Good to Great to Blah

Jeevan Sivasubramaniam Posted by Jeevan Sivasubramaniam, Managing Director, Editorial, Berrett-Koehler Publishers Inc.



In his latest book, Gerald Davis explains how large American corporations are dying and how that is not always a good thing. Corporations employ many people, offer pensions and insurance and give economic stability to millions. The new economy employs far fewer people and offers much less in the way of financial stability.

In his seminal bestselling book Good to Great, Jim Collins profiled several large American corporations who were doing things right and had a bright future ahead of them for making the leap to greatness. However, many of those corporations are not so great any more. Here are just five that did not stand the test of time too well:

1. Circuit City: Collins praised this booming company which in the late 90s and early 2000s had revenues of $12 billion and 1,520 stores in the U.S. and Canada with over 46,000 workers. But with a series of mistakes (which would illustrate how they shifted away from confronting "brutal facts," as Collins would say) and bad decisions, the company went bankrupt in March of 2009.

2. Fannie Mae: Praised for its aggressive management structure, Fannie Mae was projected to be a long-term winner with a stock market value of $70 billion, but its ongoing challenges to congress and Wall Street earned the company some powerful enemies in the late 90s. The company was seen as having grown too big for its britches, and the culture of discipline that once governed it no longer had a role. And when the meltdown hit, guess who was caught in the crosshairs.

3. Gillette: The company best known for razors and personal care products was riding the waves more than a decade back, but then in 2005, CEO James Kilts decided to sell the company to P&G for a cool $57 billion (and personally reaped close to $200 million for doing so). More than six thousand employees lost their jobs and many more quit while Kilts closed the doors on over 100 years of history and promptly retired. So much for level-5 leadership.

4. Kimberly-Clark: The paper company was riding high for many years but poor performance issues in 2009 forced the company to cut 1,600 jobs. The restructuring actually began in 2005 with the cutting of 6,000 jobs. The company is still a huge global employer with over 43,000 global employees and $18.6 billion in sales (2015). Recently they started climbing out of the hole but now a 60 Minutes story on various product and company failures (basically falling behind in the "technology accelerator" field) has opened up a new wound with a damages estimate that has exceeded $900 millionThis could be a bad sign of things to come.

5. Pitney-Bowes: In the new age of technology, how does a mailing solutions company remain valid? With a lot of difficulty, apparently. Pitney Bowes is reorganizing management and has promised some changes over the next few quarters, but no one is holding their breath given recent dives in value. The big reason for this, many argue, is an underperforming software division that just can't seem to get traction. Only time will tell for the 16,000 or so employees that is relying on an increase in its $3.6 billion 2015 revenues to stay open for business.