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How the Mighty Fall_And Why Some Companies Never Give In

Page 15

by Jim Collins


  56. Amy Barrett and Larry Armstrong, “Merck Takes Some Growth Pills,” BusinessWeek, October 12, 1998, 78; Gardiner Harris, “Cold Turkey: How Merck Intends to Ride Out a Wave of Patent Expirations,” Wall Street Journal, February 9, 2000.

  57. Clark Gilbert and Ratna G. Sarkar, “Merck: Conflict and Change,” Harvard Business School, case study #9-805-079 (Boston: Harvard Business School Publishing, 2005).

  58. Amy Barrett and Larry Armstrong, “Merck Takes Some Growth Pills,” BusinessWeek, October 12, 1998, 78.

  59. Merck & Co., Inc., Merck 1998 Annual Report (Whitehouse Station, NJ: Merck & Co., Inc., 1999), 3.

  60. Merck & Co., Inc., Merck 1999 Annual Report (Whitehouse Station, NJ: Merck & Co., Inc., 2000); John Simons and David Stipp, “Will Merck Survive Vioxx?” Fortune, November 1, 2004, 90.

  61. Eduardo Ortiz, “Market Withdrawal of Vioxx: Is It Time to Rethink the Use of COX-2 Inhibitors?” Journal of Managed Care Pharmacy 10, no. 6 (November/December 2004): 551–554; Claire Bombardier, Loren Laine, Alise Reicin, et al. for the VIGOR Study Group, “Comparison of Upper Gastrointestinal Toxicity of Rofecoxib and Naproxen in Patients With Rheumatoid Arthritis,” New England Journal of Medicine 343, no. 21 (November 23, 2000): 1520–1528, http://content.nejm.org/cgi/content/full/343/21/1520.

  62. Peter S. Kim and Alise S. Reicin, “Refecoxib, Merck and the FDA,” New England Journal of Medicine 351, no. 27 (December 30, 2004): 2875–2878; John Simons and David Stipp, “Will Merck Survive Vioxx?” Fortune, November 1, 2004, 90.

  63. Merck & Co., Inc., Annual Report 2002 (Whitehouse Station, NJ: Merck & Co., Inc., 2003); Merck & Co., Inc., Annual Report 2004 (Whitehouse Station, NJ: Merck & Co., Inc., 2005); Susan Dentzer, “Drug Failure,” Online NewsHour, November 18, 2004, http://www.pbs.org/newshour/bb/health/july-dec04/vioxx_11–18.html.

  64. Eric J. Topol, “Failing the Public Health—Rofecoxib, Merck, and the FDA,” New England Journal of Medicine 351, no. 17 (October 21, 2004): 1701–1709; Debabrata Mukherjee, Steven E. Nissen, and Eric J. Topol, “Risk of Cardiovascular Events Associated with Selective COX-2 Inhibitors,” Journal of the American Medical Association 286, no. 8 (August 22, 2001): 954–959; Daniel H. Solomon, Sebastian Schneeweiss, Robert J. Glynn, et al., “Relationship Between Selective Cyclooxygenase-2 Inhibitors and Acute Myocardial Infarction in Older Adults,” Circulation 109 (April 19, 2004): 2068–2073, http://circ.ahajournals.org/cgi/content/full/109/17/2068.

  65. Peter S. Kim and Alise S. Reicin, “Rofecoxib, Merck and the FDA,” New England Journal of Medicine 351, no. 27 (December 30, 2004): 2875–2878.

  66. Merck & Co., Inc., Annual Report 2004 (Whitehouse Station, NJ: Merck & Co., Inc., 2005), 21.

  67. Brooke A. Masters and Marc Kaufman, “Painful Withdrawal for Makers of Vioxx,” Washington Post, October 18, 2004.

  68. Christopher Rowland, “CEO Defends Merck on Vioxx: Confirmation of Woes Came ‘Out of Blue,’” Boston Globe, October 9, 2004, http://www.boston.com/business/articles/2004/10/09/ceo_defends_merck_on_vioxx; Merck & Co., Inc. “Company Statements,” VIOXX® (rofecoxib) Information Center, http://www.merck.com/newsroom/vioxx/archive.html#company_statements.

  69. John Simons and David Stipp, “Will Merck Survive Vioxx?” Fortune, November 1, 2004, 90.

  70. George W. Merck, “Talk by George W. Merck at the Medical College of Virginia at Richmond,” December 1, 1950.

  71. Jim Collins, Good to Great: Why Some Companies Make the Leap . . . And Others Don’t (New York: HarperCollins, 2001).

  72. G. Christian Hill and Mike Tharp, “Stumbling Giant,” Wall Street Journal, July 18, 1985.

  73. Garrett G. Fagan, Emperors of Rome (Chantilly, VA: The Teaching Company Limited Partnership, 2007), audiotapes of lectures by Garrett G. Fagan, Lectures 3–6, 10.

  74. Ed Viesturs and David Roberts, No Shortcuts to the Top (New York: The Doubleday Broadway Publishing Group, 2006), 158.

  75. Jill Bettner, “‘Underpromise, Overperform,’” Forbes, January 30, 1984, 88; Motorola, Inc., “Note 2 to Consolidated Financial Statements,” 1996 Summary Annual Report (Schaumburg, IL: Motorola, Inc., 1997).

  76. Sydney Finkelstein and Shade H. Sanford, “Learning from Corporate Mistakes: The Rise and Fall of Iridium,” Organizational Dynamics 29, no. 2 (November 2000): 138–148.

  77. Sydney Finkelstein and Shade H. Sanford, “Learning from Corporate Mistakes: The Rise and Fall of Iridium,” Organizational Dynamics 29, no. 2 (November 2000): 138–148.

  78. Rajiv Chandrasekaran, “Motorola’s Next Page: The Cellular Giant and Onetime Stock Star Seeks Ways to Renew Its Growth,” Washington Post, September 29, 1996.

  79. Motorola, Inc., “Letter to Stockholders,” 1997 Summary Annual Report (Schaumburg, IL: Motorola, Inc., 1998), 6.

  80. Sydney Finkelstein and Shade H. Sanford, “Learning from Corporate Mistakes: The Rise and Fall of Iridium,” Organizational Dynamics 29, no. 2 (November 2000): 138–148.

  81. Motorola, Inc., 1999 Proxy Statement (Schaumburg, IL: Motorola, Inc., 2000), http://media.corporate-ir.net/media_files/irol/90/90829/proxies/mot_000324_1999_proxy.htm.

  82. Caleb Pirtle III, Engineering the World: Stories from the First 75 Years of Texas Instruments (Dallas: Southern Methodist University Press, 2005), 153; Joan Terrall, “Texas Instruments, Incorporated: 1983,” Harvard Business School, case study #9-184-109 (Boston: Harvard Business School Publishing, 1984), 10.

  83. Robert Ristelhueber, “Texas Tornado,” Electronic Business 23, no. 12 (December 1997): 35.

  84. Svetlana Josifovska, “Deep in the Heart of Texas Instruments,” Electronic Business 26, no. 10 (October 2000): 116; Peter Burrows and Jonathan B. Levine, “TI is Moving Up in the World,” BusinessWeek, August 2, 1993, 46; Jim Bartimo, “TI Bets Most of Its Marbles On Chips,” BusinessWeek, January 29, 1990, 73; Kyle Pope, “Texas Instruments Places Hopes On Chip,” Wall Street Journal, March 10, 1994; Robert Ristelhueber, “Texas Tornado,” Electronic Business 23, no. 12 (December 1997): 35; Caleb Pirtle III, Engineering the World: Stories from the First 75 Years of Texas Instruments (Dallas: Southern Methodist University Press, 2005), 169–171.

  85. Edward R. Tufte, Visual Explanations: Images and Quantities, Evidence and Narrative (Cheshire, CT: Graphics Press, 1997), 38–53; Diane Vaughan, The Challenger Launch Decision: Risky Technology, Culture, and Deviance at NASA (Chicago: University of Chicago Press, 1996), 278–433.

  86. W. L. Gore, conversation with author during an executive session.

  87. American Alpine Club, Inc., Accidents in North American Mountaineering, 1989 (New York: The American Alpine Club, Inc., 1989): rescue ranger at the scene of the accident, conversation with author.

  88. Louis V. Gerstner, Jr., Who Says Elephants Can’t Dance? Inside IBM’s Historic Turnaround (New York: HarperCollins, 2002), 204.

  89. “Every Dog Needs His Flea,” Forbes, May 15, 1975, 131.

  90. “Scott Paper: Back On Its Feet,” Forbes, December 15, 1976, 69.

  91. “No-Longer-So-Great Scott,” Forbes, August 1, 1972, 25.

  92. “Scott Paper: Back On Its Feet,” Forbes, December 15, 1976, 69.

  93. Stuart C. Gilson and Jeremy Cott, “Scott Paper Company,” Harvard Business School, case study #9-296-048 (Boston: Harvard Business School Publishing, 1997); Albert J. Dunlap and Bob Andelman, Mean Business: How I Save Bad Companies and Make Good Companies Great (New York: Fireside, 1997), 11.

  94. “Now An Outsider Will Run Scott Paper,” BusinessWeek, April 23, 1979, 39; Jean A. Briggs, “Too Little, Too Late?” Forbes, July 5, 1982, 88; “Scott Paper Fights Back, At Last,” BusinessWeek, February 16, 1981, 104.

  95. Tom Schmitz, “How Platt Got to the Top of HP,” San Jose Mercury News, July 18, 1992; Peter Burrows, “Twists in HP’s CEO Search,” BusinessWeek, June 14, 1999, 49; “HP Names Carly Fiorina President and CEO,” Business Wire, July 19, 1999; Christopher Springmann, “The Best Job in the World,” Across the Board, May/June, 2003; “Veterans of Value,” Chief Executive, September 2002.

&n
bsp; 96. Michael Beer, Rakesh Khurana, and James Weber, “Hewlett-Packard: Culture in Changing Times,” Harvard Business School, case study #9-404-087 (Boston: Harvard Business School Publishing, 2005), 15; Gregory C. Rogers, “Human Resources at Hewlett-Packard (A),” Harvard Business School, case study #9-495-051 (Boston: Harvard Business School Publishing, 1995), 25; Dean Takahashi, “Profits Rise 41%, But H-P Is Unhappy With Growth,” San Jose Mercury News, May 18, 1995; Peter Burrows, Backfire: Carly Fiorina’s High-Stakes Battle for the Soul of Hewlett-Packard (Hoboken, NJ: John Wiley & Sons, 2003), 83.

  97. Peter Burrows, Backfire: Carly Fiorina’s High-Stakes Battle for the Soul of Hewlett-Packard (Hoboken, NJ: John Wiley & Sons, 2003), 83; George Anders, Perfect Enough: Carly Fiorina and the Reinvention of Hewlett-Packard (New York: Penguin Group, 2003); Hewlett-Packard Company, 1993 Form 10-K (Palo Alto, CA: Hewlett-Packard Company, 1994).

  98. Tom Schmitz, “How Platt Got to the Top of HP,” San Jose Mercury News, July 18, 1992; Quentin Hardy, “All Carly All the Time,” Forbes, December 13, 1999, 138.

  99. Julie Creswell and Dina Bass, “Ranking the 50 Most Powerful Women: Fortune’s First Annual Look at the Women Who Most Influence Corporate America,” Fortune, October 12, 1998.

  100. Carly Fiorina, Tough Choices: A Memoir (New York: Penguin Group, 2006), 171–172.

  101. George Anders, Perfect Enough: Carly Fiorina and the Reinvention of Hewlett-Packard (New York: Penguin Group, 2003), 63; Peter Burrows and Peter Elstrom, “The Boss,” BusinessWeek, August 2, 1999, 76; Peter Burrows, Backfire: Carly Fiorina’s High-Stakes Battle for the Soul of Hewlett-Packard (Hoboken, NJ: John Wiley & Sons, 2003), 136–137.

  102. Louis V. Gerstner, Jr., Who Says Elephants Can’t Dance? Inside IBM’s Historic Turnaround (New York: HarperCollins, 2002), 54.

  103. Louis V. Gerstner, Jr., Who Says Elephants Can’t Dance? Inside IBM’s Historic Turnaround (New York: HarperCollins, 2002), 30.

  104. George Anders, “The Carly Chronicles,” Fast Company, February 2003; Peter Burrows, Backfire: Carly Fiorina’s High-Stakes Battle for the Soul of Hewlett-Packard (Hoboken, NJ: John Wiley & Sons, 2003), 148; David Packard, The HP Way: How Bill Hewlett and I Built Our Company (New York: HarperCollins, 2005).

  105. George Anders, Perfect Enough: Carly Fiorina and the Reinvention of Hewlett-Packard (New York: Penguin Group, 2003), 64–79; Peter Burrows, Backfire: Carly Fiorina’s High-Stakes Battle for the Soul of Hewlett-Packard (Hoboken, NJ: John Wiley & Sons, 2003), 135–156; Carly Fiorina, Tough Choices: A Memoir (New York: Penguin Group, 2006), 195.

  106. Quentin Hardy, “All Carly All the Time,” Forbes, December 13, 1999, 138.

  107. Tom Quinlan, “Transition at the Top for HP: Platt Bows Out as CEO, Ushering in Fiorina,” San Jose Mercury News, August 18, 1999; Peter Burrows and Peter Elstrom, “The Boss,” BusinessWeek, August 2, 1999, 76.

  108. Louis V. Gerstner, Jr., Who Says Elephants Can’t Dance? Inside IBM’s Historic Turnaround (New York: HarperCollins, 2002), 36, 68.

  109. Louis V. Gerstner, Jr., Who Says Elephants Can’t Dance? Inside IBM’s Historic Turnaround (New York: HarperCollins, 2002), 223.

  110. David Kirkpatrick, “Lou Gerstner’s First 30 Days,” Fortune, May 31, 1993, 57; Louis V. Gerstner, Jr., Who Says Elephants Can’t Dance? Inside IBM’s Historic Turnaround (New York: HarperCollins, 2002), 56–57.

  111. Peter Burrows, Backfire: Carly Fiorina’s High-Stakes Battle for the Soul of Hewlett-Packard (Hoboken, NJ: John Wiley & Sons, 2003), 76.

  112. Carly Fiorina, Tough Choices: A Memoir (New York: Penguin Group, 2006), 180.

  113. Carly Fiorina, Tough Choices: A Memoir (New York: Penguin Group, 2006), 292–294, 303.

  114. “HP Sends Letter to Shareowners on Value of Compaq Merger,” Business Wire, January 18, 2002.

  115. Pallavi Gogoi, “Circuit City: Due for a Change?” BusinessWeek.com, February 29, 2008, http://www.businessweek.com/bwdaily/dnflash/content/feb2008/d b20080229_251654.htm; Pallavi Gogoi, “Is Circuit City Up for Sale?” BusinessWeek.com, April 8, 2008, http://www.businessweek.com/bwdaily/dnflash/content/apr2008/db2008048_602083.htm; Pallavi Gogoi, “Circuit City’s Secret Service Plan,” BusinessWeek.com, August 24, 2008, http://www.businessweek.com/investor/content/aug2006/pi20060824 _857413.htm; Circuit City Stores, Inc., Annual Report 2006 (Richmond, VA: Circuit City Stores, Inc., 2006); Circuit City Stores, Inc., Annual Report 2007 (Richmond, VA: Circuit City Stores, Inc., 2007); Circuit City Stores, Inc., Annual Report 2008 (Richmond, VA: Circuit City Stores, Inc., 2008); Louis Llovio, “No Deal for Circuit City,” Times-Dispatch, July 2, 2008.

  116. “Scott Paper Fights Back, At Last,” BusinessWeek, February 16, 1981, 104; Bill Saporito, “Scott Isn’t Lumbering Anymore,” Fortune, September 30, 1985, 48.

  117. Ames Department Stores, Inc., Annual Reports, for years 1992–2000 (Rocky Hill, CT: Ames Department Stores, Inc., 1993–2001); Pete Hisey, “Ames Nears Day of Reckoning,” Discount Store News, August 6, 1990, 1; Jeffrey Arlen, “Fashioning the Turn Around at Ames,” Discount Store News, April 18, 1994, A10; Don Kaplan, “Ames Redefines Its Niche in the Northeast,” Daily News Record, October 14, 1994, 3; Dianne M. Pogoda, “Ames is Battling Back,” WWD, October 26, 1994, 10; Donna Boyle Schwartz, “Hanging Tough,” HFN—The Weekly Newspaper for the Home Furnishing Network, November 20, 1995, 1; James Mammarella, “Joe Ettore: President, CEO, Ames,” Discount Store News, December 4, 1995, 36; Valerie Seckler, “Ames’s Strategy for Survival,” WWD, March 19, 1997, 20; Joyce R. Ochs, “Anatomy of a Bankruptcy,” Business Credit 99, no. 9 (October 1997): 20; Jean E. Palmieri, “At the Magic Show, Ames’ Buyers Will Be Seeking the Next Wave in Tops,” Daily News Record, February 22, 1999, 18; Mike Duff, “Discount Veteran Ames to Liquidate After 44 Years,” DSN Retailing Today, August 26, 2002, 1.

  118. “A&P’s Ploy: Cutting Prices to Turn a Profit,” Business Week, May 20, 1972, 76; William I. Walsh, The Rise and Decline of the Great Atlantic & Pacific Tea Company (Secaucus, NJ: Lyle Stuart, Inc., 1986), 146; Mary Bralove, “Price War in Supermarkets Imperils Some As A&P Sets Out to Regain Market Share,” Wall Street Journal, July 21, 1972; “A&P’s ‘Price War’ Bites Broadly and Deeply,” Business Week, September 30, 1972, 56; Eleanor Johnson Tracy, “How A&P Got Creamed,” Fortune, January 1973, 103; Mary Bralove, “A&P Goes Outside Ranks for First Time, Picks Scott to Assume Eventual Command,” Wall Street Journal, December 11, 1974; Mary Bralove, “New A&P Chairman Unveils 5-Year Plan to Reverse Chain’s Declining Fortunes,” Wall Street Journal, February 7, 1975; “National Tea’s Loss is A&P’s Gain,” Business Week, October 18, 1976, 39; “A&P Puts Big Money On its Family Marts,” Business Week, January 23, 1978, 50; Peter W. Bernstein, “Jonathan Scott’s Surprising Failure at A&P,” Fortune, November 6, 1978, 34; Peter Z. Grossman, “A&P: Should You Invest Along With the Germans?” Financial World, February 15, 1979, 16; Gay Sands Miller, “A&P’s New President Isn’t Signaling Any Retrenchment Wave Despite Deficit,” Wall Street Journal, May 2, 1980.

  119. Roger O. Crockett, “A New Company Called Motorola,” BusinessWeek, April 17, 2000, 86.

  120. Motorola, Inc., 1999 Summary Annual Report (Schaumburg, IL: Motorola, Inc., 2000).

  121. Source: ©200601 CRSP®, Center for Research in Security Prices. Graduate School of Business, The University of Chicago. Used with permission. All rights reserved. www.crsp.chicagobooth.edu.

  122. Motorola, Inc., 2000 Summary Annual Report (Schaumburg, IL: Motorola, Inc., 2001).

  123. Barnaby Feder, “Motorola Picks an Outsider to Be Its Chief Executive,” New York Times, December 17, 2003; Barnaby J. Feder, “New Chief to Take Reins as Motorola Takes on Challenge of Rivals,” New York Times, January 3, 2004; Laurie J. Flynn, “Motorola Replaces Chief With an Insider,” New York Times, December 1, 2007.

  124. Texas Instruments Inc., “Interactive Timeline,” History of Innovation (Dallas: Texas Instruments, Inc., 2008), http://www.ti.com/corp/docs/company/history/interactivetimeline.shtml; Erick Schonfeld, “Stetsons Off to
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  125. Caleb Pirtle III, Engineering the World: Stories from the First 75 Years of Texas Instruments (Dallas: Southern Methodist University Press, 2005), 144–146; Peter Burrows and Jonathan B. Levine, “TI is Moving Up in the World,” BusinessWeek, August 2, 1993, 46.

  126. Karen Blumenthal, “Texas Instruments Focuses on Youth as it Names Engibous President, CEO,” Wall Street Journal, June 21, 1996; Robert Ristelhueber, “Texas Tornado,” Electronic Business 23, no. 12 (December 1997): 35; Erick Schonfeld, “Hotter than Intel,” Fortune, October 11, 1999, 179; Elisa Williams, “Mixed Signals,” Forbes, May 28, 2001, 80.

  127. Andrew Park, “For Every Gizmo, a TI Chip,” BusinessWeek, August 16, 2004, 52.

  128. Source: ©200601 CRSP®, Center for Research in Security Prices. Graduate School of Business, The University of Chicago. Used with permission. All rights reserved. www.crsp.chicagobooth.edu.

  129. “Office Equipment,” Forbes, January 1, 1963, 61.

  130. “Addressograph Multigraph Had a Great Fall,” Forbes, September 15, 1973, 88; “Taking On Xerox With a Fast Copier,” BusinessWeek, April 26, 1969, 78; “The Man on the Spot,” Forbes, June 1, 1975, 24; David Pauly and James C. Jones, “Corporations: Roy Ash’s Challenge,” Newsweek, December 13, 1976, 90; “Addressograph Gets the Roy Ash Treatment,” BusinessWeek, March 21, 1977, 36.

  131. David Pauly and James C. Jones, “Corporations: Roy Ash’s Challenge,” Newsweek, December 13, 1976, 90; “AM International: When Technology Was Not Enough,” BusinessWeek, January 25, 1982, 62.

 

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