Customer Reviews

Revival of the Fittest: Why Good Companies Go Bad and How Great Managers Remake Them

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This is one of several business books whose subtitle really is accurate: "Why Good Companies Go Bad and How Great Managers Remake Them." The same can be said of a few other business books which are (to varying degrees) relevant to Sull's central thesis. For example, Jim Collins' Built to Last: Successful Habits of Visionary Companies and especially Good to Great: Why Some Companies Make the Leap...and Others Don't. In fact, I wish I had read Sull's book before reading Sydney Finkelstein's Why Smart Executives Fail: And What You Can Learn from Their Mistakes, Michael Craig's The 50 Worst (and Best) Business Deals of All Time, and Robert Sobel's When Giants Stumble: Classic Business Blunders and How to Avoid Them.

According to Sull, managers make commitments which fall within three categories: commitments to strategic frames, resources, processes, relationships, and values which define an organization (e.g. Wal-Mart), commitments such as those to budget agreements, job assignments, customer guarantees, and investments which reinforce an organization (e.g. Southwest Airlines), and commitments required by shifts in the competitive marketplace which transform an organization (e.g. IBM).

Here's where it gets interesting. After years of rigorous and extensive research, Sull learned that commitments can be "double-edged swords" in that they can provide a sustainable competitive advantage as well as organizational benefits as when a pledge to achieve a given goal backed up with action creates and mobilizes energy among employees and induces them to persevere even when the outcome is uncertain. However, commitments can also limit an organization's flexibility in the present. "By focusing on one way of developing new products, for example, a company may excel at innovation in one domain but become less competent in other technologies."

Sull examines dozens of companies in which original (defining) commitments had been reaffirmed (thereby sustained) despite internal as well as external developments which rendered such commitments obsolete and even counter-productive, if not destructive. Both Firestone and Goodyear were caught in what Sull calls "The Active Inertia Trap." Goodyear escaped because its managers made commitments which transformed the organization; Firestone's managers did not. Nor did the managers at other previously great companies such as Digital Equipment organization, Data General, and Wang Laboratories. Although IBM encountered many of the same challenges as did they in its own competitive marketplace, Louis Gerstner and his associates made certain commitments which transformed their company.

For various reasons indicated, Sull has made a substantial and unique contribution to our understanding of corporate and managerial failure but also to our understanding of how some managers in some organizations effectively used one of the "sword's" edges to cut through what Jim O'Toole has characterized as "the ideology of comfort and the tyranny of custom" and thereby freed those organizations from "The Active Inertia Trap."

F. Scott Fitzgerald wrote in 1940 that there are no second acts in American Lives. Professor Sull's witty, crystalline prose in Revival of the Fittest offers a rebuttal. Sull's case-studies of corporate rebounds and managerial reinventions provides a global array of second acts.

Contrary to the following review, Sull's wise reflections, his acute hindsight, on what separates mid-course corporate successes from failures is full of insights, though not quick-fixes or one-size-fits-all makeovers.

Rather, Sull provides an array of diagnostic tools for managers, helping them isolate the "active inertia"--a term he has coined and that is gaining currency among business theorists--and sift through the vast horizon of possibilities and risks managers in crisis must face.

A multi-disciplinary work with a global perspective, Revival of the Fittest is both informative and potentially transforming.

This is an excellent, pragmatic, and thoroughly engaging book on how successful companies can find themselves at risk for failure due to what Sull coins as "active inertia". This concept is illustrated with a great set of corporate examples which are different from the ones used in many other business texts -- and this is a key feature which sets the book apart from its competitors. Sull walks the reader through some very useable steps for how companies can transform themselves and avert obsolescence. A great book, greatly written.

I was in the author's class 11 years ago at Harvard Business School when he was getting his degree. The high quality of Don's book Revival of the Fittest is no surprise - his insights were always superior (deep, relevant, and entertaining). No one else came close.

Revival of the Fittest is built on persuasive and powerful arguments that become actionable through the mechanisms/exercises he identifies.

I'm passing the book to each member of my company's executive team - I've said that it's a must read.

I hope that the incumbent set in our industry doesn't read this. Applause for their "active inertia" while the sharp blade of significant innovation gets them in the soft underbelly. So much of the framework was relevant even for early stage organizations like ours - recognizing the active inertia enables us to take greater chances in seeking collaborative arrangements with these potential competitors. Revival of the Fittest and other recent research-based books including Creative Destruction demonstrate that change in industry after industry comes from outside the firm - and significant innovation comes from the margin of the industry. I particularly enjoyed learning how the "success formula" for an organization often mutates into blinders and millstones - early insights and truths become shibboleths.

I read business books constantly - this one is a keeper!

At some point in a great battle between good and evil, at least as portrayed in pop culture, we can expect the villain to gloatingly assert: "It is your very goodness that will make you weak and fail." Professor Donald Sull is no super-villain but makes a similar, though rather more developed, claim about the best businesses. Rather than blaming the failure of a previously excellent company on incompetence, corruption, laziness, or lack of imagination, Sull locates the problem of stumbling giants in active inertia: the tendency of management to respond to disruptive changes by accelerating activities that succeeded in the past. In Revival of the Fittest, Sull analyzes this barrier and helps managers tackle the demanding task of overcoming it.

To overcome active inertia, Sull recommends neither evolutionary nor revolutionary change typically prescribed for faltering champions. Instead he explains the power of transforming commitments. Commitments matters, he explains, in that they both enable effective management and can disable it when they no longer fit what is needed. Managers select, make, honor, and less often remake commitments or binding actions by investing capital, making personnel decisions, exiting a business, making public promises, making public promises, forging relationships with resource providers, writing contracts, or by manipulating information. Commitments are a powerful tool for creating the desired future but they also become cognitive, cultural, and structural shackles that prevent a company from changing - even when the need to change is clear to all.

Companies take shape at the beginning of the "life cycle of commitments" through defining commitments consisting of strategic frames, resources, processes, relationships, and values. The character of the organization hardens over time as managers make reinforcing commitments large and small. The best companies develop a "success formula" that becomes the envy of competitors and the source of best practices for writers and consultants. This story takes a tragic turn when, eventually and inevitably, a gap opens and widens between the nature of the company and the business environment. The only way out - if one exists at all - is through transforming commitments that require boldness, prudence, and tenacity.

Sull uses pairs of companies to show how some have spiraled down while others successfully made and kept their transforming commitments. IBM's justly famous transformation under Gerstner exemplifies the latter, though this is only one of a wide range of illuminating examples in the book. Sull casts light on the active inertia trap which can arise from the basis of any of the original defining commitments. He follows this with eight risk factors to check for and some diagnostic tests to administer. If transforming commitments fit your situation, you must then choose the right anchor. This may be a new strategic frame but may also be new resources, processes, relationships, or values. The right anchor needs to be worked on by the right person who gives the transforming commitments traction by making commitments credible, clear, and courageous.

Since commitments are powerful tools, Sull's cautious advice includes an unflinching look at seven common mistakes that can lead transformation efforts off-track. Neither does Sull allow managers to anticipate the benefits without also appreciating the personal costs. The book does not try to delve deeply into every relevant aspect of each stage, allow the book to convey vital points while remaining slim enough for busy executives to actually read.

Like many books, Revival of the Fittest suggests that how firms cope with change determines their fate. Don Sull argues that because of the landscape in which firms operate changes, in order to stay competitive, their strategies and commitments should also change. However, managers have a tendency to adhere to what have brought them success. This often results in what Sull terms "active inertia" where managers do more of what worked in the past but irrelevant in a new environment.

Unlike other books, Revival of the Fittest is packed with practical advices on how to manage change: from how to choose transforming commitments to what are the considerations for shareholders. This book does not tell readers what to do as the author realizes that there are no one-size-fits-all solutions but rather gives guidance to those who want to make change happen. What is most interesting to me is his method of pairing firms in the same industry who had been affected by the same change and yet one prospered and the other failed. This gives an idea on what constitutes success and failures under different circumstances. The pairs include many firms across the globe in different industries, such as: Goodyear versus Firestone (U.S.A.), Samsung versus Daewoo (Korea) and Lloyds TSB versus National Westminster. (U.K.).

This is a book about how to transform an organization and more. In short, what one learns from the book is not only about managerial commitments but also personal ones. The book closes with three simple questions about commitment: (1) what is the right thing to do?, (2) what hinders you? and (3) why wait?.

Donald Sull is Associate Professor of Management at London Business School.

Leadership is about making commitments and seeing them through.

There are two dangers with commitment making. The first danger is that the commitments fail. Sull argues that the second danger is that the commitment succeeds. A series of successful commitments can be bundled up in what Sull calls a company's success formula. In an every changing world, leaders must guard against being prisoners of their own success formulas.

The most interesting part of this book is his creative pairing of similar companies in similar industries who took different paths of either honoring or destroying their success formulas. The stories of Firestone versus Goodyear in the tire industry have extraordinary value for us today and are well worth reading.

What does this mean for those who serve on Boards of Directors?

BOARDS WANT TO HIRE CHAMPIONS

Boards want to hire champions. Champions are bred to be decisive and self-confident. They love making commitments and seeing them through.

As Donald Sull argues, when champions make commitments you have a double edge problem. It is predictable that champions will have difficulty admitting that their commitments no longer fit the times. Indeed this trait is so predictable I called it the LBJ Effect in honor of the American President who escalated commitment to a failing war once it became clear that the war could not be won.

LESSONS FOR REVIVAL OF THE FITTEST FOR BOARDS OF DIRECTORS.

1. Good CEOs are champions. Champions believe in themselves and their commitments.

2. In the absence of a strong countervailing force, some CEO Champions will rigidly hold on to what Sull calls the success formula when it ought to be thrown away. We even take the more extreme position that in the absence of a strong countervailing force, champions will pour more resources into an inappropriate success formula.

3. This strong countervailing force is called the Board of Directors.

SETTING THE RIGHT CULTURAL TONE

At a cultural level, the LBJ Effect can be fought by the board insisting on a culture where it is acceptable to fail, to learn from mistakes, and to try again. It is a culture where "mid course correction" is not necessarily a sin and "stick-to-itness" is not necessarily a virtue.

Perhaps the most famous example of a corporate culture that supports this notion is Johnson & Johnson. On the desks of most executives within the J&J organization is a framed one-page document called, "Our Credo."

The J&J Credo is a series of principles that govern management decisions:

When there was a concern that a batch of Tylenol had been poisoned, a division manager unilaterally ordered all bottles of Tylenol off the U.S. market. That action was taken without consulting corporate headquarters. It was justified to management on the basis of the credo. Senior management at J&J backed the local manager and the employees were enormously proud of it.

This use of a corporate values statement is not unique at J&J. We have consulted at other companies with credos. And some of these companies had problems as severe as the Tylenol crisis. But in no other company would a middle level manager make a major decision based on an esoteric company principle. With respect to failure, the J&J Credo states:

"Employees must feel free to make suggestions and complaints....We must experiment with new ideas. Research must be carried on, innovative programs developed, and mistakes paid for."

In other words, failure is not "bad." It is part of the necessary price for being innovative.

Board Influencing Tactics

Boards seeking to influence CEOs to make mid-course corrections have a semantic problem. Leaders must be convinced that mid-course corrections will not be labeled as "indecisive" or "waffling." Such negative words are inconsistent with a positive sense of self. On the other hand, adaptability in the face of changing circumstances is consistent with a positive self-concept.

Some CEOs deride Sarbanes Oxley as an example of legislative overkill. They say that it will move the board/CEO relationship into an adversarial stance. Such a stance will only harm shareholders and waste resources. Sull's perspective is powerful people are only too human. And they are all too human in predictable ways.

A valid checks and balances system should keeps the LBJ Effect from getting out of hand and help companies decide when it is time to destroy their own success formula before competition does it for them. Maryanne Peabody and Laurence J. Stybel,Ed.D. are co-founders of Board Options, Inc. Its mission is to increase Board effectiveness through the application of practical behavioral Science.

Most business books that tackle the lofty goals such as organizational change, transformation strategy and leadership lessons end up boiling the ocean. By trying to be all gospel to every sort of manager, such books fail in keeping the attention of the reader, or if they do so, they utilize wild-eyed case studies and pithy advice that is neither relevant or actionable in today's world. Not so in "Revival of the Fittest," by Don Sull.

Professor Sull's work is ground-breaking in its simplicity: take a stand, take the consequences. Knowing what you are committing to as an organization is as important as knowing why you are committing to it. His approach and his reasoning stand the test of the time-tested, out-of-the-box analogy as well. Sull presents a construct that works as well for a title that might read: "Why Good Marriages Go Bad and How Great Spouses Remake Them." In essence this is Sull's brilliance, in taking a complex, strategic issue and distilling it down to its core. Sull keeps you engaged throughout the distillation column in his succint writing style.

This book is a secret weapon; a crash course in taking one's leadership inside an organization to the next level.

Rip Gerber
former CEO

Expertly written by Donald N. Sull (Assistant Professor of Business Administration, Harvard Business School), Revival Of The Fittest: Why Good Companies Go Bad And How Great Managers Remake Them informatively examines why successful businesses so often fail, and the means by which such sinking corporations can be turned around. Warning against the tendency toward "active inertia" (relying so heavily on methods that have worked in the past that one fails to adapt in time to changes in the market, customer base, or general surroundings), Revival Of The Fittest focuses upon the crucial importance of picking the right person for the job, the common pitfalls ("seven deadly sins") of attempting to transform companies, and a great deal more. Revival Of The Fittest is commended as being an excellent assessment that addresses both the preventions and the cures for corporate adversities.

Like many books, Revival of the Fittest suggests that how firms cope with change determines their fate. Don Sull argues that because of the landscape in which firms operate changes, in order to stay competitive, their strategies and commitments should also change. However, managers have a tendency to adhere to what have brought them success. This often results in what Sull terms "active inertia" where managers do more of what worked in the past but irrelevant in a new environment.

Unlike other books, Revival of the Fittest is packed with practical advices on how to manage change: from how to choose transforming commitments to what are the considerations for its shareholders. This book does not tell readers what to do as the author realizes that there are no one-size-fits-all solutions but rather gives guidance to those who want to make change happen. What is most interesting to me is his method of pairing firms in the same industry who had been affected by the same change and yet one prospered and the other failed. This gives an idea on what constitutes success and failure under different circumstances. The pairs include many firms across the globe in different industries, such as: Goodyear versus Firestone (U.S.A.), Samsung versus Daewoo (Korea) and Lloyds TSB versus National Westminster. (U.K.).

This is a book about how to transform an organization and more. In short, what one learns from the book is not only about managerial commitments but also personal ones. The book closes with three simple questions about commitment: (1) what is the right thing to do?, (2) what hinders you? and (3) why wait?.