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strategy and business
Published: May 28, 2013
 / Summer 2013 / Issue 71

 
 

Captains in Disruption

In this implementation phase of managing through a disruption, what CEOs do is at least as important as what they say. Too many leaders in crisis simply send memos from on high, rather than determine a course to do things differently. There is also a risk in trying to frighten people into changing their ways—the burning platform sometimes just scares them into freezing instead. Finally, CEOs confronting disruption need to reach out to people throughout the company who can help them cross-organizationally, and do so through informal interactions. Cross-organizational interaction is by far the biggest accelerator of change (see “Culture and the Chief Executive,” by Jon Katzenbach and DeAnne Aguirre, s+b, Summer 2013).

The Defining Moment

The Great Recession gave the CEO of virtually every company around the world a strong taste of the impact of a deeply disruptive crisis. Some chief executives thrived, making their company stronger than ever. Others simply muddled through. Still others watched as their company succumbed to the trauma.

The best CEOs understand that disruptions will happen, and that no company can insulate itself completely from their effects. But they also know that in any crisis there can be an opportunity. Companies that survive major disruptions are likely to come out even stronger, and better able to anticipate and prepare for the next one. As Clayton Christensen notes, it’s difficult to think this way, because leaders are always tempted toward complacency. “Almost all of them,” he says, “probably including me, tend to stop asking good questions—or else their successors do. For example, [former Intel CEO] Andy Grove really got the concept of disruption. His famous phrase, ‘Only the paranoid survive,’ was a statement about how to [anticipate and] respond to disruption.”

For any CEO who leads a company successfully through a disruption, that success will likely become his or her defining moment. If you are a chief executive, that’s the hidden opportunity disruptions provide. The next disruption to your company could be the event that most determines how you will be regarded and remembered as a leader. 

Reprint No. 00182

Author Profiles:

  • Ken Favaro is a senior partner with Booz & Company based in New York. He leads the firm’s work in enterprise strategy and finance.
  • Per-Ola Karlsson is a senior partner with Booz & Company based in Stockholm. He serves clients across Europe and the Middle East on issues related to organization, change, and leadership.
  • Gary L. Neilson is a senior partner with Booz & Company based in Chicago. He focuses on operating models and organizational transformation.
  • Also contributing to this article were Booz & Company senior partner Alan Gemes and senior manager Josselyn Simpson, and s+b contributing editor Edward H. Baker.

 

 
 
 
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Resources

  1. Amy Bernstein, “Yossi Sheffi: The Thought Leader Interview,” s+b, Spring 2006: MIT’s leading supply chain expert says business leaders have to figure out how to bounce back from the unthinkable.
  2. Christopher Dann, Matthew Le Merle, and Christopher Pencavel, “The Lesson of Lost Value,” s+b, Winter 2012: A study of companies with shrinking shareholder returns shows that strategic risk—self-induced disruption—is the number one cause.
  3. Ken Favaro, Per-Ola Karlsson, and Gary L. Neilson, “CEO Succession 2011: The New CEO’s First Year,” s+b, Summer 2012: Last year’s study focused on guidance for the incoming captain of the company.
  4. Art Kleiner, “The Discipline of Managing Disruption,” s+b [online only], Mar. 11, 2013: The interview with Clayton M. Christensen where the quotes in this article first appeared.
  5. Gary Neilson and Julie M. Wulf, “How Many Direct Reports?Harvard Business Review, Apr. 1, 2012: During the past 20 years, the CEO’s average span of control has doubled, giving fresh relevance to the question, How much should the chief executive take on?
  6. For more thought leadership on this topic, see the s+b website at: strategy-business.com/strategy_and_leadership.