How the Mighty Fall_And Why Some Companies Never Give In Read online

  276. Rajiv Lal and Arar Han, “Nordstrom: The Turnaround,” Harvard Business School, case study #9-505-051 (Boston: Harvard Business School Publishing, 2005); Kathy Mulady, “Nordstroms Again Take the Reins,” Seattle Post-Intelligencer, September 1, 2000.

  277. Kathy Mulady, “Another Move At Nordstrom,” Seattle Post-Intelligencer, September 12, 2000; Rajiv Lal and Arar Han, “Nordstrom: The Turnaround,” Harvard Business School, case study #9-505-051 (Boston: Harvard Business School Publishing, 2005); Robert Spector and Patrick McCarthy, The Nordstrom Way to Customer Service Excellence (Hoboken, NJ: John Wiley & Sons, Inc., 2005), 91, 144.

  278. Bill Kossen, “A Good Fit?” Seattle Times, May 29, 2001; Nordstrom, Inc., Annual Report 2002 (Seattle: Nordstrom, Inc., 2003); Rajiv Lal and Arar Han, “Nordstrom: The Turnaround,” Harvard Business School, case study #9-505-051 (Boston: Harvard Business School Publishing, 2005).

  279. Rajiv Lal and Arar Han, “Nordstrom: The Turnaround,” Harvard Business School, case study #9-505-051 (Boston: Harvard Business School Publishing, 2005).

  280. Rajiv Lal and Arar Han, “Nordstrom: The Turnaround,” Harvard Business School, case study #9-505-051 (Boston: Harvard Business School Publishing, 2005); Carol Tice, “Bringing Nordstrom Back,” Puget Sound Business Journal, December 26, 2003; Bill Kossen, “A Good Fit?” Seattle Times, May 29, 2001; Robert Spector and Patrick McCarthy, The Nordstrom Way to Customer Service Excellence (Hoboken, NJ: John Wiley & Sons, Inc., 2005), 143; Nordstrom, Inc., Annual Report 2003 (Seattle: Nordstrom, Inc., 2004).

  281. Nordstrom, Inc., Annual Report 2002 (Seattle: Nordstrom, Inc., 2003); Bill Kossen, “A Good Fit?” Seattle Times, May 29, 2001; Nordstrom, Inc., Annual Report 2003 (Seattle: Nordstrom, Inc., 2004), 11; Devon Spurgeon, “In Return to Power, The Nordstrom Family Finds A Pile of Problems,” Wall Street Journal, September 8, 2000.

  282. Rajiv Lal and Arar Han, “Nordstrom: The Turnaround,” Harvard Business School, case study #9-505-051 (Boston: Harvard Business School Publishing, 2005).

  283. Jon Rhine, “Refashioning the ‘Nordstrom Way,’” San Francisco Business Times, June 8, 2001, 3; Amy Merrick, “Nordstrom Accelerates Plan to Straighten Out Business,” Wall Street Journal, October 19, 2001; Rajiv Lal and Arar Han, “Nordstrom: The Turnaround,” Harvard Business School, case study #9-505-051 (Boston: Harvard Business School Publishing, 2005).

  Index

  The pagination of this electronic edition does not match the edition from which it was created. To locate a specific passage, please use the search feature of your e-book reader.

  Note: Page numbers in italics refer to charts.

  A&P, 8, 14, 128, 133, 135

  competition against, 91, 154

  complacency in, 47, 154

  early years of, 37

  and Hartford brothers, 36–37

  Kroger contrast with, 141

  preserving the culture in, 37, 39

  Rise and Decline of The Great Atlantic & Pacific Tea Company, 37

  Stage 2 in, 20, 154

  Stage 4 in, 155

  Abbott Labs, 128, 132, 140

  acquisitions:

  as binary decision, 45–46

  game changing, 22

  addiction to scale, 55

  Addressograph Corporation, 14, 128, 133, 135

  bankruptcies of, 99

  competition against, 97

  core capability of, 98–99

  jobs lost in, 99

  panic and desperation, 97–99

  Pitney Bowes contrast with, 141

  Stage 2 in, 149

  Stage 4 in, 155–56

  age fit, 136–37

  Alexander, Caroline, The Endurance, 115

  Allaire, Paul, 114

  Amazon, 84

  American Express, 128, 132

  Ames Department Stores, 14, 23, 128, 133, 135

  bankruptcy of, 46, 156

  CEO turnover in, 91

  liquidation of, 46, 156

  Stage 2 in, 150

  Stage 4 in, 156

  Wal-Mart contrast with, 15–16, 16, 39–42, 46, 141

  Zayre bought by, 45–46, 150, 156

  Anders, George, Perfect Enough, 84

  Anna Karenina (Tolstoy), 19

  Apple, 48, 139, 152

  Applied Materials, 140

  Armacost, Samuel, 9–11

  arrogance, 43, 145

  Astor, Lady, 121

  atrophy, 111

  Augustus Caesar, 58–60

  Bank of America, 7–11, 14, 18, 128, 133, 135

  as Bank of Italy, 6–7

  bureaucracy of, 58

  CEO pick of, 8–11

  and Charles Schwab, 9

  and Merrill Lynch, 76

  net income (1972–1987), 9

  responsibilities in, 57–58

  and Seafirst Corp., 10

  Stage 2 in, 150

  Stage 4 in, 156

  Wells Fargo contrast with, 141

  Bank of Italy, 6–7

  Bear Stearns, xiii, 23, 76, 146

  Beethoven, Ludwig van, 36

  Bell Atlantic, 29

  Best Buy, 33–34, 35, 36, 91, 139, 141, 157

  Bethlehem Steel, 128, 133

  BHAGs (Big Hairy Audacious Goals), 182

  big bets, unwarranted, 68–70, 81

  blame, externalizing, 79, 81, 109

  Blockbuster, 91, 157

  blockbuster product, 22

  Boeing Corporation, 116, 128, 132

  Boston Globe, 52

  Box, George E. P., 20

  Bristol-Myers Squibb, 128, 133

  Built to Last (Collins and Porras), xiv, 28, 33, 54, 94–95, 128, 148, 179

  Bull Corporation, 110

  bureaucracy, 56, 58, 63

  Burger, Ralph, 36–37

  Burroughs, 128, 133

  Burrows, Peter, Backfire, 84

  business fit, 136

  BusinessWeek, 10, 29, 51, 85, 87, 92, 109

  Caesar, Gaius Julius, 58–59

  Caesar, Octavian (Augustus), 58–60

  Caligula, Roman Emperor, 59

  capitulation to irrelevance or death, 22–23, 103–23, 103

  cash shortages, 104–5

  denial vs. hope, 111–12

  giving up, 105–7

  running out of options, 107–11

  CarMax, 30–31, 33, 151

  cash:

  easy, vs. cost discipline, 63

  shortage of, 104–5, 118

  cell phones, 65–68

  CEOs, outside, 85, 87–88, 95, 98, 100, 155, 157, 158

  Challenger, 71–74

  Chamberlain, Neville, 121

  change, consistency vs., 38

  character flaws, 49

  Charles Bruning Co., 149

  Charles Schwab, 9

  Chase Manhattan Bank, 128, 131

  Chase National Bank, 7

  Chief Executive, 83

  Chrysler Corporation, 128, 132

  Churchill, Winston, 120–23

  Circuit City, 8, 14, 60, 128, 133

  arrogant neglect, 32

  bankruptcy filing of, 31

  Best Buy vs., 33–34, 36, 139, 141

  CarMax, 30–31, 33

  CEO replaced in, 91

  core business of, 32–34

  Divx, 30–31, 33

  employees fired in, 91

  hubris born of success (Stage 1), 30–34

  profit margins in, 31

  Radio Shack vs., 139

  Stage 2 in, 150–51

  Stage 4 in, 156–57

  Wal-Mart vs., 139

  Cisco Systems, 140

  Citicorp, 128, 132

  Citigroup, 144

  civilization, declining, 2

  Clark, Dick, 116

  Clausen, A. W., 150

  Cleopatra, 59

  clock building, 182

  Colgate, 128, 132

  Columbia Pictures, 128, 131

  commitments, 160

  companies in recovery, 14–15

  Compaq Computer Corporation, 89, 157r />
  comparison company criterion, 129–31

  complacency, 46–47, 49, 151, 154

  Conference Board, 1

  conflict, cult of, 152

  confusion, 101

  consistency, change vs., 38

  contrasts, study of, 15–16, 16,135

  core business, 32–34, 35–36, 43, 55, 182

  core values, 55, 101, 111, 159, 166, 171–72, 182

  correlations, 16–17

  cost discipline vs. easy cash, 63

  Countrywide, 146

  Cowles, Virginia, 121

  Crockett, Roger O., 29

  cultural revolution, 22

  culture, preservation of, 37, 39

  customer loyalty, 76

  customer priority, 87

  cynicism, 101

  decision analysis, 4

  decision making, “waterline” principle of, 74

  decisions, irreversible, 73–74, 76

  decline, chronic, 132–33

  decline, five stages of, 13–23, 24

  applied to entire industries, 147–48

  capitulation to irrelevance or death (Stage 5), 22–23, 103–23

  denial of risk and peril (Stage 3), 21–22, 65–82

  framework of, 19–23, 20

  grasping for salvation (Stage 4), 22, 83–101, 155–58

  hubris born of success (Stage 1), 20–21, 27–44

  research process, 13–19

  self-inflicted, 25

  study of contrasts, 16

  undisciplined pursuit of more (Stage 2), 21, 45–64, 149–58

  way out of, 23–26, 117

  Dell Corporation, 139

  Deming, W. Edwards, 118

  denial of risk and peril, 21–22, 65–82, 65

  accentuate the positive, 81

  blaming others, 79, 81

  culture of, 76–80

  eroding team dynamics, 81

  imperious detachment, 82

  making big bets, 68–70, 81

  markers, 81–82

  Morton Thiokol, 71–73

  Motorola, 65–68

  obsessive reorganization, 79–80, 81

  taking risks, 71–76, 81

  detachment, imperious, 82

  DiMicco, Daniel R., 167, 168–72

  discipline:

  culture of, 56, 181–82

  management, 117, 118, 119–20

  self-discipline, 160

  disciplined action, 180, 181–82

  disciplined people, 179, 180, 181

  disciplined thought, 180, 181

  disease, hidden, 3–4

  Disney, 116, 128, 133

  Divx, 30–31, 33, 151

  dogmatism, 39

  Drucker, Peter F., 118

  Dunlap, Al “Rambo Al”; “Chainsaw Al,” 105–6

  Eckerd, 128, 133

  El Capitan, climbing on, 75

  Eldorado Canyon, Colorado, 74–75

  Eli Lilly, 140

  Emerson, 140

  Engibous, Tom, 69, 94

  entitlement, 43

  entrepreneurial phase, 104

  escape, 23–26

  excellence, passion for, 166

  exclusions:

  for chronic decline, 132–33

  for founder effect, 132

  for industry effect, 132

  for pre-1950, 132

  facts, confronting, 181

  Fagan, Garrett G., 59

  Fannie Mae, xiv, 15, 76, 128, 132, 143–48

  Fears, J. Rufus, 29

  financial crisis (2008), 143–48

  financial institutions, downward spiral of, 147

  financial strength, erosion of, 101

  Finkelstein, Sydney, 66

  Fiorina, Carly, 85, 86, 87–88

  Tough Choices, 88

  flywheel, 182

  Forbes, 8, 30, 85, 86, 94, 151

  Ford Motor Company, 128, 132

  Fortune, 48, 85, 87, 91, 114, 136

  founder effect, 132

  Freddie Mac, xiv, 144, 147

  Galvin, Paul, 28, 54

  Galvin, Robert, 27–28, 66, 67

  Galvin Manufacturing Corporation, 28

  Gandhi, Mohandas K. (Mahatma), 121

  Geek Squads, 34

  General Electric (GE), 128, 132, 140, 151

  General Instruments Corporation, 92–93, 157

  General Motors (GM), 104, 133

  Georgia Pacific, 79

  Gerstner, Louis V., Jr., 85–88, 95–96, 161

  assessing brutal facts, 78, 163–64

  and core values, 166

  disciplined focus of, 85, 86–87, 97, 164–65

  inner drive of, 117

  Level 5 leadership of, 162

  and succession planning, 165

  Who Says Elephants Can’t Dance?, 86, 162

  Giannini, Amadeo Peter, 5–6

  Giannini family, 7

  Gillette, 128, 132

  Gilman, Herb, 42

  Gilmartin, Ray, 50–53, 116

  giving up, 105–7

  Glamour, 85

  Glass, David, 41–42

  Glass-Steagall Act, 9

  Goldman Sachs, 91

  Good to Great (Collins), xiv, 4, 94, 128, 143, 179

  good-to-great framework, 179–83

  building greatness to last, 180, 182

  diagnostic tool, 179

  disciplined action, 180, 181–82

  disciplined people, 179, 180, 181

  disciplined thought, 180, 181

  Gore, Bill, 74

  Great Depression, xiv

  greatness test, 138–39

  Great Western, 128, 131

  growth:

  disciplined quest for, 54

  obsession with, 50–54, 55

  unsustainable quest for, 54, 55, 63, 84

  Hall, Rob, 66

  Hansen, Morten, 118

  Harris, 128, 132, 140

  Hartford, George, 36–37

  Hartford, John, 37

  Harvard Business Review, 7

  Hasbro Toys, 128, 133

  hedgehog concept, 170, 181

  Hesselbein, Frances, 1

  Hewlett, Bill, 54, 86

  Hewlett-Packard (HP), 14, 128, 133

  and Compaq, 89, 157

  founding purpose of, 54

  IBM contrast with, 139, 141

  leadership succession in, 85, 87–88

  restructuring, 88

  searching for silver bullet, 88–89

  Stage 2 in, 54, 55, 84, 151

  Stage 4 in, 83–85, 157

  stock price of, 84

  success-contrast candidates, 139

  turnaround, 116

  and undisciplined growth, 54, 55, 84

  Hills Department Stores, 156

  historical analysis, 17–18

  hope, 113–23, 113

  abandonment of, 107

  and Churchill, 120–23

  denial vs., 111–12

  and recovery, 25, 113–18, 120

  in solid management discipline, 117, 119–20

  housing market bubble, 75

  Howard Johnson, 128, 131

  hubris, multiple forms of, 30

  hubris born of success, 20–21, 27–44, 27

  A&P, 37

  Ames, 39–42

  approach 1, 38

  approach 2, 38–39

  arrogant neglect, 29–36

  Circuit City, 30–34

  confusing what and why, 36–42

  and core business, 32–34, 35–36, 43

  dogmatism, 39

  markers, 43–44

  Motorola, 27–30

  overreaching, 39, 53, 68

  hype, 100

  IBM, 128, 132

  competition of, 164

  customer priority in, 87, 163, 164, 165

  decline and recovery case, 116, 117, 161–66, 161

  decline of, 78

  discipline in, 164–65

  HP contrast with, 139, 141

  Motorola contrast with, 140, 152

  passion for ex
cellence in, 166

  right people in key seats, 163

  succession planning in, 85–88, 165

  turnaround of, 78, 88, 95, 97, 116, 117

  value created in, 165

  inconsistency, 92

  industry effect, 132

  innovation, undisciplined, 47–49, 151

  Intel, 48, 69, 94, 139, 140, 151, 152

  Internet Bubble, 84, 93

  Internet economy, 84

  investors, cumulative returns to, 54

  Iridium, 66–68, 70, 76, 152

  Iverson, Ken, 168, 169, 171

  Japanese competition, “unfair,” 79, 108, 109

  Johnson & Johnson, 25, 128, 132, 140, 141, 151

  JPMorgan Chase, xiii

  Julius Caesar, 58–59

  Junkins, Jerry, 93–94

  Kaufman, Marc, 52

  Kennedy Space Center, 71

  Kenwood, 128, 131

  key seats, filled with the right people, 55, 56–57, 63, 76, 87, 159–60, 163, 169, 174–75, 181

  Kimberly-Clark, 79, 105, 106, 128, 132, 141, 158

  Kirkpatrick, David, 87

  Kmart, 40

  Kroger, 37, 128, 132, 141

  launch decisions, 74

  Lazier, Bill, 1, 103–4

  Leader to Leader Institute, 1

  leadership:

  charismatic, 88

  family dynamics of, 61

  focused approach to, 97

  level 5, 179, 181

  multiple generations of, 182

  outside CEOs, 85, 87–88, 95, 98, 100, 155, 157, 158

  problematic succession of, 58–61, 63–64

  refusal to give up, 116

  visionary, 22, 88

  leadership-team dynamics, 76–78, 77–78

  leaps, discontinuous, 48, 63

  learning vs. knowing, 39, 43

  Lehman Brothers, xiii, 23, 76, 146

  Lorentz, Francis, 110

  luck, role of, 44

  Manchester, William, The Last Lion, 121

  Maney, Kevin, 114

  Mark Antony, 59

  Marriott Corporation, 128, 132

  Masters, Brooke, 52

  maturity, 160

  Maxwell, David, 143, 145

  McAuley, Kathryn, 105–6

  McDonald, Eugene, 107–8

  McDonnell Douglas, 128, 133

  Medco Containment Services, Inc., 152

  mediocrity, 56, 92, 111

  decline to, 131–32

  Melville, 128, 133

  Merck, 14, 128, 133

  core purpose of, 53

  and generic drugs, 50

  and hubris, 53

  J&J contrast with, 141

  new patents in, 47

  obsession with growth, 50–54, 55

  recovery of, 116