The Book Corner - Review
2005 Volume 8 Issue 4

The Book Corner

The Book Corner

Featured in this issue:

Why Good Companies Go Bad and How Great Managers Remake Them

By Donald N. Sull
Harvard Business School Press, 2005

Recommended by Jack Green, PhD, Associate Professor of Strategy

In 1999, Donald Sull wrote for the Harvard Business Review, “Why Good Companies Go Bad.” A continuation of the ideas from that article, this book provides specific ideas on recognizing problems and making corrections before it is too late. A major issue explored in the book is “managerial commitments” and the implications of those commitments, such as investing financial resources, signing contracts, making public promises, and entering into customer relationships all of which bind the organization into a future course of action.

Dr. Sull builds on his original ideas of “active inertia,” which stems from a company’s defining commitments. Throughout the book the model that Sull explores is the premise “That which created success often leads to failure.” Specifically, he discusses the following:

  1. Strategic frames (the set of assumptions that determine how managers view the business and how they see the competitive landscape) become Blinders. Frames provide focus and answer such strategic questions as “What business are we in and who are our most dangerous competitors?” However, these frames may constrict a manager’s vision and blind him/her to new opportunities and threats.
  2. Resources (what we own that helps us compete) become Millstones. Resources may be tangible (factories, equipment, etc.) or intangible (brands, technology, etc.). However, a shift in the competitive environment may devalue established resources so that these existing resources may contribute to active inertia.
  3. Relationships (the ties to employees, customers, suppliers, distributors, and shareholders) become Shackles. These relationships may limit an organization’s flexibility, which can make or break a company.
  4. Values (the set of shared beliefs that determine a company’s culture) may ossify into Dogmas. As companies mature, their values often harden into rigid rules and regulations.
  5. Processes (the way things are done) become Routines. That which has always worked may become so common that little thought is given to competitive implications.

Dr. Sull provides vivid illustrations of companies that suffered from active inertia based on the above criteria. He then provides recommendations to examine your own organization to determine if it is at risk and, if so, suggests what managers may do to make the necessary commitments and changes.

The book is written well and is based on solid research. Sull’s focus on past, present and future commitments illustrate issues that all organizations face.

Sull, D.N. (1999). “Why Good Companies Go Bad.” Harvard Business Review, 77(4), 42-51.

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Resonant Leadership

By Richard Boyatzis and Annie McKee
Harvard Business School Press, 2005

Recommended by Ann Feyerherm, PhD, Associate Professor of Organization and Management

Resonant Leadership is an extension of the authors’ work, Primal Leadership, which highlights the dynamics and importance of Emotional Intelligence (EI) to a leadership position. This book goes further, though, in suggesting that the attributes of mindfulness, hope, and compassion are essential ingredients in coping with the “power stress” of an executive position.

Boyatzis and McKee first set the stage for what so often happens in organizations dissonance. Three conditions occur that support dissonance: 1) executives develop the “Sacrifice Syndrome” that comes as a result of unchecked power stress; 2) executives cope by developing defensive routines; and 3) organizations create their own “monsters” by reinforcing unhealthy workplace behaviors.

Patterns of what the authors term “power stress” are the result of executives being responsible for goals in uncontrollable situations in which there is social evaluation and people assume the need for self-control. Research is cited that demonstrates the physiological responses that can lead to chronic stress and disease. The “Sacrifice Syndrome” is one of the likely set of feelings and actions that result. Thus, the question arises: How does one deal with these all-too-often dynamics? Resonant leadership holds the key to this answer.

Resonant leaders understand the need for renewal, therefore they can develop a pattern of sacrifice and renewal. Lest the reader think that renewal is about “work-life balance,” or taking all the vacation that one is owed, Boyatzis and McKee offer another set of prescriptions. The essence of their book is that through mindfulness, hope, and compassion, leaders can find renewal. This tripartite approach assumes that mind, body, spirit and heart are intertwined. Mindfulness is the capacity to be fully aware of what is happening, both internally and externally. Hope creates a positive emotional tone in oneself and others. Compassion is defined as empathy in action. To fully explore these key concepts, the authors weave in rich supporting research and examples of resonant leaders.

One criticism of the book is that it felt “preachy” at times, with overuse of the admonitions that leaders “must” or “need to” to do or feel something. Although, such prescriptions weren’t without a story or two to illustrate the power of the particular action, I personally felt overwhelmed or chided at times.

Also, while the stories were illustrative of the points the authors were making, it would have been more powerful to hear their voices in the book. Time after time, the authors told what happened to certain individuals. How wonderful it would have been had the people themselves shared, through quotes, what they were feeling and thinking.

In summary, though, I recommend this book, for it gives an alternative to “how to” behaviors that a leader must “do” and gives a series of exercises designed to help leaders decide how to “be.” And, to quote the authors, “People who think they can be truly great leaders without personal transformation are fooling themselves.” This book is one way to provoke your own learning on the path to becoming a more conscious and intentional being.

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Telebomb: The Truth Behind The $500-Billion Telecom Bust and What the Industry Must Do to Recover

By John Handley
AMACOM, 2005

Recommended by John Briginshaw, PhD, Assistant Professor of Accounting

Although the dot-com crash at the turn of the century got most of the attention, overinvestment in telecommunications infrastructure dwarfed the losses incurred by Internet firms. As former Accenture partner and telecoms expert John Handley states, “…the largest “dot bomb” (Webvan) burned through a mere $1.4 billion of investors’ cash, while $10 billion was the minimum stake to play in the fiber optic laying game, and total overinvestment was as much as $170 billion in tangible assets, and as much as $500 billion if merger activity is taken into account.”

Handley has clearly been “around the block” of the industry, and so gives an engaging account of many of the firms and their mistakes. Much of the time, reading Telebomb is more like sitting down with your favorite uncle for a fireside chat than reading a business book. Handley supplies interesting tidbits on the firms and humorous anecdotes. He recounts engineers’ frustration at frequent service interruptions due to highway repairs impacting buried fiber. Engineers coined the amusing acronym FSBE (fiber seeking backhoe event) to describe the problem, satirizing a purported affinity for fiber optic cable on the part of the backhoe operators. The dark brilliance of the telecom entrepreneurs is depicted in many examples. Perhaps my favorite anecdote is the decision of one entrepreneur to capitalize on consumers’ indifference when forced to choose a long distance telecom provider after deregulation by registering long distance companies under the names of “I don’t know,” “Who cares” and “Whoever.”

However, when one is done with the engaging stories, the book’s core message sometimes seems a little elusive. Some of Handley’s advice is eminently sensible. As he states, telecom providers should concentrate on providing signal transport (pipes) rather than on repeating earlier, frequently disastrous forays into providing content. Within such a commodity business, superior cost efficiency will indeed be the key determinant of business success.

However, some of Handley’s other conclusions are more debatable. He is obviously not a fan of the Telecommunications Act of 1996, but solutions to its problems are not simple ones. The litigious U.S. business environment that has hindered regulation of telecoms is unlikely to change anytime soon. Handley’s criticism that the Act contained little about the Internet is a little harsh when directed at an act passed in 1996 and largely crafted in the early 1990s, bearing in mind that the Internet reached 11 percent penetration in the U.S. only in 1995.

Finally, “overinvestment” is easy to spot in the rearview mirror, but not as simple to identify without the benefit of hindsight. U.S. entrepreneurs’ willingness to invest in risky assets is at the core of the nation’s long-term economic success. Sometimes that investment will be wasted, but without it we would certainly be poorer, both in monetary terms and in the schadenfreude [2] that Handley sometimes bids us snack on!

John Briginshaw is the author of Internet Valuation (Palgrave).

[2] Schadenfreude is a German expression (from Schaden: damage, harm; and Freude: joy) meaning pleasure taken from someone else’s misfortune or “shameful joy”. Schadenfreude is usually believed not to have a direct English equivalent. For example, Harper Collins German-English Dictionary translates schadenfreude as malicious glee or gloating. Retrieved 9/14/05,

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Becoming a Manager: How New Managers Master the Challenges of Leadership

By Linda A. Hill
Harvard Business Press, 2003

Recommended by Marjorie Walsleben, PhD, Associate Editor, Graziadio Business Report

Although addressed mainly to those considering management as a career, Linda Hill’s book contains little technical detail and is designed to appeal to a wide audience. The book follows 14 men and 5 women through their first year as managers. As is the pattern with most workers, before their promotions, everyone in the study was an individual contributor, a specialist, a producer.

In contrast to producers, managers are formally in charge of organizations or subunits and are responsible for supervising others rather than for performing technical tasks themselves. These new managers grappled with three critical sets of problems: 1) How to reconcile initial expectations of management with the realities of a manager’s daily work life; 2) How to handle many conflicts with subordinates; and 3) How to make sense of and meet superiors’ expectations.

Most of these new managers initially thought less about how actions might affect their relationships with their subordinates or their subordinates’ development. They instead focused more clearly on the first aspect of management formal authority than on the second aspect: getting the work done through the efforts of others. As former outstanding producers, they were not attuned to their networking responsibilities, but instead focused on only a subset of their agenda-setting responsibilities those related to financial and business arenas rather than on their people or on the organization.

Isolated as a result of having been “star status producers,” the new managers suffered from the illusion of mastery that often plagues such promoted producers. As producers, they had encountered few difficulties or conflicts with peers or superiors and had had limited opportunity to observe what successful managers do. Furthermore, they felt they had lost their “nice guy” image simply because of their new authority. As producers, they had been able to work in grey areas, bend rules, and be grouchy. As managers, they had to learn to manage their emotions, to “Be like a duck: on the surface calm and serene, and underneath, paddling like hell!”

Quoting a Fortune survey, the author reports that corporate recruiters suggest MBA programs should teach the so-called soft skills (e.g. interpersonal skills, as well as conceptual ones) and instill more realistic expectations for that first managerial job. She further suggests that if an organization “…could make only ONE intervention that would improve development of new management, I believe it should be to provide senior executives with training on how to be better coaches.”

Hill suggests four things potential managers should do: 1) Before becoming a manager, ask for the opportunity to perform manager-like tasks, especially seeking to enhance conceptual and interpersonal skills; 2) Take time to observe YOUR managers at work their prime responsibilities, reasons for making decisions, ways they fulfill responsibilities and expectations of others; 3) Assess what the realities are in transitioning from individual contributor to manager; no one has to become a manager; and 4) Engage in constructive introspection regarding whether or not your career interests, aptitudes, knowledge and skills fit the requirements of a manager’s position. As these new managers discovered, that transition is not as simple as it may look.

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Investing in Your Company’s Human Capital: Strategies to Avoid Spending Too Little or Too Much

By Jack J. Phillips, PhD
AMACOM, 2005

Recommended by Sean D. Jasso, MBA, MPP, Practitioner Faculty in Economics and Marketing

The premise of Jack J. Phillips’ book rests on addressing the mystery that lies between the investment in human capital (labor) and the success or return that follows. Phillips declares early on that the reputation of the HR function in the business organization has diminished over the years in that many harsh critics have suggested that HR has lost its relevance altogether and its functions should be dissolved into outlying departments.

As a long-time HR consultant and human capital expert, Phillips affirms that HR is indeed a relevant function, yet it has failed to demonstrate its value to the organization. The thesis of Philips’ book is to demonstrate how HR departments are in fact accomplishing the communication of their value to the firm.

Phillips targets a broad management audience mainly because his underlying objective is to communicate to the management community that when HR models its results on his key principles, every strategic arm of the organization can benefit. Most readers will recognize the case study and comparative methods which constitute his primary tools for unveiling the solutions to four central questions:

  • How much should we invest in human capital?
  • What is the importance and value of measuring the human capital investment?
  • What can be measured?
  • What is the executive’s role?

Within each core section, Phillips provides strategic insight that is helpful, familiar, and tangible for both scholars and practitioners. I find that his comparative analyses are most effective, such as his overview entitled, “Invest with the Rest,” which demonstrates Phillips’ expertise in developing relevant benchmarking models that compel HR managers and senior leaders to ask the key strategic questions regarding how much human capital investment is enough.

Phillips does not offer a magical formula to answer the “how much” question, since every organization clearly has its unique characteristics, investment capacities, and overall goals. However, the strength in the Phillips text is that he provides a useful framework with which HR managers can organize their thinking around the core priorities or principles noted above. Advocating a commitment by senior leadership to support the HR function combined with the HR department’s commitment to develop an investment and ROI philosophy on staffing and training, Phillips does guarantee that the outlook of any organization’s management of its human capital will be strengthened and will demonstrate an increased impact on the overall strategic direction of the firm.

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