By Jon KrausharCommunications Consultant

Management guru Jim Collins has a new business book out that should be a must-read for both Democrats and Republicans because its findings also apply to politics and politicians.

In "How the Mighty Fall," Collins describes five stages that move businesses from feeling flush with success to ignoring the warning signs that lead to failure.

Collins' five stages are:

  1. Hubris born of success
  2. Undisciplined pursuit of more
  3. Denial of risk and peril
  4. Grasping for salvation with a quick, big solution
  5. Capitulation to irrelevance or death
White House

Organizations (including political parties) risk going into a death spiral if, in flailing around to fix themselves, they act rashly and frantically rather than thoughtfully and deliberately. The Republicans are just at this delicate point. And, as Collins warns, the leaders of Stage 4 organizations "...need to get back to a calm, clear-headed, and focused approach. If you want to reverse decline, be rigorous about what notto do." [Emphasis added.]

Republicans are struggling to configure a political Rubik's Cube. They are trying to align a return to their core values, beliefs and competencies while faced with changing demographics in America that demands that they widen their appeal beyond the base that used to bring them victory. No longer are there enough older, white, right-of-center voters for Republicans to overcome a rising number of younger, minority (especially Hispanic), left-of-center Democrats--joined by independent voters.

Having retaken the White House and with a near veto-proof and filibuster-proof majority in Congress, Democrats are now going through the exhilaration of Collins' first three stages. The Democrats' danger, to put Collins into a political context, is that, "... internal warning signs begin to mount, yet external results remain strong enough to 'explain away' disturbing data or to suggest that the difficulties are 'temporary' or 'cyclic' or 'not that bad,' and 'nothing is fundamentally wrong.'"

Last Friday, the Dow moved for the first time this year into positive territory since President Obama's election (the stocks on the Dow have since dropped and the stock market is still volatile, of course). Obama's personal approval ratings remain high, and a credulous mainstream news media keeps propping up Obama's notion that recovery beckons despite massive indebtedness and spending.

Collins adds that, "In Stage 3 [denial], leaders discount negative data, amplify positive data, and put a positive spin on ambiguous data." In this category put Obama's unsupportable claim that his stimulus spending has "saved or created" 150,000 jobs and that additional stimulus spending will save or create 450,000 more jobs in his second 100 days in office. Economists agree that there is simply no way to prove this assertion.

The Democrats, true to Collins' model in Stage 3 are showing this behavior: "Those in power start to blame external factors [George W. Bush, Dick Cheney, Rush Limbaugh and the "radical right"] for setbacks rather than accept responsibility. The vigorous, fact-based dialogue that characterizes high-performance teams dwindles or disappears altogether. When those in power begin to imperil the enterprise by taking outsize risks and acting in a way that denies the consequences of those risks, they are headed straight for Stage 4 [grasping]." For the Democrats this points to spending, debt, nationalization, federalization and taxation schemes for businesses, health care, energy, education and the environment--Big Government on steroids.

In Stage 5 (capitulation), financial strength and spirit are sapped to such an extent that "great nations, great companies, great social institutions and great individuals" fail, fall and even die.

Neither political party is at Stage 5. But Collins' admonition applies to both parties--in particular to Republicans, who are attempting a turnaround in Stage 4 (grasping). "Be willing to evolve into an entirely different portfolio of activities, even to the point of zero overlap with what you do today, but never give up on the principles that define your culture. Be willing to embrace loss, to endure pain, to temporarily lose freedoms, but never give up faith in your ability to prevail. Be willing to form alliances with former adversaries, to accept necessary compromise, but never--ever--give up on your core values."

Will Democrats lurch boldly and blindly into Stage 4 after overreaching and arrogance that Collins captures with the following mindset: "We deserve success because we're so good/so smart/so innovative/so amazing." And, "We're so great, we can do anything!"

Will Republicans confront their weaknesses and achieve a revival? Can they hold on to their principles even as they come up with creative policies that produce solutions for the concerns of people--especially those not currently in their camp?

With Collins, here is where hope lies: "The path out of darkness begins with those exasperatingly persistent individuals who are constitutionally incapable of capitulation. It's one thing to suffer a staggering defeat--as will likely happen to every enduring business and social enterprise at some point in its history--and entirely another to give up on the values and aspirations that make the protracted struggle worthwhile. Failure is not so much a physical state as a state of mind; success is falling down--and getting up one more time--without end."

Communications consultant Jon Kraushar is at www.jonkraushar.net.

Communications consultant Jon Kraushar is at www.jonkraushar.net. He is a consultant to corporate and political leaders including Steve Forbes.