3 Great Companies On the Brink of Death
“Time is running out for many formerly great companies!” wrote Gregg Stocker, a management consultant currently advising at Hess Corp., in his 2006 book Avoiding the Corporate Death Spiral. “We have all witnessed/are witnessing the decline of great companies that have been dying for many years.”
For some context, the Center for American Progress summed up and dismissed what happened with the U.S. economy in 2006 with just one word: slowdown. Both gross domestic product and job growth slowed that year compared to 2005, consumer debt rose, and loan defaults and bankruptcies began to edge higher, as if in anticipation of the coming crisis. From Stocker’s point of view, the American business landscape was littered with companies, formerly great or not, trapped in a death spiral.
In retrospect, Stocker’s warning seems prescient. In the coming years, crisis would sweep first through the bloated U.S. financial sector and then through the economy at large. In 2008, the myriad corporate death spirals converged, forming a supercell, a corporate death vortex — that year, according to the Brookings Institution, the rate of business growth fell below the rate of business destruction for the first time since 1978. Business dynamism, essential to net new job creation in every economy, declined in every part of the country. Markets and businesses all around the world felt the sting.
Against this backdrop and agitated by disruptive forces like the spread of mobile Internet and the evolution of international competition, many great companies found themselves sucked into a corporate death spiral. Here’s a look at three of those companies.