This might be the toughest lesson of the book How the Mighty Fall(HTMF)by Jim Collins. It also might be the most useful.

The stories hit hard. Companies bet big on a new product or service, yet ignore the data that says its out of date(Motorola), frame the data so risk is hidden(NASA), ignore the early warning signs(Lehman Brothers), shoot the messengers (IBM).

In all the studied companies the leaders managed to block out empirical evidence that something might be amiss. If these bright leaders of large previously successful organizations do, how can we be expected to avoid this stage?

Three questions to ask to make sure you don’t blow a hole in you ship below the waterline:
1. What’s the upside if things turn out well?
2. What’s the downside if things go poorly?
3. Can you live with the downside if things don’t go well? Really?

Symptoms or markers that indicate you might be in this stage:
1. Positive talk only, dismissive of negatives
2. Betting big with out empirical data
3. Taking big risks on ambiguous data
4. Poor team dynamics (finger pointing, less dialogue, autocratic tendencies)
5. Blaming the external
6. Regular reorganizations
7. Leaders becoming detached and imperious.

More on usefulness in the next post.