In technology companies, when the employees disappear, the spiral begins: The company declines in value, the best employees leave, the company declines in value, the best employees leave. Spirals are extremely difficult to reverse.

I have my own theory about why decline happens at companies like IBM or Microsoft. The company does a great job, innovates and becomes a monopoly or close to it in some field, and then the quality of the product becomes less important. The company starts valuing the great salesmen, because they’re the ones who can move the needle on revenues, not the product engineers and designers. So the salespeople end up running the company.

The most common reason once-great companies and projects go sideways is not technological or business disruption, it's that they eventually stop caring.

Fascinatingly, as companies begin to struggle, the third category always seems to grow much faster than the first. In addition, the sudden wave of “semi-performance-related attrition” usually happens in companies that claim to have a “super-high talent bar.” How do all these superstar employees suddenly go from great to crap?

When things go poorly, all those reasons become reasons to leave. In fact, the only thing that keeps an employee at a company when things go horribly wrong — other than needing a job — is that she likes her job.

When things go well, the reasons to stay at a company are many: Your career path is wide open because as the company grows lots of interesting jobs naturally open up. Your friends and family think you are a genius for choosing to work at the “it” company before anyone else knew it was “it.” Your résumé gets stronger by working at a blue-chip company in its heyday. Oh, and you are getting rich. When things go poorly, all those reasons become reasons to leave. In fact, the only thing that keeps an employee at a company when things go horribly wrong — other than needing a job — is that she likes her job.

Bad companies are destroyed by crisis, Good companies survive them, Great companies are improved by them.

The technological changes that damage established companies are usually not radically new or difficult from a technological point of view. They do, however, have two important characteristics: First, they typically present a different package of performance attributes—ones that, at least at the outset, are not valued by existing customers. Second, the performance attributes that existing customers do value improve at such a rapid rate that the new technology can later invade those established markets.

Any existing organization, whether a business, a church, a labor union, or a hospital, goes down fast if it does not innovate. Conversely, any new organization, whether a business, a church, a labor union, or a hospital, collapses if it does not manage. Not to innovate is the single largest reason for the decline of existing organizations. Not to know how to manage is the single largest reason for the failure of new ventures.

Companies that go bankrupt are a danger to healthy competition. They are able to make their creditors and shareholders pay for their losses and bad management and then to start anew with assets that they essentially got for free, quite unlike the competition that has not gone bankrupt, who have to pay full price for their assets, but quite similar to how their customers have wanted their products, for too little money.

Companies die because their managers focus on the economic activity of producing goods and services, and they forget that their organizations' true nature is that of a community of humans.

Often, firms that were successful start to fail after a successful CEO departs, largely because they spent little time mentoring the successor in making successful decisions. ... I think we are seeing this play out at Apple at the moment ...

morale at the company was undeniably higher, and turnover had dropped markedly. But Jeff was adamant that it shouldn't go away completely: “If no one is leaving or being asked to leave, then we're probably not truly living these values.

A company surrenders today's businesses when it gets smaller faster than it gets better. A company surrenders tomorrow's businesses when it gets better without getting different.