Why do some businesses thrive, then stagnate? How can organizations emerge from a slump?
These are questions explored by Samuel B. Bacharach, ILR’s McKelvey-Grant Professor, in his latest book, “Transforming the Clunky Organization: Pragmatic Leadership Skills for Breaking Inertia,” published by Cornell University Press this summer.
In this volume, which is a follow up to the recently published “The Agenda Mover: When Your Good Idea Is Not Enough,” Bacharach looks at a wealth of companies in a range of fields: Unilever, Starbucks, Chrysler, Bank of America, Amazon, Google, Apple, Borders Group, RadioShack. Some overcome their slump and resume thriving, while others remain stuck and ultimately fail.
“Why do organizations sometimes get stuck?” he writes. “What makes them sluggish?” They have either a “clunky tendency” or a “myopic tendency.”
“The clunky tendency is usually found in complex organizations, with complicated structures, overlapping missions, unintegrated units, confused lines of authority and a general sense of organized anarchy,” he said. “Organizations with myopic tendencies are trapped in the old ways of doing things and the old models.”
According to Bacharach, organizational success comes down to leadership. Great leaders are alert and look for signs of inertia. While they realize that inertia may not immediately lead to failure, it may lead to an organization’s inability to reach its potential.
A common mistake of a sluggish organization is failure to recognize changing consumer tastes. RadioShack morphed from selling supplies for the amateur radio enthusiasts to selling cellphones. It lost its way because of its inability to define its core product and prime customer, Bacharach said. In the current business climate, where technology is changing so quickly, organizations need to define their niches. For instance, is Netflix in the technology business or entertainment business? How the organization decides to answer that question could have long-term consequences.
Good leadership requires that leaders are actively engaged in discovery and delivery, supporting the contextual and ideation process, and building the coalitions needed to see the idea to execution, Bacharach said. Pragmatic leaders are able to identify the next big thing, and support the creativity necessary to create a working prototype. They are also politically and managerially adept, with the ability to gain support by campaigning for their ideas, and balancing the loose and tight control that is required to execute on the project.
“They understand that they need to bring stakeholders together to overcome the challenges of turf, the entrenchment of inertia, and the resistance to change,” he writes.
PepsiCo picked up on society’s health vibe and adapted its products accordingly, Bacharach said. Motorola and Toshiba created a mutually beneficial alliance, he points out in the book.
“Apple Pay continues to be successful, not only because of the security, privacy and user friendliness of the transactions, but also because of the partnerships that Apple forged within the financial sector,” Bacharach writes.
“Tesla puts a premium on information sharing,” he said. “Pragmatic leaders know that good ideas are not enough,” he maintains. They strike the right balance between loose execution and tight control. Employees and partners have the freedom and autonomy to make necessary changes without losing sight of the mission.
Bacharach cites Henry Ford’s stance in the 1940s and the carmaker’s subsequent loss of market share to General Motors. “Ford’s tight control led to the leakage of talent. Fed up with their inability to have a say, top managers simply left.”
Persuading employees and team members to get on board with a specific idea or innovation is a multi-step process. The leaders must identify the primary stakeholders and understand their roles within the organization. The leader must also have a track record of credibility—and gain stakeholder support by showing that he or she is the right person to lead the project. There are arguments that leaders can make to gain support for their idea, such as providing regulatory, social, cultural or moral reasons to make the change.
“One of the great ironies of organizational life,” said Bacharach, “is that yesterday’s success becomes tomorrow’s source of inertia.” On the one hand, leaders must be keenly aware of at what point the current deliverables become stale and renewed discovery is necessary. On the other hand, they have to realize the necessity of balancing discovery with delivery, the ability to move the project across the finish line.
Lowell McAdam, chairman and former CEO of Verizon Communications, said the book provides practical guidance for leaders. “The longer an organization has been in existence or the more successful they have been the greater the tendency to maintain the status quo. Convincing all employees that change and innovation is the only way to remain relevant in this increasingly complex world of business is a critical skill for all leaders.”
VC Gopalratnam, senior vice president of information technology and chief information officer of International Operations, Cisco, said Bacharach’s book provides tips for how leaders can help their organizations be agile.
Bacharach dedicates the book to “my ILR students who have accompanied me on this journey.” According to Bacharach, the best experience that one can have as a faculty member is to teach. Bacharach says, “ILR’s strength, for me, has been not simply been our faculty and staff, but our students, who constantly challenge us and push us to be better in what we do.”