Stall Points

How important today are Xerox, DuPont and Reebok, formerly uncontested leaders in their industries? What has become of PanAm, United Technologies and RCA? At one point or another, almost all large corporations come to a screeching halt in their growth. Some recover, but most never again get up to speed. This is the statistically-supported observation made by the authors of Stall Points. So why do these companies hit a wall? Could it have been avoided? How to get back into the race when this happens, regardless?

The study presented in this book covers only multinationals. However, with the exception of chapter 14, devoted to the role of the strategy unit in the organizational structure, this book offers many findings that a company of any size would likely find helpful, by explaining both the main reasons businesses crash and the warning signs to watch.

The central message is that most businesses do not fail because of external factors as much as because of bad management decisions. Chapter 4 points to the importance of the mental models of company leaders and the risk of failing to see major environmental shifts. Chapters 12 and 13 describe several practices (shadow cabinet, creation of specific indicators, etc.) to minimize this danger.
The four main reasons for business decline are covered in separate chapters, i.e., inability to respond to the emergence of new competitors or a shift in customer expectations (chapter 6, with the examples of Kodak and Levi-Strauss), inability to innovate or use innovation as a new source of growth (chapter 7, examples of Goodrich and RCA), failure to diversify or unjustified abandonment of the core business (chapter 8, examples of Philips and BankAmerica), inability to acquire or retain the talent and skills required to realize a winning strategy (chapter 10, examples of Hitachi and Disney). Chapters 5, 9, and 11 describe other more rarely observed causes, such as overdependence on a single product or customer, changes to the economic or legal context, etc.

In a book that focuses on preventative measures, only chapter 15 evokes potential ways to surmount crises once they hit—react quickly, refocus on the core business and devote all your resources to it, etc. This is illustrated by the example of Embraer.