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 / First Quarter 1997 / Issue 6(originally published by Booz & Company)


How to Stop Bad Things from Happening to Good Companies

Astor. Rockefeller. Wood. Haas. Grove. Did any of these people use our diagnostics in reformulating their businesses? Of course not. Business is not that simple; it is not a matter of painting by numbers.

But if you explore the histories of these and other successful executives who managed to prevent bad things from happening to their good companies, what you discover is that many of the guidelines we offer were, in fact, implicitly followed. Not every guideline. Not all the time. But enough right actions were taken at enough key moments to make the difference. We have presented our diagnostics as a tool to help make their implicit thinking explicit and thus transmittable.

What these business leaders accomplished demands analytical acumen, self-awareness and courage. It most of all involves facing reality. As Robert Haas noted, in response to a question about championing such values as empowerment when workers fear losing their jobs: "There is an apparent contradiction but not a real one, because our most basic value is honesty. If we have too much capacity, it's a problem that affects the entire company. Sometimes, the only solution is to close a plant, and if we don't have the guts to face that decision, then we risk hurting a lot of people -- not just those in one plant. We need to be honest about that."(8)

The success of such leaders illustrates that the difficulties involved in changing with the market can only be met with insight and courage. But changing with the market -- especially changing a step ahead of the market -- will stop bad things from happening to your company.

Reprint No. 97104


(1) For more on this, see Benson P. Shapiro and Adrian J. Slywotzky, "Leveraging to Beat the Odds: The New Marketing Mind-Set," Harvard Business Review, September-October 1993, pp. 97-107, Reprint No. 93510.

(2) Chris Argyris, "Overcoming Organizational Defenses" (Allyn & Bacon, 1990).

(3) Alfred D. Chandler Jr. and Richard S. Tedlow, "The Coming of Managerial Capitalism: A Casebook on the History of American Economics Institutions" (Irwin, 1985), pp. 55-82.

(4) Ibid., pp. 343-371.

(5) Richard S. Tedlow, "New and Improved: The Story of Mass Marketing in America" (Basic Books, 1990), pp. 259-343.

(6) Robert Howard, "Values Make the Company: An Interview With Robert Haas," Harvard Business Review, September-October 1990, p. 136.

(7) Robert A. Burgelman, "Fading Memories: A Process Theory of Strategic Business Exit in Dynamic Environments," Administrative Science Quarterly, Vol. 39 (1994), pp. 24-56.

(8) Robert Howard, op. cit., p. 143.

Benson P. Shapiro, Benson P. Shapiro was a professor at the Harvard Business School for 27 years, and continues to teach executive education programs there on a part-time basis. Professor Shapiro has an active consulting, public speaking and research practice in Concord, Mass.
Adrian J. Slywotzky, Adrian J. Slywotzky is the author of "Value Migration" (Harvard Business School Press, 1995) and "The Profit Zone" (Times Business, 1998).
Richard S. Tedlow, Richard S. Tedlow is the Class of 1957 Professor of Business Administration at the Harvard Business School, where he specializes in business history. His publications include "New and Improved: The Story of Mass Marketing in America" (Basic Books, 1990). This article is adapted from a teaching note. Reprinted by permission of the Harvard Business School, Copyright by the President and Fellows of Harvard College, all rights reserved.
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