Denial of Risk and Peril - Stage 3
How the Mighty Fall and Why Some Companies Never Give In - Jim Collins
Stage 3: Denial of Rish and Peril
This chapter really just talks about the over-confidence that companies tend to have when they become very successful and think that they are invincible. Collins is very good at bringing in examples of companies, what they did wrong and what they should have done and comparing it with other companies who took the road less travelled and did things at a slower pace and therefore stayed/ are staying at the top of their sector at the moment.
Collins starts with talking about the need for satellites for cellular phones to work worldwide being put together in 1985 by a Motorola engineer on vacation. Iridium was the venture that Motorola invested in. They basically invested half a billion dollars into this venture and it concluded that the service was too expensive because there were very few people using it as the connection was very poor. The cellular phone market was very successful and while the idea of phones that could work anywhere on earth was good for people in rural areas, there were not enough people living in these remote areas to make it a profit making business. Iridium filed for bankruptcy in 1999.
Collins then talks about a different case from Texas Instruments (TI), who took their time expanding before they made any educated gambles. This is why they are so successful. They chose the correct time for their DSP company to branch out with a lot of investment. They did not jump at the first sign of success.
Then Collins goes on to talk about the wrong thinking of the manager of NASA that lead to the Challenger disaster in January 27, 1986. The conditions were out of the norm for a spaceship to take off. But NASA leaders argued 'prove it 's not safe ' and Morton Thiokol argued 'prove it is safe '. The spaceship burst into flames killing all passengers.
When decision making, Collins came up with three questions to ask yourself: '1. What 's the
Stage 3: Denial of Rish and Peril
This chapter really just talks about the over-confidence that companies tend to have when they become very successful and think that they are invincible. Collins is very good at bringing in examples of companies, what they did wrong and what they should have done and comparing it with other companies who took the road less travelled and did things at a slower pace and therefore stayed/ are staying at the top of their sector at the moment.
Collins starts with talking about the need for satellites for cellular phones to work worldwide being put together in 1985 by a Motorola engineer on vacation. Iridium was the venture that Motorola invested in. They basically invested half a billion dollars into this venture and it concluded that the service was too expensive because there were very few people using it as the connection was very poor. The cellular phone market was very successful and while the idea of phones that could work anywhere on earth was good for people in rural areas, there were not enough people living in these remote areas to make it a profit making business. Iridium filed for bankruptcy in 1999.
Collins then talks about a different case from Texas Instruments (TI), who took their time expanding before they made any educated gambles. This is why they are so successful. They chose the correct time for their DSP company to branch out with a lot of investment. They did not jump at the first sign of success.
Then Collins goes on to talk about the wrong thinking of the manager of NASA that lead to the Challenger disaster in January 27, 1986. The conditions were out of the norm for a spaceship to take off. But NASA leaders argued 'prove it 's not safe ' and Morton Thiokol argued 'prove it is safe '. The spaceship burst into flames killing all passengers.
When decision making, Collins came up with three questions to ask yourself: '1. What 's the
References: Collins, J. (2009). Stage 3: Denial of Risk and Peril. In: Collins, J How The Mighty Fall. London: HarperCollins. p65-83.