At any given moment, about 5%–7% of companies either are in free fall or are about to be. Free fall is a crisis of obsolescence and decline that can happen at any point in a company’s life cycle, but most often it affects maturing incumbents whose business model has come under competitive attack from insurgents or is no longer viable in a changing market. And here’s a sobering fact: Only about 10%–15% of those companies will ever pull out of it. Of those who do, about half have to fundamentally redefine at least a part of their core business in order to save themselves. We set out to understand why once successful companies enter these deadly tailspins, and found that the root causes are usually internal. We also found that free-fall situations are responsible for some of the largest swings in value — not only down but also up. If handled properly, free fall represents an enormous opportunity. Other companies can do the same. After studying and working with hundreds of companies in free fall, we’ve identified concrete steps that leadership teams can take to engineer successful turnarounds and transformations.