Organizational decline is the process within the four major stages of the organizational life-cycle. The owners of the company will experience a decline when they do not anticipate, neutralize, or recognize the internal or external factors that pose a threat to the survival of the firm. The description provided by Jim Collins in How the Mighty Fall , it is evident that managers of these big corporations that have experienced extensive success in the past fail to recognize and adapt to the changing external or internal forces. Some of the major similarities identified in this book similar to that of The Goal are stage 1 in the Hubris Born of Success, stage 2 undisciplined pursuit of more, and stage 3 denial of risk and peril. These passages are particularly compelling in the organizational decline as the managers are able to recognize clear indicators of how the company is at risk of destruction. The passages show that despite these indicators, there is possibility of survival and avoiding ultimate fall.
The stage 1 is particularly similar to that of the Alex Rogo’s predicament as the manufacturing plant manager at UniCo. The “Hubris Born of Success” passage is a description of a corporation that has achieved success for quite a long time that it becomes blinded by it (Goldratt, & Cox, 2016). Managers of such a company feel that success is their entitlement and one they do not have to work so hard to achieve (Collins, 2009). In this practice, the senior personnel of such an organization are depicted to have diverted from the primary business practice and in the process, fail to achieve the intended goal (Kanter, 2011). In the book The Goal, Alex and his employees have taken up so many orders and are unable to present them on time. The practice has become common and the organization is at risk of total failure (Witmer, & Mellinger, 2016). Such incidences are common and could lead to a complete disaster in the company.
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The second stage “Undisciplined Pursuit of More” is another indicator of poor preparation in the organization and directing it to achieve its primary objective (Collins, 2009). The passage provided by Collins identifies a corporation that is too greedy for more that it fails to focus on the core business (Witmer, & Mellinger, 2016). Rubbermaid is a corporation seen to be driven towards achieving significant success. However, its practices result in significant destruction as it is unable to sustain the growth and has to close down 6,000 product variations, 9 plants, and 1170 jobs (Collins, 2009). In Alex’s case, it is evident that the company is experiencing significant growth. The UniCo manufacturing plant increases investment to include robots in the production process. This action does not increase productivity but instead maximizes the company’s expenditure in operational expense. It is important that a manager identify appropriate measures of delegating duties such that tasks are conducted within the required time frame. Delays on delivery of orders are a major hindrance to continued success.
The third stage “Denial of Risk and Peril” is another issue that describes the occurrence of organizational decline (Collins, 2009). Senior members of the company along with their subordinate members are well aware of the poor performance. However, none of them seem to take an active role in alleviating the problem instead they believe that things will be better in time. This incidence is another indicator of entitlement where members do not feel they need to work hard to continue in their successful streak. The practice is similar to that of Alex’s case where he identifies that there is a mismatch between the firm’s MIS system reports and the actual profits accumulated (Goldratt, & Cox, 2016). This should be a clear sign that the company is in crisis. However, it takes the plant manager quite some time to take the required action to avoid the fall of the company.
References
Collins, J., (2009). How the mighty fall: And why some companies never give in . New York: Collins Business Essentials.
Goldratt, E. M., & Cox, J. (2016). The goal: a process of ongoing improvement . New York: Routledge.
Kanter, R. M. (2011). Zoom in, zoom out. Harvard Business Review, 89 (3), 112–116.
Witmer, H., & Mellinger, M. S. (2016). Organizational resilience: Nonprofit organizations’ response to change. Work, 54 (2), 255-265.
