Active Inertia in Business

In the article Why Good Companies Go Bad, Donald Sull outlines why major change in large organizations is so difficult. Ironically in most cases the very elements that enabled the business to initially scale and succeed turn into what holds the company back. Sull refers to these forces as “Active Inertia”.

What holds back change (Active Inertia):

  1. Strategic Frames – Assumptions that shape how the org views the business
  2. Processes – How the organization gets things done
  3. Relationships – Ties to customers, employees, suppliers, etc.
  4. Values – Beliefs held by most in the organization

Examples of companies slow to change:

  • Microsoft’s adoption of the Internet – The many established product lines (esp. MS Office) did not understand how the Internet would affect their businesses. Once they did they have been slow to accept the inevitable changes to their underlying business model. Finally the multi-year release cycle employed at MS prevented them from initially responding to the ever changing Internet release cycle.
  • Palm’s acceptance of color screens & keyboards – The initial success of the original Palm Pilot (with it’s utterly simple b/w screen and Graffiti handwriting recognition) led Jeff Hawkin’s to ignore for years the benefits of color or the popularity of the Blackberry thumb-keyboard. While these were eventually implemented it was at the cost of much of their initial market share.

How to overcome Active Inertia:

  1. Increase urgency
  2. Build the guiding team
  3. Get the vision right
  4. Communicate for buy-in
  5. Empower action
  6. Create short-term wins
  7. Don’t let up
  8. Make change stick

    Excerpt from: Get Off the Dime! by John Kotter

As someone currently driving an initiative that breaks with the tried and true way of doing things, these articles really resonate with me. By employing some of Kotter’s approaches along with my own Emotional Intelligence I hope to turn out a success. I’ll let you know how it goes…

What to know more?

Emotional Intelligence (EQ)

In reading What Makes a Leader? (Goleman) I learned that while technical skills and IQ are important for senior managers to succeed it is emotional intelligence that is actually the most critical. As a long-time believer in soft skills I did not have any difficulty believing this assertion.

Emotional Intelligence’s Five Components:

  1. Self-Awareness: The ability to identify and name one’s emotional states and to understand the link between emotions, thought and action.
  2. Self-Regulation: The capacity to manage one’s emotional states — to control emotionsor to shift undesirable emotional states to more adequate ones.
  3. Motivation: The ability to enter into emotional states (at will) associated with a drive to achieve and be successful.
  4. Empathy: The capacity to read, be sensitive to, and influence other people’s emotions.
  5. Social Skill: The ability to enter and sustain satisfactory interpersonal relationships.
    Above as defined by Daniel Goleman & Peter Salovey.

Personal Reflection

In thinking of some of the most effective leaders that I’ve worked with over the years, I definitely see that they have shown strengths in emotional intelligence. And conversely as I think of hot-head or sell-absorbed leaders who were less effective—they obviously would score low on this assessment. Fortunately for all aspiring leaders most of the leading thinkers on this topic believe that while some EI is innate, much can be improved or learned with time.

For example, I am not always a great listener which hurts my ability to emphasize. Thru conscious effort I hope to improve in this area. If you know me personally, let me know how I’m doing. 🙂

Want to know more?

Evidence-Based Management

I recently read the article Evidence-Based Management (HBR Jan 06) which outlines an emerging movement which applies the scientific approach long used in medicine to the practice of management.

A number of factors inhibit managers’ ability to make good decisions including:

  • specialty bias (e.g. marketers tend to recommend marketing as a solution)
  • hype (e.g. managers taken by the latest pop management theory)
  • dogma (e.g. managers who know that people really only click on items “above the fold”)
  • casual benchmarking (e.g. Shuttle by United’s attempt to copy Southwest)

Evidence-based management aims to avoid these pitfalls by:

  • Investing in Analytics – In order to make sound decisions you must have the sound underlying evidence upon which to do so. This often means a large investment in metrics and analytics.
  • Asking Questions – Recognize gaps in logic and misuse of inference. Often the positive effect touted is unrelated to the claimed cause. Demand that proposals be backed by sound data.
  • Performing A/B Testing – Rather than make an uneducated decision, create a test for your hypothesis. eBay and other internet companies have been doing this for years and it is amazing all that you can learn from it.
  • Showing Humility – By admitting what you don’t know you’ve taken the first step toward learning something. Celebrate mistakes and a means to learning about your business.

Having worked at companies that employ this management theory I think we must pay close attention to each decision made. A poor decision can be made under the guise of what looks like evidence-based management but is in fact not (see pitfalls above).

Want to know more?