History records the rise and fall of countless human communities. From ancient Mesopotamia and the city of Ur through the modern Rust Belt in the US Midwest, communities have boomed and become shining beacons, and then busted back into mediocrity.
The mystery is “Why?” Why does every boom seem to carry in it the seeds of its own return to mediocrity? The people who create these booms are clever in the most practical sense. They are clever enough to create the boom in the first place, but they can't seem to pass on the magic of their success. They can't seem to consistently teach their children or other successors how to be “boomers” like they were.
Consider how different history would be if teaching booming was well understood. If that was the case, today we'd be reading about the centuries of consistent glories that have sprung from Mesopotamia, the Indus Valley, and the Yellow River Valley because these are places where the booming started, and if teaching their methods of success had been possible, they would never have lost their lead. They would be the New York Cities, Londons, and Shanghais of today as they have consistently been since the early BCE's. But this isn't our history so the conclusion must be: Booming is not easy to teach.
I'm far from the first to notice this phenomenon; it’s been an interesting one for historians for a long time. One of the more enduringly famous is Edward Gibbon author of Decline and Fall of the Roman Empire. From the Wiki article: “According to Gibbon, the Roman Empire succumbed to barbarian invasions in large part due to the gradual loss of civic virtue among its citizens. They had become weak, outsourcing their duties to defend their Empire to barbarian mercenaries, who then became so numerous and ingrained that they were able to take over the Empire. Romans, he believed, had become effeminate, unwilling to live a tougher, “manly” military lifestyle. In addition, Gibbon argued that Christianity created a belief that a better life existed after death, which fostered an indifference to the present among Roman citizens, thus sapping their desire to sacrifice for the Empire. He also believed its comparative pacifism tended to hamper the traditional Roman martial spirit. Finally, like other Enlightenment thinkers, Gibbon held in contempt the Middle Ages as a priest-ridden, superstitious, dark-age. It was not until his own age of reason and rational thought, it was believed, that human history could resume its progress.”
This 13 Oct 12 NY Times book review, “The Self-Destruction of the 1 Percent” by Chrystia Freeland, reviews Daron Acemoglu’s and James A. Robinson’s book Why Nations Fail: The Origins of Power, Prosperity, and Poverty. The article describes in fair detail how the Golden Age of Venice in the early 1300's came and went. The thesis is that the plutocrats of Venice cut off their own continued growth by over-controlling the disruptive economy that was at the heart of their growing prosperous in the first place - after growing prosperous for a few decades, the “winners” of the day made up a list of winners, gave that list legal teeth, and that brought on an era of stability which ended the era of growth.
First off, let me note that rises and declines come in many time and size scales. The Roman rise and decline took ten centuries, whereas the Venetian rise and decline took one. Apple Inc.'s first rise took ten years, as did many other high tech leading companies of the 1980's-2000's. Cleveland, my favorite example, boomed from its founding in 1814 through the 1950's. In 1920 it was America's fifth largest city.
That noted, let's break a memorable boom into three phases: boom, peak and post-peak. I will refer to communities, but the same thing can occur in human organizations of any size from family to cultural region.
In the beginning, a soon-to-be-memorable booming community is just one of many. It has lots of competitors and not much is notable about it in its earliest days. Rome was just one of many competing tribes in Italy, Cleveland just one of many thriving cities west of the Appalachians in frontier America, Apple just one of many hopeful startups in Silicon Valley in the 1970's.
As these communities compete, there is a lot of overall growth as well as a weeding-out process that takes place – with some communities growing steadily while others falter. And there is consolidation happening. The winners are picking up people and resources from the falterers. This happens because the winners are able to use resources better than the falterers can. In the high tech environment people move from faltering companies to winning companies because the winners can afford them and the falterers can't.
As this process continues, strings of success continue, and the winners become more noticeable. They become standards in their area of endeavor and a lot more surrounding people pay attention to them. Those who take notice start asking, “What's your secret?” Think of Apple, New York City and the United States. All of these started as no-names, not worthy of much attention. But as they boomed, and boomed longer and more dramatically than their contemporaries, they became rich, famous, and shining examples for others.
While a community is booming a lot of tough choices are being made. They are tough because they are expensive, and scary, and involve doing things differently than they have been done in the past. They involve lots of change in how the community is going to do things in the future.
Using Apple, NYC and the US as examples, here are some tough choices that had to be made by these organizations that turned into huge successes. In all three cases something brand new was being tried - it might work, it might not. If it does work, the community is going to be changed a lot: Apple going with the iPod on Jobs’s second tour, New York City staying open to large scale immigration all through the 19th century, and the United States choosing to completely rewrite its governing document at the Constitutional Convention of 1787. All of these involved tremendous risk and created heated controversies. They all required leaders who had long-term, visionary thinking as well as influential support groups backing them - groups that showed a lot of tolerance for change and risk. Making tough choices such as these is the lifeblood of being a booming community, and making these choices well is what distinguishes the memorable boom community from its lost-in-the-noise competitors. Not all the choices made are right, but more of the important ones are well-chosen and better than competitors’ choices.
At the peak of the boom, however, something changes. As the peak is reached the number of good tough choices made by the booming community declines compared to competitors and the community’s own recent past.
My theory is that the root of this transformation from above-average to average numbers of good tough choices is caused by a change in what community members think is important. A new generation of decision makers emerges and that new generation doesn't like supporting constant tough choices. When there is a change in what the community thinks is important, the leadership will change as well. Historians tend to attribute such changes to the leaders, but my feeling is that a leader is much closer to the community's feelings than that - a leader makes choices that are compatible with what the numerous but less visible decision makers want.
Two examples from the business world: At some point in the growth of many start up companies there is a change in top management from “visionaries” to “managers”. This often happens as they grow from small to medium sized. One such famous change occurred when Steve Jobs left Apple in 1985 and was replaced by John Scully. Apple became less visionary until Jobs returned in 1996 and launched the famously successful iPod and iTunes. In my book, Surfing the High Tech Wave, I write about how this change happened at Novell in 1989, nine years after its startup. The management change at Novell precipitated an “organizational phase shift” (my term, think of changing from water to ice), which changed Novell's direction of development.
My father, Roger Bourke White , a successful high tech business founder of the 1950’s, told me about a business truism he learned: When a company grows to the point that it can move into its own building, as in, one built for it, the company culture will change and that change may be towards complacency. Citing this truism, older and wiser managers caution younger managers, of the boom company, to be on their toes as the move happens. Changing management and changing buildings can be times when a peak is reached for the company and its boom ends.
So the peak is reached when many members of the community decide that the constant tough choices that it took to make the boom happen, and are necessary to sustain it, are no longer worth the effort.
This change of thinking is the “seed” that brings on the end of the boom and begins the post-peak era.
Historians bemoan them but post-peak times are actually fairly comfortable times for most community members. At first there is a sense of relief from the constant change and uncertainty that are part and parcel of boom times, and that relief is followed by comfortable complacency. Rules and regulations are enacted and life becomes much more predictable - people know their places. The article about Venice mentioned above talks at length about this happening in Venetian society. I witnessed it personally as I was growing up in Cleveland in the 1960's where “being fair” became a much more important part of day-to-day political and business decision making than making things work better than they had before. One example of this was Cleveland electing Carl Stokes as mayor in 1967. Stokes was the first black mayor of a major US city. Another was setting up prescriptive zoning laws about what kinds of buildings could be built and commercial activities could take place along the various streets of the city.
When the peak comes, lots of people support this change to greater harmony, but the ambitious ones don't. They chafe. If they can't continue to operate in a community that supports tough booming choices, they will leave and look for better opportunities. My father responded to the zoning changes by relocating his company’s factory to a Cleveland suburb when the next expansion time came. Many of the ambitious of Cleveland headed for California and some helped create the Silicon Valley boom.
In most cases the people who stay in the post-peak community don't mind that glory is passing them by. Their day-to-day lives are comfortable ones. And so, the glory moves on. It goes to some other community that is still competing and still willing to support the tough choices that come with booming change. (It is worthy of noting that coming back to supporting boom sometimes happens. Apple is a company that came back to boom supporting when Jobs came back. New York and London are cities that have consistently come back to supporting boom. All is not necessarily lost when a community goes post-peak.)
Booming is exciting and rewarding. But it’s not easy, and the rewards are not necessarily those that the community values the most. Famous booms happen when a community supports tough choices and those choices turn out to be consistently good ones.
But boom times are both scary and full of change. They are times when people are getting rich, but those who are getting rich will often be different from who is already rich. (“The rich get richer” is a half-truth. There will be lots of “new rich” as well.) When a decision-making generation takes over that doesn't like all the tough choices and scary changes, a peak happens. The way things are done changes to a more predictable style, and this style becomes a comfortable one for a lot of community members. Fairness often becomes the important theme in a post boom community.
If the community doesn't reverse itself, and support the tough choices again, then the ambitious will move on and take their ambition to some other community that is successfully supporting boom, and the community left behind will comfortably move into mediocrity.