How the Mighty Fall #2

This second blog post is about the second reading that I did, which explained stages 3 and 4.

Stage 3 being Denial of Risk and Peril and Stage 4 being Grasping for Salvation.

Stage 3: Denial of Risk and Peril:

This stage is indicated by the fact that companies will deny its financial data, saying it was misinterpreted or wrongly calculated. Also, the company will not believe that it is about to fail even though the numbers are indicating their demise, as well as their financial advisors saying that the company is about to fail. An example that is given is with Lehman Brothers, as the CEO of Lehman Brothers did not believe that the housing bubble would burst, and the cause of that caused Lehman Brothers to collapse.

Stage 4: Grasping for Salvation:

Companies will basically start to try anything to save their company from going down the drain. Usually at this point, many companies’ fate has already been sealed as it is too late, however there is a small chance that companies can redeem themselves here and come out alive. However it is a slim chance that requires a good leader. Statically, the book said that the only company that saved themselves at this point was when their CEO was from inside of their company. Every company that failed however hired someone outside of the company to be the CEO. I have my own beliefs that the reason companies got out of stage 4 was because they made their own employees CEO, and because it was an employee that worked there they had a connection with their company at will try to save it.

-Francis Laferriere