Why Large Companies Stall Out and Die

Pilots know all about stalls. This is the point where the plane's air speed is reduced enough that it can no longer generate lift, and falls out of the sky. But most planes are equipped with stall alarms, which sound as the critical low speed is reached. Point the nose of the aircraft downward to increase your speed, and you live to fly another day.

The new book Stall Points looks at how companies can likewise stall. Studying 50 corporations, authors Matthew Olson and and Derek van Bever discovered that 87 percent of them hit stall points, a time where previous years of profit growth suddenly flattens or diminishes. Less than half were able to recover to previous growth rates.

The problem: The stalled companies had forgotten how to innovate, concentrating too much on ever-smaller niche opportunities, brand extensions, and ideas that returned little bang for the buck.

The authors say you can see these stalls coming and do something about it -- the equivalent of a stall alarm in the airplane.

Harvard Business School professor James Heskett is hosting an online forum on this very subject of growth and innovation. He asks:

"All of the companies in the sample had reached substantial size at the time they stalled, suggesting that organization size must play a role in this mix of phenomena that includes 'innovation management breakdown.' But why do these phenomena occur, especially given what we generally assume to be the availability of superior resources to support innovative activities in larger organizations?"

Have the answer? Hop over to HBS Working Knowledge to add your insight, then travel back here and give us your best examples of companies that haven't stalled with growth, companies like Apple. What are their secrets to sustained success?