Book Review: Harvard Business Review on Turnarounds

With the U.S. economy struggling, this is certainly an appropriate book for the times.  I will try to summarize the overall book and then list some of the key points worth remembering and applying.

This book is a nice collection of short studies in change and turnaround strategy.  Each study reads like a short story illustrating various cases and competing strategies.   It’s a quick read that’s broken up into easily ‘consumable’ chunks.  Here are some excerpts and key points from the book:

Corporate transformations typically fall into one of two categories.  The first called Theory E based on economic value.  This strategy is focused on maximizing shareholder value, managing change top down, emphasizing structure and systems, planning and establishing programs, motivating through financial incentives, and using consultants to analyze problems and shape solutions.  The second is Theory O based on organizational capability.  Theory O emphasizes: developing organizational capabilities, encourage participation from the bottom up, building up corporate culture/behavior/attitude, experimenting and evolving, motivating through commitment, using consultants to support management.  Theory E is the ‘stop the bleeding and cut back to survive’ strategy while Theory O is the ‘rebuild for the future’ strategy.  Each seems to have their place depending on how bad off a company is.  The book suggests administering the correct doses or E and O varies over time based on company condition but that both are ultimately required for short term survival and longer term growth.

‘Catalytic Mechanisms produce desired results in unpredictable ways, distribute power for the benefit of the overall system (often to the great discomfort of those who traditionally hold power, have a sharp set of teeth, attract the right people and self-select the wrong people, produce an ongoing effect.’  One example in the book is the pre-signed resignation letter – so you know that if you don’t achieve your objectives, you and your boss already know the consequences. ‘Setting goals with real and immediate consequences and no fall back position provides public and powerful incentive to drive change.  Set BHAGs (big hairy audacious goals) with long time frames, are clear, compelling and easy to understand, and connect to the core values of the organization.’

‘3 interventions that will restore companies to vital agility and then keep them in good health: incorporating employees fully into business challenges, leading from a different place, instilling mental discipline.  This will help avoid ‘Organization drift – in place of inquiry and experimentation, ideas get studied to death in hopes of ferreting out every possible weakness before making a commitment.  The precondition for action is certain knowledge.’

‘New approach to leadership – establish focus and urgency, maintain health levels of stress, and not feel compelled to come to the rescue with a lot of answers.  They learn to stay the course until guerrilla leaders at the lower levels come forward with initiatives that address the company’s shortcomings.’

There are several more cases but I think you get the picture. The book is a nice collection of easily digestible management techniques for handling change.  The diversity of thought is as refreshing as the variety of scenarios.