Year-end sales for 2000 were $4.6 billion — down more than one-third from four years before. The company’s market share plummeted even more — from 31% in 1990 to 14% by 2000. Since then, Levi’s has tried and tried to reinvent itself — but although the company has recovered somewhat, it has yet to return to its former glory.

Here’s the pattern from Stall Points’ analysis of Fortune 100 and Global 100 companies that experienced stalls between 1955 and 2006 – after record growth, sales don’t just drop off, they drop “like a stone”.

 

“Like Levi Strauss, most organsations actually accelerate into a stall,” says Stall Points. “When the momentum is lost, it’s as if the props have been knocked out from under their corporate strategy.”

 

Surprisingly, the reason had to less to do with external factors than factors within management’s control.

 

So what did the few companies that Stall Points found had successfully reinvented and continued to reinvent themselves have in common?

 

The chart below from the article ‘Throw Your Life a Curve Ball’ by Whitney Johnson in the Harvard Business Review shows how businesses as well as careers work in waves, or ‘S Curves’. An S Curve describes how business performance tends to slow down after an initial growth phase. It’s called stalling.

 

How do they do that when, as Stall Points found, stalls often occur right after periods of record sales?

 

“They tend to broaden their focus beyond the financial S curve,” say the authors, “and manage to three much shorter but vitally important hidden S curves—tracking the basis of competition in their industry, renewing their capabilities, and nurturing a ready supply of talent. In essence, they turn conventional wisdom on its head and learn to focus on fixing what doesn’t yet appear to be broken.”

 

What causes stalling? 

There’s no shortage of explanations—from deviating from the core business to failing to respond to competition and changing tastes and fashions.

 

One of the causes of stalling is, of course, disruption. Although the word means a disturbance or interruption in an industry, it’s much more than that, according to Horace Dediu in his article ‘What Is Disruption and How Can It Be Harnessed?’

“The nominal definition I work with is that disruption is the ‘transfer of wealth in an industry from dominant incumbents to disadvantaged entrants’,” he says.