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COLTAN
Consumers are ultimately funding this bloody conflict through the purchase of small
electronics such as mobile phones and playstations.
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COST
The mining of Coltan is thought to have claimed upwards of 5 million lives.
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THE DANGER OF DEMOTIVATING
Jim Collins reflects on findings from
How the Mighty Fall:
The Danger of Demotivating
YouTube
HOW THE MIGHTY FALLJIM COLLINS (2009) HARPERCOLLINS
FIVE STAGES OF DECLINE
Stage 1: Hubris Born of Success
Stage 2: Undisciplined Pursuit of More
Stage 3: Denial of Risk and Peril
Stage 4: Grasping for Salvation
Stage 5: Capitulating to Irrelevance or
Death
MARKERS FOR STAGE ONEHUBRIS BORN OF SUCCESS
Success Entitlement, Arrogance
Neglect of a Primary Flywheel
“What” replaces “Why”
Decline in learning orientation
Personal interests placed above
organizational interests
MARKERS FOR STAGE TWOUNDISCIPLINED PURSUIT OF MORE
Unsustainable quest for growth,
confusing big with great
Undisciplined discontinuous leaps
Declining proportion of right people in
key seats
Easy cash erodes cost discipline
Problematic succession of power
MARKERS FOR STAGE THREEDENIAL OF RISK AND PERIL
Amplifying the positive, discount the
negative
Big bets and bold goals without empirical
validation
Incurring huge downside risk based on
ambiguous data
Erosion of healthy team dynamics
Externalizing Blame
Obsessive reorganizations
MARKERS FOR STAGE FOURGRASPING FOR SALVATION
A series of silver bullets
Grasping for leader-as-savior
Panic and haste
Radical change and “revolution” with fanfare
Hype precedes results
Initial upswing followed by disappointments
Confusion and cynicism
Chronic restructuring and erosion of financial strength
CIRCUIT CITY SIX
SIX FATAL MISTAKES OF A ONCE
“GOOD TO GREAT” COMPANY
Don Eames
President & CEO of
Eames Management Group
Former Senior Vice President of Best Buy
THE WORLD ASKS THE QUESTION
How could this happen?
Jim Collins wrote: “Circuit City became to the consumer electronics retailing what McDonald’s became to the restaurants–not the most exquisite experience, but an enormously consistent one.” In the early 1980’s the company had built a culture of discipline that produced superior execution of the “4-S” model (service, selection, savings, satisfaction). “It was because of this consistency that Circuit City took off in the early 1980’s and beat the general stock market by more than 18 times during the next 15 years.”
GENERAL PROBLEMS
External threats:
weakening consumer demand,
growing unemployment,
tight credit and
collapsing housing markets.
Internally threats
several years of declining sales,
a weak balance sheet,
skeptical vendors worried about getting paid
increasing competition from low service/no service retailers.
SIX FATAL MISTAKES
“Aside from these current realities, in my
opinion, Circuit City made six fatal mistakes
which resulted in one of the most significant
business failures in retail history. These
mistakes undermined their own progress and
ultimately killed them.”
1. ARROGANCEHOW IT ALL STARTED
HAVE EDGE, NOT ARROGANCE
Humility is always better than arrogance
Never be satisfied, always keep moving the
ball
Stay ahead of the competition –never give up
ground
2. REAL ESTATEPRIORITIZING “B” SITE LOCATIONS IS NEVER A GOOD STRATEGY
BE STRATEGIC
Always go for “A” locations as long as NPV is
positive and IRR is within your acceptable
range
Be faster than your competition
Hire the best real estate experts in the
industry
3. HOME APPLIANCESFROM WHITE GOODS TO RED INK
THINK BIG
Always test your assumptions before you act,
look for unintended consequences
Many financial decisions have another side
to them which may often hurt other aspects
of the company’s business
Focusing on short term can lead to trouble –
think long term
4. COMMISSION MODELLISTEN TO YOUR CUSTOMERS, THEY DON’T LIKE THIS EXPERIENCE
CHANGE MANAGEMENT
When changing strategies, understand the
impact on your business, customers and
employees and manage the risk accordingly
In order to make a successful change in your
operating model, ensure organizational
alignment (process, structure, systems,
compensation, training, culture, etc)
5. FIREDOG“BETTER LATE THAN NEVER” DOESN’T ALWAYS WORK
STAY TUNED
Be the leader
If you are not the leader, at least be a fast
follower
Invest in profit opportunities
Listen to your customers, know what they
want
6. TALENTYOUR BEST EMPLOYEES ARE YOUR GREATEST ASSET. KEEP THEM
ANY ORGANIZATION IS ALL ABOUT PEOPLE
Make retention of your best people one of the top priorities
Create a great culture inside your organization where your employees would love to belong
Invest in training. Untrained or under-trained employees are usually dissatisfied with their jobs which negatively affects themselves , other employees and customers
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