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Change Management
What Everyone Gets Wrong about ChangeManagement
N. Anand and Jean-Louis Barsoux
Corporate transformations still have amiserable success rate: About three-quarters of change efforts either fail todeliver the anticipated benefits or are abandoned entirely. And because flawedimplementation is most often blamed for such failures, organizations havefocused on improving execution. But poor execution is only part of the problem;the authors’ four-year study of 62 corporate transformations suggests thatmisdiagnosis is equally to blame. Before worrying about how to change, theywrite, executive teams need to figure out what to change—in particular, what tochange first. They can do this by fully understanding three things: thecatalyst for transformation, the organization’s underlying quest (is it globalpresence, customer focus, nimbleness, innovation, or sustainability?), and theleadership capabilities needed to see it through.
J.C. Penney, Norske Skog, Acer, and otherclassic cases illustrate the authors’ points, and the article includes a “questaudit” to help companies identify their transformation priorities.
HBR Reprint R1706D
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TALENT Management
turning potential into success
Claudio Fernández-Aráoz, Andrew Roscoe, andKentaro Aramaki
Most leadership development programs aren’tworking. Only 24% of senior executives at firms that have them consider them tobe a success.
Companies must take a more scientificapproach to turning their raw talent into leaders, say three authors from EgonZehnder, which has been measuring executive potential for 30 years. Begin byidentifying which of seven key leadership competencies (results orientation,strategic orientation, collaboration and influence, team leadership, developingorganizational capabilities, change leadership, and market understanding) arecritical to your top roles. Next, assess employees’ potential by looking atfive predictors of strong competencies (motivation, curiosity, insight,engagement, and determination) and then map people’s potential to rolerequirements to see how far they can go. Last, to help them get there, providethe right coaching and development opportunities.
HBR Reprint R1706E
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Strategy
Stop Doubling Down on Your Failing Strategy
Freek Vermeulen and Niro Sivanathan
People have a tendency to stick to anexisting course of action, no matter how irrational. In the managementliterature, this is known as an escalation of commitment, and in nearly everyacademic case study on the demise of a former industry leader, it played amajor role. The story of the British music company HMV—whose managing directordismissed downloadable music as “just a fad”—is a classic example.
Escalation of commitment is explained by anumber of mutually reinforcing biases, among them: the sunk cost fallacy, lossaversion, the illusion of control, the preference for completion, pluralisticignorance, and personal identification. The authors describe six practices thatcan help counteract these biases: (1) Set decision rules. (2) Pay attention tovoting rules. (3) Protect dissenters. (4) Expressly consider alternatives. (5)Separate advocacy and decision making. (6) Reinforce the anticipation ofregret. Overcommitted executives, they write, are prone to ignore signs oftheir company’s imminent collapse. These practices will encourage managers atall levels to make decisions more objectively.
HBR Reprint R1706H