Interesting paths emerge with market leadership. You talk of one where leadership leads to hubris leads to complacency. Nokia and Kodak are poster children. Andy Grove cautions against that. But is there another path that's as common. When Jim Collins found some of the companies covered in Good to Great had spiralled into irreversible decline, he investigated them and came up with a theory that sometimes market leadership leads to hubris leads to the 'undiciplinsd pursuit of more'. Circuit City is one such example. More covered in the book How the Mighty Fall.
It's a fascinating insight. Overconfidence doesn't only lead to complacency. It also leads to taking big risks that you don't have a hedge for. For every Nokia there's a Circuit City.
Yes, that's interesting too! "Undisciplined pursuit of more".
I think the word "undisciplined" is doing the heavy lifting here, tbh. That's the complacency. The difference between a Henry Singleton / Warren Buffett, and Circuit City.
I didn't think of it that way--that overconfidence is complacency. Maybe you can say they took their growth for granted. I read it as becoming more aggressive, overreacting.
Henry Singleton--thanks for reminding. Some say the greatest capital allocator
Yes, that's why I mentioned Singleton. Some might say "I'm going to buy 150 new companies in the next 5 years" is hubris, but it wasn't, because he was disciplined.
"Overreach" is tbh outcome-driven to an extent. If you're successful, you didn't over-reach :)
Loved the piece, Jitha.
Interesting paths emerge with market leadership. You talk of one where leadership leads to hubris leads to complacency. Nokia and Kodak are poster children. Andy Grove cautions against that. But is there another path that's as common. When Jim Collins found some of the companies covered in Good to Great had spiralled into irreversible decline, he investigated them and came up with a theory that sometimes market leadership leads to hubris leads to the 'undiciplinsd pursuit of more'. Circuit City is one such example. More covered in the book How the Mighty Fall.
It's a fascinating insight. Overconfidence doesn't only lead to complacency. It also leads to taking big risks that you don't have a hedge for. For every Nokia there's a Circuit City.
Yes, that's interesting too! "Undisciplined pursuit of more".
I think the word "undisciplined" is doing the heavy lifting here, tbh. That's the complacency. The difference between a Henry Singleton / Warren Buffett, and Circuit City.
I didn't think of it that way--that overconfidence is complacency. Maybe you can say they took their growth for granted. I read it as becoming more aggressive, overreacting.
Henry Singleton--thanks for reminding. Some say the greatest capital allocator
Yes, that's why I mentioned Singleton. Some might say "I'm going to buy 150 new companies in the next 5 years" is hubris, but it wasn't, because he was disciplined.
"Overreach" is tbh outcome-driven to an extent. If you're successful, you didn't over-reach :)
You're right. Something I'm going to think about. Thanks
*Overreaching* (not overreacting )