CONFRONTING REALITY Doing What Matters to Get Things Right
By Larry Bossidy and Ram Charan Crown Business -- 264pp -- $27.50
Larry Bossidy and Ram Charan are in tune with the business zeitgeist. Two years ago, the oddly paired duo -- Bossidy is the blunt former CEO of Honeywell International Inc., while Charan is a smooth-talking management guru -- produced the best-seller Execution: The Discipline of Getting Things Done. In an era of low growth and shattered expectations, that volume's focus on getting results resonated with readers. Now Bossidy and Charan are back with another exhortation, Confronting Reality: Doing What Matters to Get Things Right. Coming at a time when Corporate America is being jolted by everything from the expanding reach of Wal-Mart Stores Inc. (WMT
) to business challenges from China, the new book cannily addresses the pressure on managers to train a microscope on their business models.
Confronting Reality is divided into four parts. It begins with a somewhat obvious essay on why managers must overcome wishful thinking and come to grips with the realities that face them. Bossidy and Charan then grab our attention by offering a new model for accomplishing this feat. Next they provide several recent case studies that hold lessons about what to change and what not to change. They conclude with tips on how to prepare an organization for transformation.
Some may wonder whether the new work is merely an attempt to capitalize on the success of Execution. It's not. The busy authors have managed to bring fresh insights to a matter that's high on the corporate agenda. What's more, Confronting Reality is even more readable than its predecessor.
One reason Confronting Reality succeeds is that it truly does confront reality -- unlike Execution, where hypothetical examples were common. Cases in which a manager was simply referred to as Joe, or a corporation known as XYZ Co., sometimes gave the earlier book the feeling of a business fable. This time there are interesting narratives built around real-world characters and entities. Most get kudos for their courage. EMC Corp. (EMC
) chief Joseph M. Tucci and Cisco Systems Inc.'s (CSCO
) John Chambers are portrayed as men who have steered their companies wisely amid unsettling industry shifts. Bossidy's employer of 34 years, General Electric Co. (GE
), is depicted as a place that spawns smart, driven realists such as, well, Bossidy himself. As in Execution, Bossidy offers some folksy musings on his leadership of AlliedSignal and the entity that resulted from its merger with Honeywell -- only now the stories focus on the many times in his career that he was forced to face unpleasant facts. Once again, though, he misses an opportunity to reflect on any mistakes he may have made. There are also profiles of 3M (MMM
) Chief Executive Jim McNerney, Home Depot Inc. (HD
) CEO Robert L. Nardelli, and Stanley Works' (SWK
) head John Trani -- all GE veterans -- along with current GE chief Jeffrey Immelt and his iconic former GE boss Jack Welch.
While the book is largely an examination of what it takes to be a winner in a fast-changing world, there are some cases of losers. Kmart Corp.'s (KMRT
) leaders, though unnamed, are slapped for failing to adapt to shifting realities, thus letting Wal-Mart gobble their franchise. The authors also join the chorus of critics who say Scott McNealy of Sun Microsystems Inc. (SUNW
) has been blind to the need for a new business model. But they add that "given his history of bucking the odds, we can't write off his chances of recovering." Then there are what the authors call "structurally defective industries" -- autos, airlines, commodity chemicals, even professional baseball -- that are so saddled with excess capacity, high fixed costs, or inept regulatory policies that it's almost impossible to succeed. For many trapped in the purgatory of these industries, reality bites.
The book's most useful part is its model for facing facts in three areas -- external realities, internal realities, and financial targets -- helping readers to see how these are linked and how to reassess them. Financial aspirations are tested against both external realities -- everything from industry trends and the financial health of rivals -- and internal ones, such as whether the right people are in the right jobs. The value comes in what Bossidy and Charan call "iterating the model," or constantly applying it and revising it to stay current with the changing business environment and a company's evolving strengths.
These discussions may strike some readers as pretty basic, but it's clear from the anecdotes that many managers need to go back to step one. In the authors' view, the primary goal is not simply to face facts when designing a business model. It's to design a model that becomes a tool for constantly confronting reality. Used properly, such an approach could help executives kill unrealistic ideas. It may even inspire some to restructure their core operations. In their first book, Bossidy and Charan struck gold by telling readers how to execute strategies. They may be doing them a greater service this time by helping them ensure that the strategies are worth pursuing at all.
Copyright 2004, by The McGraw-Hill Companies Inc. All rights reserved.
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