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Success or failure of any organization begins at the top with those responsible for leading and stewarding the organization.

Whether you are a self-employed plumber, the CEO of a Fortune 100 company with 35,000 employees or a pastor of a 15,000 member church – it all begins with the leader.

Ultimately, the foundation of good leadership is not competence, skill, passion, or personality – its humility. We can obtain advanced degrees from the best institutions on the planet. We can be competent, highly-skilled, passionate, and have a winsome personality, but if we lack humility, those other things don’t matter. As leaders, we must relentlessly cultivate humility. It requires humility to recognize signs of decline in order to avoid it. Lasting success requires humility as well.

In Part 1, we will dive into signs your church, ministry, or business might be headed into decline. Essentially, we are attempting to accurately diagnose the problem. In Part 2, we’ll discuss how decline relates to you (and me) as an individual leader and what you can do to avoid it. Here, we are attempting to provide a cure or solution for the problem. 

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Disclaimer (because everybody needs one): I have been in various leadership positions since I was in high school. I have worked for myself. I have worked in the C-suites. I have owned companies. I have led ministries. In my lifetime, I have made massive, sometimes heart-breaking mistakes. In fact, I could write volumes about my failures and mistakes and a short pamphlet of my successes. So, when it comes to failure, (please believe me when I say) I know what I’m talking about. I’ve failed a lot. But, I try to learn from my failures and make things right.

What are the signs your church, ministry, or business may be failing?

Jim Collins’ book, “How the Mighty Fall – And why some companies never give in” will be our guide. I read the book in 2009. I’ve read it at least 5 times since. I use it as a reference. I’ve watched the lessons in the book unfold in real life. “How the Mighty Fall” is ultimately a book about humility. I highly recommend reading it. You can also read my post: How The Mighty Fall – A Primer for Successful Leadership

The book answers the questions: “What happened leading up to the point at which decline became visible? What did the company do once it began to fall?”

I’ve organized key concepts and quotes into sections to help readers navigate and digest Collins’ concepts quickly and easily.

– 5 Stages of Decline –

Stage 1.

HUBRIS BORN OF SUCCESS

We’re so great, we can do anything!
(Picture Leonardo DiCaprio on the bow of the Titanic yelling, “I’m king of the world!”)

“Stage 1 kicks in when people become arrogant, regarding success virtually as an entitlement, and they lose sight of the true underlying factors that created success in the first place. When the rhetoric of success (“We’re successful because we do these specific things”) replaces penetrating understanding and insight (“We’re successful because we understand why we do these specific things and under what conditions they would no longer work”), decline will very likely follow.” (1)

Markers for Stage 1:
a. Success Entitlement, Arrogance: Success is viewed as “deserved,” rather than fortuitous, fleeting or even hard earned in the face of daunting odds; people begin to believe that success will continue almost no matter what the organization decides to do, or not do.

b. “What” Replaces “Why”: The rhetoric of success (We’re successful because we do these specific things’) replaces understanding and insight (“We’re successful because we understand why we do these specific things and under what conditions they would no longer work”).

c. Decline in Learning Orientation: Leaders lose the inquisitiveness and learning orientation that mark those truly great individuals who, no matter how successful they become, maintain a learning curve as steep as when they first began their careers. (2)

Stage 2.

UNDISCIPLINED PURSUIT OF MORE

More, more, and more!

“… more scale, more growth, more acclaim, more of whatever those in power see as “success.” Companies in Stage 2 stray from the disciplined creativity that led them to greatness in the first place, making undisciplined leaps into areas where they cannot be great or growing faster than they can achieve with excellence—or both. When an organization grows beyond its ability to fill its key seats with the right people, it has set itself up for a fall. Although complacency and resistance to change remain dangers to any successful enterprise, overreaching better captures how the mighty fall.” (1)

Markers for Stage 2:
a. Unsustainable Quest for Growth, Confusing Big with Great: Success creates pressure for more growth, setting up a vicious cycle of expectations; this strains people, the culture, and systems to the breaking point; unable to deliver consistent tactical excellence, the institution frays at the edges.

b. Declining Proportion of Right People in Key Seats: There is a declining proportion of right people in key seats, because of losing the right people and/or growing beyond the organization’s ability to get enough people to execute on that growth with excellence (e.g., breaking Packard’s Law).

c. Bureaucracy Subverts Discipline: A system of bureaucratic rules subverts the ethic of freedom and responsibility that marks a culture of discipline; people increasingly think in terms of “jobs” rather than responsibilities.

d. Problematic Succession of Power: The organization experiences leadership-transition difficulties, be they in the form of poor succession planning, failure to groom excellent leaders from within, political turmoil, bad luck, or an unwise selection of successors.

e. Personal Interests Placed Above Organizational Interests: People in power allocate more for themselves or their constituents – more money, more privileges, more fame, more of the spoils of success – seeking to capitalize as much as possible in the short term, rather than investing primarily in building for greatness decades into the future. (2)

Stage 3.

DENIAL OF RISK AND PERIL

Oh, don’t be an alarmist, things are just fine!

“In Stage 3, leaders discount negative data, amplify positive data, and put a positive spin on ambiguous data. Those in power start to blame external factors for setbacks rather than accept responsibility. The vigorous, fact-based dialogue that characterizes high-performance teams dwindles or disappears altogether. When those in power begin to imperil the enterprise by taking outsize risks and acting in a way that denies the consequences of those risks, they are headed straight for Stage 4… If you blow a hole above the waterline (where the ship won’t take on water and possibly sink), you can patch the hole, learn from the experience, and sail on. But if you blow a hole below the waterline, you can find yourself facing gushers of water pouring in, pulling you toward the ocean floor.” (1)

Stage 3 Leadership-Team Dynamics (organizations in decline)

– People shield those in power from grim facts, fearful of penalty and criticism for shining light on the harsh realities.

– The team leader has a very low questions-to-statements ratio, avoiding critical input and/or allowing sloppy reasoning and unsupported opinions.

– Team members acquiesce to a decision yet do not unify to make the decision successful, or worse, undermine the decision after the fact.

– Team members seek as much credit as possible for themselves yet do no enjoy the confidence and admiration of their peers.

– Team members argue to look smart or to improve their own interests rather than argue to find the best answers to support the overall cause.

– The team conducts “autopsies with blame” seeking culprits rather than wisdom. (2)

Markers for Stage 3:
a. Amplify the Positive, Discount the Negative: There is a tendency to discount or explain away negative data rather than presume that something is wrong with the company; leaders highlight and amplify external praise and publicity.

b. Big Bets and Bold Goals without Empirical Validation: Leaders set audacious goals and/or make big bets that aren’t based on accumulated experience, or worse, that fly in the face of the facts.

c. Incurring Huge Downside Risk Based on Ambiguous Data: When faced with ambiguous data and decisions that have a potentially severe or catastrophic downside, leaders take a positive view of the data and run the risk of blowing a hole “below the waterline.”

d. Erosion of Healthy Team Dynamics: There is a marked decline in the quality and amount of dialogue and debate; there is a shift toward either consensus or dictatorial management rather than a process of argument and disagreement followed by unified commitment to execute decisions.

e. Externalizing Blame: Rather than accept full responsibility for setbacks and failures, leaders point to external factors or other people to affix blame.

f. Obsessive Reorganizations: Rather than confront the brutal realities, the enterprise chronically reorganizes; people are increasingly preoccupied with internal politics rather than external conditions.

g. Imperious Detachment: Those in power become more imperious and detached; symbols and perks of executive-class status amplify detachment; plush new office buildings may disconnect executives from daily life. (2) 

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Stage 4.

GRASPING FOR SALVATION

Do something! Anything! 

“The cumulative peril and/or risks gone bad of Stage 3 assert themselves, throwing the enterprise into a sharp decline visible to all. The critical question is: How does its leadership respond? By lurching for a quick salvation or by getting back to the disciplines that brought about greatness in the first place? Those who grasp for salvation have fallen into Stage 4… Initial results from taking dramatic action may appear positive, but they do not last… leaders atop companies in the late stages of decline need to get back to a calm, clear-headed, and focused approach. If you want to reverse decline, be rigorous about what not to do.” (1)

Stage 4 behaviors:
– Pin hopes on unproven strategies – discontinue leaps into new technologies, new markets, new businesses – often with much hype and fanfare.

– Embark on a program of radical change, a revolution, to transform or upend nearly every aspect of the company, jeopardizing or abandoning core strengths.

– Destroy momentum with chronic restructuring and/or a series of inconsistent big decisions. (2)

Markers for Stage 4:
a. Series of Silver Bullets: There is a tendency to make dramatic, big moves, such as a “game-changing” acquisition or a discontinuous leap into a new strategy or an exciting innovation, in an attempt to quickly catalyze a breakthrough – and then do it again and again, lurching about from program to program, goal to goal, strategy to strategy, in a pattern of chronic inconsistency.

b. Grasping for a Leader-As-Savior: The board responds to threats and setbacks by searching for a charismatic leader (expert) and/or outside savior.

c. Panic and Haste: Instead of being calm, deliberate, and disciplined, people exhibit hasty, reactive behavior, bordering on panic.

d. Radical Change and “Revolution” with Fanfare: The language of “revolution” and “radical” change characterizes the new era: New Programs! New Cultures! New Strategies! Leaders engage in hoopla, spending a lot of energy trying to align and “motivate” people engaging in buzzwords and taglines.

e. Hype Precedes Results: Instead of setting expectations low – underscoring the duration and difficulty of the turnaround – leaders hype their visions, they “sell the future” to compensate for the lack of current results, initiating a pattern of overpromising and underdelivering.

f. Initial Upswing Followed by Disappointments: There is an initial burst of positive results, but they do not last; dashed hope follows dashed hope; the organization achieves no buildup, no cumulative momentum.

g. Confusion and Cynicism: People cannot easily articulate what the organization stands for; core values have eroded to the point of irrelevance; the organization has become “just another place to work,” a place to get a paycheck; people lose faith in their ability to triumph and prevail. Instead of passionately believing in the organization’s core values and purpose, people become distrustful, regarding visions and values as little more that PR and rhetoric.

h. Chronic Restructuring and Erosion of Financial Strength: Each failed initiative drains resources; cash flow and financial liquidity begin to decline; the organization undergoes multiple restructurings; options narrow and strategic decisions are increasingly dictated by circumstance. (2)

“Reorganizations and restructurings can create a false sense that you’re actually doing something productive. Companies are in the process of reorganizing themselves all the time; that’s the nature of institutional evolution. But when you begin to respond to data and warning signs with reorganization as a primary strategy, you may well be in denial. It’s a bit like responding to a severe heart condition or a cancer diagnosis by rearranging your living room.” (2)

Stage 5.

CAPITULATION TO IRRELEVANCE OR DEATH

Oh well, at least we tried…

“In Stage 5, accumulated setbacks and expensive false starts erode financial strength and individual spirit to such an extent that leaders abandon all hope of building a great future. In some cases the company’s leader just sells out; in other cases the institution atrophies into utter insignificance; and in the most extreme cases the enterprise simply dies outright.”(1)

In conclusion, the core of good leadership is not competence, skill, passion, or personality – is humility. As leaders, we must relentlessly cultivate humility. We must be open to criticism, feedback, challenges, questions, and advice. We are to be servants, not masters.

READ PART 2 HERE…

Sources:

(1) Article: How the Mighty Fall – A Primer on the Warning Signs (Business Week) by Jim Collins (2009)

(2) Book: How the Mighty Fall by Jim Collins (2009)

Please share your insights by commenting below this post.

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