JAN. 22, 2010 – Business guru Jim Collins, the bestselling writer who picks apart successful companies for signs of strength, concludes that all businesses are vulnerable to downfalls, no matter how great they’ve been in the past.

“If companies such as Zenith and A&P, once the unquestioned champions in their fields, can plummet from great to irrelevant, then we should be wary about our own success,” he wrote last year in Business Week in a summary of his latest book, “How the Mighty Fall.” “There is no law of nature that the most powerful will inevitably remain at the top. Anyone can fall, and most eventually do.”

Pondering these conclusions, let’s see whether they can apply to South Carolina’s state government.

Collins and his team of researchers developed a five-stage list of warning signs that a company was headed toward failure. Interestingly, most companies don’t recognize they have a big problem until they’re in Stage 4. And by the final stage, it often is too late.

• Stage 1: Arrogance. Collins says when a company starts to regard its success as an entitlement and loses sight of why it was successful in the first place, it is poised for decline.
• Stage 2: Wanting more. Arrogance often leads companies to the “undisciplined pursuit of more,” an acquisitiveness that can lead to undisciplined growth and leaps into areas that might not fit.
• Stage 3: Denial. When core businesses are being overlooked, warning signs may mount, but be ignored. “Those in power start to blame external factors for setbacks rather than accept responsibility.”
• Stage 4: Grasping at straws. When things start to go bad, companies often grasp at straws for salvation, which can start a big downward spiral. “The very moment when we need to take calm, deliberative action, we run the risk of doing the exact opposite and bringing about the very outcomes we most fear.”
• Stage 5: Atrophy. If a company stays in Stage 4 too long without turning it around, it faces irrelevance or death, Collins says. To get out of this warning stage is tough, but takes leaders “who retain faith that they can find a way to prevail in pursuit of a cause larger than mere survival.”

With this as a backdrop, consider what’s been going on in South Carolina for the last few years:

• A now-tainted governor has been battling with leaders of the legislature in his own party to the point that he is virtually ignored on policy issues.
• The legislature, faced with more than $1.5 billion in budget cuts from just two years ago, forms a big tax study commission to revamp how the state generates revenue. But just as the study is due, its report is put off until after the election. While leaders say they need more time to do a good job – a perfectly valid point because the problem is so big – it also looks like they’re putting off doing something for another year while doing nothing now. Fiddling while Rome burns?
• Lawmakers voted for a huge property tax relief measure for taxpayers because they listened to squeaky wheels. The ill-conceived measure has been roundly criticized by the business community as being short-sighted because it shifted the burden to commercial businesses.

The lessons for state government that stem from Collins’s business analysis are that it is time for state lawmakers to be leaders and to accept responsibility for what’s happened. They need to take considered action to avoid problems like the property tax swap, but they can’t sit on their fingers all year.

With unemployment at 12 percent, now is the time for action, not stasis. Taxpayers deserve leadership from elected officials, not just more of the same wishy-washiness. There’s no need for state government to atrophy. Our state’s elected leaders need to stop partisan bickering and remember that they’re in office for the good of the state.

Andy Brack is publisher of Statehouse Report.com, where this column first appeared.