Bank of America

5 stages of decline

STAGE ONE

YOUR PRIMARY FLYWHEEL

• Hard work and focus on core competencies. • Evolve core business in a never ending

creative renewal.

DISCOUNT YOUR OWN SUCCESS

STAGE TWOUNDISCIPLINED PURSUIT OF

MORE

CONFUSING GROWTH WITH EXCELLENCE!

“George Merck, Paul Galvin, Bill Hewlett and David Packard viewed expanding not as the end

goal, but as a residual result of pursuing their core purpose. Later generations forgot this

lesson. Indeed, they inverted it.”

STAGE 3DENIAL OF RISK AND PERIL

• MOTOROLA Iridium• An engineer came up with the idea of satellite phone.• It started as a small experimental project.• In 1991 Motorola spun out Iridium in a separate company.• By 1996 Motorola had invested $537 million.• Iridium launched in 1998.• The very next year Iridium filed for bankruptcy.

MAKING BIG BETS IN THE FACE OF MOUNTING EVIDENCE IN THE CONTRARY

• As companies move into stage 3, we begin to see the cumulative effects of previous stages.

• This describes what happened with Iridium.• TI’s investment in DSP Chips.• TI dared to take a big leap, it based its decision on a firm

foundation of proven success.• Audacious goals stimulate progress, but big bets with out

empirical validation can bring companies down.

TAKING RISK BELOW THE WATERLINE

• Bill Gore, founder of W.L.Gore & Associates, articulated a helpful concept for decision and risk taking. “Waterline” principle.

• Decisions gone bad will blow a in the side of the ship.• If you blow a hole above the waterline, you can patch the hole

and learn from the experience.• But if you blow a hole below the waterline, you will find your

self in trouble.• Great enterprises do make big bets, but the avoid big bets

that could blow hole below the waterline.

• When making risky bets and decisions in the face of ambiguous or conflicting data, ask three questions:

1. What’s the upside, if events turn out well?2. What’s the downside, if events go very badly?3. Can you live with the downside? Truly?

A CULTURE OF DENIAL

• Companies can also gradually weaken, and as they move deeper into stage 3, they begin to accumulate warning signs.

• Deteriorating in gross margin, current ratio or debt-to-equity ratio.

• Change in Leadership-Team Dynamics.• Power Blame.

Stage 4:GRASPING FOR SALVATION

• Stage 4 begins when an organization reacts to a downturn by lurching for a silver bullet.

• The key point is that they go for a quick , big solution or bold stroke to jump-start a recovery.

• Companies stuck in stage 4 try all sorts of new programs, new fads, new strategies, new visions, new cultures, new breakthrough, new acquisition and new saviors.

• And when one silver bullet fails they go for another, and then another.

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Stage 5:Capitulation To Irrelevance Or Death

• Accumulated setbacks and expensive false starts erode financial strength and individual spirit to such an extent that leaders abandon all hope of building a great future.

• In some cases, their leaders just sell out;• In other cases, the institution atrophies into

utter insignificance;• And in the most extreme cases, the enterprise

simply dies outright.

Is there a way out?

NUCORNORDSTROMDISNEYIBM

Never give in

BUT NEVER GIVE UP YOUR CORE PURPOSE

Be willing to change tactics,

BUT NEVER GIVE UP ON THE IDEA OF BUILDING A GREAT COMPANY.

Be willing to kill failed business ideas, even to shutter big operations you’ve been in for a long time

BUT NEVER GIVE UP ON THE DISCIPLINE TO CREATE YOUR OWN FUTURE.

Be willing to embrace the inevitability of creative destruction,

BUT NEVER GIVE UP FAITH IN THE ABILITY TO PREVAIL.

Be willing to embrace loss, to endure pain, to temporarily lose freedoms,

Success is falling down, and getting up one more time, without end.

http://www.youtube.com/watch?v=_PE5V4Uzobc

THANK YOU!

GROUP:ASADULLAH NAQVI

DANIYAL KHANMEHAK ZAHIDRABIA AHMAD