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Jared Diamond’s brilliant Collapse: How Societies Choose to Fail or Succeed analyzes five ancient societies that imploded horribly, attempting to find insights useful for the modern, increasingly interconnected world.

Diamond identified five factors that lead to collapse. Always, the unsustainable overuse of environmental resources was one, and the society’s failure to appropriately respond to early symptoms was another. They were sometimes coupled with climate change, the loss of a critical trading partner, or the presence of hostile neighbors — singly or in combination.

Businesses being societies too, I thought it would be worthwhile trying to apply Diamond’s conclusions to the world of business (did you wonder how I was going to justify the tax write-off for this book?).

Unsustainable overuse of environmental resources

Easter Island was the home of a thriving society that relied heavily on its extensive forests. Diamond asks, “What did the Easter Islander who cut down the last palm tree say while he was doing it? Like modern loggers, did he shout ‘Jobs, not trees!’? Or: ‘Technology will solve our problems, never fear, we’ll find a substitute for wood’? Or: ‘We don’t have proof that there aren’t palm somewhere else on Easter, we need more research, your proposed ban on logging is premature and driven by fear-mongering’?”

Now that you’re either offended or delighted (depending on your political proclivities), take a step back and apply the question, not to global warming or depletion of the world’s oil supply, but to the company in which you work. In business, the unsustainable use of environmental resources can take several forms.

For forest products and mining companies it’s obvious, and part of the strategic plan (I hope!). It’s just as real for companies that build growth on information technology that’s inexpensive but can’t scale. When too many customers overload it, the company gets a bad reputation and its customer base collapses.

It also fits the U. S. steel industry, which collapsed in the 1970s from failing to maintain and modernize its factories.

Climate change

One reason the Norse colony on Greenland failed is that the Norse settled Greenland during an abnormally warm and hospitable period. They based their society on the expectation that it would continue. When it turned cold, they were over-extended for the new conditions.

How many businesses only work in a hospitable economic climate, and collapse when it cools?

Loss of a critical trading partner

Pitcairn and Henderson islands hosted thriving societies for centuries. They depended on trade with each other and another island, Mangareva. For complex reasons the trade stopped and both societies died, unable to sustain themselves without it.

I’m reminded of the advertising agency responsible for the original “Speedy Alka Seltzer” campaign. The agency lost the Alka Seltzer account and failed. I’ve known systems integrators that suffered similar fates.

Companies that have outsourced IT, which has a high switching cost and lengthy transition, are also vulnerable. Imagine how many would die if EDS (for example) were to close its doors.

Presence of hostile neighbors

Hostile neighbors didn’t cause any of the collapses Diamond documented, but contributed to some. In Norse Greenland, for example, the Norse worked hard to make their relationship with the Inuit hostile, and persistently failed to learn anything from them about how to build a sustainable society in Greenland’s difficult environment. When the climate cooled, the Inuit were attackers instead of trading partners, contributing to the elimination of the always-small Norse population.

More broadly, history is filled with examples of societies that failed to anticipate the possibility of invasion: The Aztecs, for example, had no idea Spain even existed. A business parallel: How many hardware store chains failed because they never envisioned the type of competition that Home Depot and Lowes would create, and could not figure out how to respond to it?

Not to mention what’s currently happening to Red Hat.

Societal response

Every Collapse is a story of unsustainable growth — growth built on habits that led to the over-harvesting of one or more resources, reducing productivity while the society’s success and population growth increased demand. All are also stories of clinging to invalid assumptions — a failure to adapt to the necessities of the situation, often because of leaders who were distracted by the need to maintain their levels of privilege and demonstrations of prestige.

Some other societies — Iceland, Japan and New Guinea, for example — did develop sustainable societal solutions. The small societies worked “bottom-up.” The larger ones were driven by leaders who took a long-term perspective.

The business parallels are too obvious to require explanation.

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|In: Industry Commentary|Last Updated:

Jared Diamond’s Collapse: How societies choose to fail or succeed is arguably the most important book of the decade. Also the most depressing. It’s about the factors that caused five past societies to collapse (hence the title) and their application to modern societies, including our own. His account avoids both the facile (because people are stupid, rapacious, short-sighted, or insert your preferred character flaw here) and the one dimensional.

Try this: Monday and Wednesday read Collapse. Tuesday and Thursday read the best book you can find from the business press. On Friday you’ll recognize two undeniable facts. The first is the difference between real genius and the limited imitation that passes for it in the world of commerce.

The second is that, compared to actual science, management science is little more than unsupported hand-waving.

Diamond could explain the collapse of (for example) Anasazi society with considerable confidence because he had access to knowledge amassed over decades by dozens of patient, dedicated researchers in (to provide a partial list): archaeology, anthropology, physics (for radiocarbon dating), dendrochronology, ethology (for the analysis of packrat middens), and palynology.

When, in contrast, Jim Collins studied the success of his Good to Great companies and its absence in their rivals, the only information available to him beyond the interviews he and his team conducted was a few decades of stock prices and financial statements.

Why is that?

Palynology — one of the intellectual resources Diamond mined — isn’t what you might call a “money field.” Nobody becomes wealthy from the painstaking analysis of pollen samples in lakebed cores. At best, they make a modest living from their salaries as college professors, with research funding measured in tens of thousands of dollars, all spent to pay for travel, equipment, and the austere lifestyle “enjoyed” by graduate students.

The world of commerce generates so much more money that a single CEO like Bill McGuire, until recently of United Healthcare, could amass a fortune that exceeds the total annual spending in all of the aforementioned fields, even excluding what he got from backdated stock options.

We know much more about paleobotany than we do about what leads to business success. With so much more money at stake, can’t we do better than the Harvard Business Review?

Apparently not, and the reason isn’t difficult to figure out.

Imagine you’re a high-SAT sort of person who is fascinated by how the universe came to be. Your career choices are clear. You’ll become an astrophysicist, or a string theorist, or a quantum mechanic (the person you call when your quantum breaks down). It’s the only way to make a living while doing what you want to do with your life.

Now imagine you’re an equally bright individual who is fascinated by what it is that makes businesses successful. What’s your career? Management, of course, because if that’s your interest, you’re going to want to (a) put your ideas into practice; and (b) make money doing it.

That isn’t surprising. What’s somewhat more surprising is that the business world hasn’t invested more in business research, to make the pursuit of what is called “management science” but is really “management strongly held, thinly supported opinions” more attractive to the type of individual who could help sort out what works from what doesn’t.

I don’t know why this is. Neither does anyone else. My hypothesis is that nobody really wants to know.

If you were on a board of directors and business theory was as solid as quantum electrodynamics, you’d either have to understand and apply the knowledge, or else resign and not get paid for the dozen days of work each year that boards of directors generally work in exchange for their salaries.

If you were a CEO, the board would require you to have and apply this knowledge or your multi-million-dollar compensation package would go to someone who did and could.

If you were a venture capitalist, you wouldn’t invest in the acquisition of knowledge that might benefit the next generation of venture capitalists and the generation after that, but not you.

And if you’re any of the above, there’s a decent chance you have, shall we say, a healthy ego and strongly held opinions on the subject of what leads to business success. The absence of solid knowledge makes holding your strongly held opinions a lot safer.

Because if it existed, boards of directors, CEOs and venture capitalists would be held to the standards usually reserved for some who report to those who report to those who report to them:

People who learn and apply what scientists discover, like architects, engineers, and IT professionals.

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