Business Case Studies, Executive Interviews, Donald N Sull on Why Good Companies Go Bad

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Executive Interviews: Interview with Donald N Sull on Why Good Companies Go Bad
January 2007 - By Dr. Nagendra V Chowdary

Donald N Sull
Associate Professor for Management Practice at the London Business School

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  • In one of your brilliantly written articles (Do Your Commitments Match Your Convictions, HBR, January 2005), you have observed that for most people, it takes a crisis illness, divorce, death of a loved one, business failure before we will refocus our commitments of money, time, and energy on what really matters to us. But why wait for a crisis?
    First, to be clear, I did not argue that people should wait for a crisis, but merely observed that they often do.Crises make itmuch easier they create a break in the day to day routine, jolt us into rethinking our existing commitments, and provide a ready excuse for explaining to others why we might change what we are doing.It is much

    more productive, however, to build in periodic occasions to revise your current commitments and rethink whether they are still aligned with what matters most to you. It is impossible to rethink everything on a daily basis, but equally dangerous to simply forge forward without periodically pausing to step back, reassess the situation, and check that you are on the right path.

  • One of the often quoted strengths in any resume is, I am a committed worker. What according to you is commitment?What does it take to be a committed worker? Is such behavior shaped by individuals value system or is it also shaped equally by organizational philosophies?
    Typically when people say they are committed workers, they mean that they are committed specifically to the organization, its goals, values, and way of proceeding. This commitment is critical, because it allows workers to persist when inevitable obstacles arise, and stick with the company even in the face of tempting offers from outside. Two things are critical for this type of commitment. First, the individual must be willing to commit to any organization. Many people view themselves as free agents who work for an organization for a period of time, but are always looking for a better option. This is not necessarily a bad thing, but it does make it hard for organizations to get themost out of people. The second requirement is that the organization provide something worth committing to. Most people cannot commit equally to any organization be it Mittal Steel, Aravind Eye Clinic or the Civil Service. Rather they commit to an organization that is aligned with their own aspirations and values. Here it is incumbent for the leaders to first of all ensure that their organization stands for something that attracts potential and current employees. The values that might work are varied, and include not only serving others, but quality, innovation, winning globally, creativity and others. Leaders of organizations must also do a good job of communicating what it stands for, and ensuring that they maintain the integrity of those values as the organization grows.

  • What about convictions? What shapes the conviction attitudes of employees? Can an effective leader/ organization presuppose any change in the conviction attitudes of employees?
    It is difficult to change peoples underlying convictions. People are motivated by a variety of drives to achieve, to win, to serve, to affiliate with others, to acquire, to exercise power, to learn and research suggests these are fairly hard wired into our brains. The best system, it seems to me, provides a variety of organizations which stand for different things, such as investment banks that focus on making money, universities that focus on pushing the frontier of knowledge, health care organizations that serve others, etc. The labor market then serves to match people with the organizations that bestmatch their convictions. Often times this system fails, however. Partially it is because organizations tend to converge on a single model and drive out variety. In the US right now, for instance, many universities, schools and health care providers are mimicking the norms of for profit businesses, a model which does not always attract people who chose those professions to serve. Also, managers often fail to take a stand to what their organization stands for, and to stick to those core convictions when the going gets tough. Over the past decade I have studied several companies that have risen to global leadership in their industries fromemerging markets, companies including Samsung Electronics, Mittal Steel, Turkish bank Garanti, AmBev (the Brazilian brewer which recently acquired Anheuser Busch), Mexican cement maker CEMEX, and Chinas Haier among others. In every case, leaders in these companies articulated a strong set of values, and stuck to them as the organization grew larger and expanded its reach globally.

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