How the Mighty Fall_And Why Some Companies Never Give In

by Jim Collins

  132. “Addressograph Jumps Into Word Processing,” BusinessWeek, July 4, 1977, 19; Louis Kraar, “Roy Ash is Having Fun at Addressogrief-Multigrief,” Fortune, February 27, 1978, 46; “AM International: When Technology Was Not Enough,” BusinessWeek, January 25, 1982, 62; Andrew Baxter, “AM International Rebuilds on its Old Foundations,” Financial Times, March 29, 1984; Thomas C. Hayes, “Ash Forced Out of Two AM Posts,” New York Times, February 24, 1981.

  133. Susie Gharib Nazem and Susan Kinsley, “How Roy Ash Got Burned,” Fortune, April 6, 1981, 71.

  134. “AM International: When Technology Was Not Enough,” BusinessWeek, January 25, 1982, 62.

  135. “Addressograph Multigraph Had a Great Fall,” Forbes, September 15, 1973, 88; “How AM is Pulling Itself Up Again,” BusinessWeek, June 13, 1983, 37; Andrew Baxter, “AM International Rebuilds on its Old Foundations,” Financial Times, March 29, 1984; “AM International: Profits Are In, High Tech’s Out,” BusinessWeek, July 7, 1986, 77.

  136. “Addressograph Gets Ash and $2.7 Million,” Business Week, October 4, 1976, 31; “Up From the Ashes,” Forbes, April 16, 1979, 104; Leslie Wayne, “AM International’s Struggle,” New York Times, June 20, 1981; “AM Files Chapter 11 Petition,” New York Times, April 15, 1982; “Cleaning Up the Mess at AM International,” Business Week, December 3, 1984, 165; John N. Maclean, “AM Files Again For Chapter 11,” Chicago Tribune, May 18, 1993.

  137. “An Aftershock Stuns AM International,” BusinessWeek, March 22, 1982, 30.

  138. N. R. Kleinfield, “AM’s Brightest Years Now Dim Memories,” New York Times, April 15, 1982.

  139. 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.

  140. John A. Byrne and Joseph Weber, “The Shredder: Did CEO Dunlap Save Scott Paper—or Just Pretty It Up?” BusinessWeek, January 15, 1996, 56.

  141. John A. Byrne, Chainsaw: The Notorious Career of Al Dunlap in the Era of Profit-at-Any-Price (New York: HarperCollins Publishers, 2003).

  142. John A. Byrne and Joseph Weber, “The Shredder: Did CEO Dunlap Save Scott Paper—or Just Pretty It Up?” BusinessWeek, January 15, 1996, 56; Albert J. Dunlap and Bob Andelman, Mean Business: How I Save Bad Companies and Make Good Companies Great (New York: Fireside, 1997), 21.

  143. “Commander McDonald of Zenith,” Fortune, June 1945, 141.

  144. Richard Hammer, “Zenith Bucks the Trend,” Fortune, December 1960, 128; “Troubled Zenith Battles Stiffer Competition,” BusinessWeek, October 10, 1977, 128.

  145. Richard Hammer, “Zenith Bucks the Trend,” Fortune, December 1960, 128; “Sam Kaplan ‘That’s Our Plan,’” Forbes, May 15, 1968, 80; “Zenith Fills the Rooms at the Top,” Business Week, May 16, 1970, 62; “The Big Winner,” Forbes, April 1, 1974; “Every Dog Needs His Flea,” Forbes, May 15, 1975, 131; “Troubled Zenith Battles Stiffer Competition,” Business Week, October 10, 1977, 128; Bob Tamarkin, “Zenith’s New Hope,” Forbes, March 31, 1980, 32.

  146. “Zenith to Jimmy Carter: Help!” Forbes, December 15, 1976, 43; “Troubled Zenith Battles Stiffer Competition,” BusinessWeek, October 10, 1977, 128.

  147. Bob Tamarkin, “Zenith’s New Hope,” Forbes, March 31, 1980, 32; “Zenith May Lead the Way in the Video Revolution,” BusinessWeek, February 23, 1981, 94; “Zenith: The Surprise in Personal Computers,” BusinessWeek, December 12, 1983, 102; “Zenith Wants to Give the Boob Tube a Brain,” BusinessWeek, May 6, 1985, 71.

  148. “Zenith’s Jerry Pearlman Sure is Persistent,” BusinessWeek, October 2, 1989, 67; “Zenith: The Surprise in Personal Computers,” BusinessWeek, December 12, 1983, 102.

  149. “Zenith is Doing Quite Well, Thank you—In Computers,” BusinessWeek, July 11, 1988, 80; “Zenith’s Jerry Pearlman Sure is Persistent,” BusinessWeek, October 2, 1989, 67; Lois Therrien, Thane Peterson, and Geoff Lewis, “Why Jerry Pearlman Gave Up His Brainchild,” BusinessWeek, October 16, 1989, 35; “Zenith’s Bright Side and Its Dark Side,” Forbes, May 2, 1988, 112.

  150. Lisa Kartus, “The Strange Folks Picking on Zenith,” Fortune, December 19, 1988, 79; Lois Therrien, Thane Peterson, and Geoff Lewis, “Why Jerry Pearlman Gave Up His Brainchild,” BusinessWeek, October 16, 1989, 35; Robert L. Rose, “Zenith Faces Liquidity Crunch in Wake of Price Wars,” Wall Street Journal, November 11, 1992; “Zenith Dials Up a New CEO,” BusinessWeek, March 13, 1995; “Getting the Picture,” Crain’s Chicago Business 20, no. 2 (January 13, 1997): 13.

  151. Lisa Kartus, “The Strange Folks Picking on Zenith,” Fortune, December 19, 1988, 79; Lois Therrien, “HDTV Isn’t Clearing Up Zenith’s Picture,” BusinessWeek, February 25, 1991, 56; H. Garrett DeYoung, “An Improving Picture for Zenith?” Electronic Business, June 1993, 83; “ ‘A Short Leash’ at Zenith,” BusinessWeek, January 31, 1994, 31; Laxmi Nakarmi, Richard A. Melcher, and Edith Updike, “Will Lucky Goldstar Reach Its Peak with Zenith?” BusinessWeek, August 7, 1995, 40; “Zenith Faces Liquidity Crunch in Wake of Price Wars,” Wall Street Journal, November 11, 1992; Carl Quintanilla and Robert L. Rose, “Zenith Turns to a Turnaround Expert in Its Efforts to Fatten Up Bottom Line,” Wall Street Journal, January 7, 1998; “Zenith Electronics Corporation: History,” Hoovers, http://premium.hoovers.com/subscribe/co/history.xhtml?ID=ffffrrjjfffhrtfkfc; Liz Brooks, “Zenith Electronics’ New Focus on the Digital Sector Is Discussed,” Adweek Magazine’s Technology Marketing 21, no. 10 (November 2001): 26; “Why Jerry Pearlman Gave Up His Brainchild,” BusinessWeek, October 16, 1989, 35; “Zenith Wishes on a Lucky-Goldstar,” BusinessWeek, March 11, 1991; Carol Haber and Chad Fasca, “One Last Rescue for Zenith,” Electronic News 44, no. 2206 (February 16, 1998): 53.

  152. Xerox Corporation, Annual Report 2002 (Stamford, CT: Xerox Corporation, 2003); Pamela L. Moore, “She’s Here to Fix the Xerox,” BusinessWeek, August 6, 2001, 47; J. P. Donlon, “The X-Factor,” Chief Executive, June 2008; Anthony Bianco and Pamela L. Moore, “The Downfall: The Inside Story of the Management Fiasco at Xerox,” BusinessWeek, March 5, 2001, 82.

  153. Kevin Maney, “Mulcahy Traces Steps of Xerox’s Comeback,” USA Today, September 21, 2006.

  154. Betsy Morris, “The Accidental CEO,” Fortune, June 23, 2003, 58.

  155. Kevin Maney, “Mulcahy Traces Steps of Xerox’s Comeback,” USA Today, September 21, 2006.

  156. Kathleen Cholewka, “Xerox’s Savior?” Sales and Marketing Management 153, no. 4 (April 2001); Patricia Sellers and Cora Daniels, “The 50 Most Powerful Women in American Business,” Fortune, October 12, 1998, 76; Patricia Sellers, “These Women Rule: Hewlett-Packard’s New CEO and President Tops Fortune’s Second Annual Ranking of the 50 Most Powerful Women in American Business,” Fortune, October 25, 1999, 94.

  157. Betsy Morris, “The Accidental CEO,” Fortune, June 23, 2003, 58.

  158. Karen Lowry Miller, “The Quiet CEOs,” Newsweek, December 20, 2004.

  159. Jim Collins research team analysis.

  160. Nanette Byrnes, “Lessons from a Baptism by Fire,” BusinessWeek, August 12, 2002, 64.

  161. Pamela L. Moore, “She’s Here to Fix the Xerox,” BusinessWeek, August 6, 2001, 47.

  162. Betsy Morris, “The Accidental CEO,” Fortune, June 23, 2003, 58.

  163. Nanette Byrnes, “Lessons from a Baptism by Fire,” BusinessWeek, August 12, 2002, 64; J. P. Donlon, “The X-Factor,” Chief Executive, June 2008.

  164. J. P. Donlon, “The X-Factor,” Chief Executive, June 2008; Nanette Byrnes, “Lessons from a Baptism by Fire,” BusinessWeek, August 12, 2002, 64; Pamela L. Moore, “She’s Here to Fix the Xerox,” BusinessWeek, August 6, 2001, 47.

  165. J. P. Donlon, “The X-Factor,” Chief Executive, June 2008.

  166. Dick Clark, conversation with author.

  167. Joseph A. Schumpeter, Capitalism, Socialism and Democracy (New York: Harper Torchbooks, 1962).

  16
8. William Manchester, The Last Lion: Winston Spencer Churchill, Visions of Glory 1874–1932 (New York: Dell Publishing, 1983), 614, 857, 860, 878–880, 883; J. Rufus Fears, Churchill (Chantilly, VA: The Teaching Company Limited Partnership, 2001), audiotapes of lectures by J. Rufus Fears, Lectures 5–12.

  169. William Manchester, The Last Lion: Winston Spencer Churchill, Visions of Glory 1874–1932 (New York: Dell Publishing, 1983), 883; J. Rufus Fears, Churchill (Chantilly, VA: The Teaching Company Limited Partnership, 2001), audiotapes of lectures by J. Rufus Fears, Lectures 5–12.

  170. William Manchester, The Last Lion: Winston Spencer Churchill, Visions of Glory 1874–1932 (New York: Dell Publishing, 1983), 32; The Churchill Centre, “We Shall Fight on the Beaches,” Selected Speeches of Winston Churchill, http://www.winstonchurchill.org/i4a/pages/index.cfm?pageid=393.

  171. The Churchill Centre, “Never Give In, Never, Never, Never,” Selected Speeches of Winston Churchill, http://www.winstonchurchill.org/i4a/pages/index.cfm?pageid=423; J. Rufus Fears, Churchill (Chantilly, VA: The Teaching Company Limited Partnership, 2001), audiotapes of lectures by J. Rufus Fears, Lectures 5–12.

  172. “How the Rescue Plan Will Work,” Washington Post, September 8, 2008.

  173. Fannie Mae, Investor Relations: Stock Information, http://www.fanniemae.com/ir/resources/index.jhtml?s=Stock+Information.

  174. Charles Duhigg, “The Reckoning: Pressured to Take More Risk, Fannie Reached Tipping Point,” New York Times, October 5, 2008.

  175. “A Conversation with Vikrim Pandit, CEO of Citigroup,” The Charlie Rose Show, November 25, 2008, http://www.charlierose.com/view/interview/9653.

  176. Timothy L. O’Brien and Jennifer Lee, “A Seismic Shift Under the House of Fannie Mae,” New York Times, October 3, 2004; Bethany McLean, “The Fall of Fannie Mae,” Fortune, January 24, 2005, 122; Annys Shin, “Report Details Raines’s Clout at Fannie Mae,” Washington Post, February 24, 2006; James R. Hagerty and Joann S. Lublin, “Mudd Plans Fannie Makeover,” Wall Street Journal, December 24, 2004; Stephen Labaton and Eric Dash, “Loan Buyer Accounting Is Faulted,” Washington Post, February 24, 2006; Terence O’Hara, “The Fannie Mae Report,” Washington Post, February 24, 2006; Eric Dash and Michael J. de la Merced, “Regulators Denounce Fannie Mae,” New York Times, May 24, 2006.

  177. Fannie Mae, “Letter to Shareholders,” 2001 Annual Report (Washington, DC: Fannie Mae, 2002), 2; Annys Shin,“Examining Fannie Mae; How a Former Chief Helped Shape the Company’s Culture,” Washington Post, May 24, 2006; Russell Roberts, “How Government Stoked the Mania,” Wall Street Journal, October 3, 2008.

  178. Fannie Mae, 2001 Annual Report (Washington, DC: Fannie Mae, 2002), 9, 49; Janice Revell, “Fannie Mae Is Plenty Safe,” Fortune, May 27, 2002, 77; Patrick Barta, “Loan Stars: Why Calls Are Rising to Clip Fannie Mae’s, Freddie Mac’s Wings,” Wall Street Journal, July 14, 2000.

  179. Fannie Mae, “Letter to Shareholders,” 2002 Annual Report (Washington, DC: Fannie Mae, 2003); Fannie Mae, “Letter to Shareholders,” 2003 Annual Report (Washington, DC: Fannie Mae, 2004).

  180. Office of Federal Housing Enterprise Oversight, “Report of Findings to Date,” Special Examination of Fannie Mae (Washington, DC: OFHEO, 2004), i, report released on September 17, 2004.

  181. Eric Dash and Stephen Labaton, “The Welcome Mat Is Out,” Washington Post, February 18, 2006; Fannie Mae, 2005 Form 10-K (Washington, DC: Fannie Mae, 2006), 52 and 91; Fannie Mae, 2006 Annual Report (Washington, DC: Fannie Mae, 2007), 37.

  182. Annys Shin, “New Paths for Mortgage Giants,” Washington Post, December 5, 2005.

  183. Fannie Mae, “Letter to Shareholders,” 2006 Annual Report (Washington, DC: Fannie Mae, 2007), 5; David S. Hilzenrath, “Fannie, Freddie Face Conflicting Demands,” Washington Post, December 4, 2007; “End of Illusions; Fannie Mae and Freddie Mac,” Economist, July 19, 2008; David S. Hilzenrath, “Fannie’s Perilous Pursuit of Subprime Loans,” Washington Post, August 19, 2008.

  184. Charles Duhigg, “The Reckoning: Pressured to Take More Risk, Fannie Reached Tipping Point,” New York Times, October 5, 2008.

  185. David S. Hilzenrath, “Fannie Loses $2.2 Billion As Home Prices Fall,” Washington Post, May 7, 2008; Charles Duhigg, “Mortgage Giants to Buy Fewer Risky Home Loans,” New York Times, August 9, 2008; “How the Rescue Plan Will Work,” Washington Post, September 8, 2008.

  186. “Office Equipment,” Forbes, January 1, 1964, 79; “The Competitive Office Equipments,” Financial World, May 19, 1965, p. 6; “Information Processing,” Forbes, January 1, 1968, 47.

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

  188. Al Heller, “Gilman’s Informality Spurs Creativity, Growth at Ames,” Discount Store News, August 19, 1985, 1; Elizabeth Rourke and David E. Salamie, “Ames Department Stores, Inc.,” International Directory of Company Histories, Vol. 30 (New York: St. James Press, 2000), 55.

  189. Peter Hisey, “Herb Gilman: ‘The Concept is So Simple,’” Discount Store News, May 23, 1988, 49; Steven Jacober, “Ames Redefines Itself at $2 Billion,” DM, August 1988, 22; “Building Ames with Careful Shopping,” Discount Store News, September 25, 1989, 85; Joseph Pereira, “Digesting Zayre Gives Ames Heartburn,” Wall Street Journal, December 28, 1989; Ames Department Stores, Inc., 1989 Annual Report to Stockholders (Rocky Hill, CT: Ames Department Stores, Inc., 1990), 13–14.

  190. “Under the Wire,” Forbes, June 15, 1969, 61; Milton Moskowitz, “Bank of America’s Rocky Road to Corporate Social Responsibility,” Bankers Magazine, Autumn 1977, 77. “Why They’re Slowing Growth at the World’s Biggest Bank,” Business Week, February 24, 1975, 54.

  191. John J. O’Rourke, “Bank of America’s Tom Clausen . . . A Man for the Seventies,” Burroughs Clearing House, January 1970, 1, 21.

  192. “The Biggest Bank Bets More on High Risk,” Business Week, May 22, 1971, 80.

  193. “Why They’re Slowing Growth at the World’s Biggest Bank,” Business Week, February 24, 1975, 54.

  194. “BankAmericard Due to Carry New Name Beginning Next Year,” Wall Street Journal, August 20, 1976.

  195. G. Christian Hill and Mike Tharp, “Stumbling Giant: Big Quarterly Deficit Stuns BankAmerica, Adds Pressure on Chief,” Wall Street Journal, July 18, 1985; Gary Hector, Breaking the Bank: The Decline of BankAmerica (Boston: Little, Brown & Company, 1988), 190–192.

  196. Circuit City Stores, Inc., “Management Letter,” Annual Report 1996 (Richmond, VA: Circuit City Stores, Inc, 1996), 4.

  197. John R. Wells, “Circuit City Stores, Inc.: Strategic Dilemmas,” Harvard Business School, case study #9-706-419 (Boston: Harvard Business School Publishing, 2005); Peter Spiegel, “Car Crash,” Forbes, May 17, 1999.

  198. Evan Ramstad, “Circuit City CEO Meets with Rivals to Peddle Alternative DVD Product,” Wall Street Journal, January 14, 1998; “Richard L. Sharp—Circuit City Stores Inc. (CC),” Wall Street Transcript, November 11, 1998.

  199. Gregory C. Rogers, “Human Resources at Hewlett-Packard (A),” Harvard Business School, case study #9-495-051 (Boston: Harvard Business School Publishing, 1995); Michael Beer, Rakesh Khurana, and James Weber, “Hewlett-Packard: Culture in Changing Times,” Harvard Business School, case study #0-404-087 (Boston: Harvard Business School Publishing, 2005).

  200. Alan Deutschman, “How H-P Continues to Grow and Grow,” Fortune, May 2, 1994, 90.

  201. Dana Wechsler Linden and Bruce Upbin, “Top Corporate Performance of 1995: ‘Boy Scouts on a Rampage,’” Forbes, January 1, 1996, 66.

  202. John H. Sheridan, “Lew Platt: Creating a Culture for Innovation,” Industry Week, December 19, 1994, 26; Alan Deutschman, “How H-P Continues to Grow and Grow,” Fortune, May 2, 1994, 90; Jennifer Telford, “Street-Smart CEO Shapes Hewlett Packard Vision,” Den
ver Business Journal, March 1–7, 1996, 1.

  203. David Einstein, “Anonymous, Inc.,” Marketing Computers 15, no. 4 (April 1995): 28; Peter Burrows, “The Printer King Invades Home PCs,” BusinessWeek, August 21, 1995, 74; Richard A. Shaffer, “The Bittersweet Success of Home PCs,” Forbes, September 11, 1995, 262; Lee Gomes, “Hewlett-Packard Sets Its PC Bar Higher and Higher,” Wall Street Journal, September 8, 1997.

  204. Arthur M. Louis, “HP to Quit Disk-Drive Business,” San Francisco Chronicle, July 11, 1996; Tom Quinlan and Scott Thurm, “HP Buys Electronic Card Firm Verifone,” San Jose Mercury News, April 24, 1997; Nikhil Hutheesing, “HP’s Giant ATM,” Forbes, February 9, 1998, 96.

  205. Brian Gillooly, “HP’s New Course,” Information Week, March 20, 1995, 45; Peter Burrows, Geoffrey Smith, and Steven V. Brull, “HP Pictures the Future,” BusinessWeek, July 7, 1997, 100.

  206. Joseph Weber and Rochelle Shoretz, “Is This Rx Too Costly for Merck?” BusinessWeek, August 9, 1993, 28; Joseph Weber, “Mr. Nice Guy With a Mission,” BusinessWeek, November 25, 1996, 132; Merck & Co., Inc., 1995 Annual Report (Whitehouse Station, NJ: Merck & Co., Inc., 1996).

  207. Merck & Co., Inc., “Letter to Shareholders,” Annual Report 2000, (Whitehouse Station, NJ: Merck & Co., Inc, 2000).

  208. John Simons, “Will R&D Make Merck Hot Again?” Fortune, July 8, 2002, 89.

  209. Merck & Co., Inc., 1998 Annual Report (Whitehouse Station, NJ: Merck & Co., Inc., 1999), 22.

  210. Barnaby J. Feder, “Motorola Will Be Just Fine, Thanks,” New York Times, October 31, 1993.

  211. Karl Schoenberger, “Motorola Bets Big on China,” Fortune, May 27, 1996, 116.

  212. Quentin Hardy, “Unsolid State: Motorola, Broadsided by the Digital Era, Struggles for a Footing,” Wall Street Journal, April 22, 1998.

  213. Karl Schoenberger, “Motorola Bets Big on China,” Fortune, May 27, 1996, 116; Rick Tetzeli, “And Now for Motorola’s Next Trick,” Fortune, April 28, 1997, 122.