I've come to see institutional decline like a staged disease: harder to detect but easier to cure in the early stages, easier to detect but harder to cure in the later stages. An institution can look strong on the outside but already be sick on the inside, dangerously on the cusp of a precipitous fall.
David Mays has summarized Jim Collins, How the Mighty Fall. The five stages on the road to ruin:
1. Hubris Born of Success: Great enterprises can become insulated by success … and lose sight of the true underlying factors that created success in the first place.
2. Undisciplined Pursuit of More: Companies in stage 2 may overreach by making undisciplined leaps into areas where they cannot be great or growing faster than their ability to fill key spots with capable people.
3. Denial of Risk and Peril: Companies in stage 3 begin to discount or explain away disturbing data, blame outside forces, and take outsized risks without giving enough weight to the consequences.
4. Grasping for Salvation: Instead of getting back to the disciplines that made them great, companies take dramatic action, seeking a silver bullet solution.
5. Capitulation to Irrelevance or Death: Some companies move quickly through the stages while others take years or decades.
Read the complete summary.