The book Confronting Reality: Doing What Matters to Get Things Right was co-written by a seasoned businessman and a Harvard Business School professor. The businessman, Lawrence Bossidy is the former CEO of Honeywell and also has thirty-four years of experience working at General Electric in various positions including vice-chairman. During his tenure at GE, he brought the company back to double-digit growth. Additionally, Bossidy was the CEO of Allied Signal for nine years and oversaw the merger of Allied Signal with Honeywell. During his time at Allied Signal the company experienced earnings-per-share growth of thirteen percent or more for thirty-one consecutive quarters (leighbureau). The other co-writer is Ram Charan, who holds an MBA and a PhD from Harvard Business School and is currently a professor at the school. Charan also consults for Fortune 500 companies including Thomson and Honeywell. This book is a follow up to the book Execution: The Discipline of Getting Things Done, which the two authors also co-wrote.
The thesis of this book is that the business environment has changed, and that business leaders from companies of all sizes need to formulate a business model that is realistic for their organization. They provide a three prong business model that needs to be implemented in order to survive. According to Bossidy and Charan, “A business model is what enhances or inhibits the performance of the organization,” (Bossidy & Charan, 2004). The authors’ emphasis on the business model is fairly in line with the current business environment. According to a 2009 survey reported in the Harvard Business Review, seven out of 10 companies are engaging in business model innovation, and 98% are modifying their business models. The top reasons why a solid business model has become so vital are deregulation, technological changes, globalization, and sustainability ( Casadesus-Masanel, R. & Ricart, J.E. 2011).
The authors discuss the reasons why most business leaders fail to confront the reality of their business and the business environment and how to avoid them. The book points out that the way businesses operate, how and what type of externalities effect your business and the types of leaders we need has changed. In response, they offer a three component business plan that can be applied to businesses of any size and in any industry. These components are analyzing the external environment, formulating realistic financial targets, and then working on the internal operating procedures guide the organization to reach these goals. Cases are then used to demonstrate how leaders of companies such as 3M, Home Depot, and EMC have used this method to save or grow their company. These cases range from companies who completely overhauled their business model to businesses who simply improved on the existing business model. The authors then give advice and examples from their own experiences on how to get an organization properly focused and head a change management initiative.
The authors’ purpose in writing this book is to share with business leaders their own experiences and guide them in running successful organizations. The combination of their business, consulting, and academic experience allow the authors to part with a plethora of personal experience and real life cases that assist the reader in understanding their concepts and theories. They want to show leaders how the methods and qualities preferred in the past can no longer be applied to today’s organization as the playing field has changed. Business owner’s need to vigilantly watch not only their competitors but also government agencies, companies in related industries, and financial markets with the same vigor. They want to show business leaders that planning for the short term solely to see positive quarterly earnings is not as important as planning for the long term health of the company.
Several themes in this book relate to the topic of organization theory. The issue of change management and how leaders can best manage a change in the strategic plan or corporate culture of a company are discussed in great detail. Additionally, the book discusses the importance in aligning the organizational structure and the operational processes to achieve the goals of the company. This is one of the three components to their business model.
Overall, this book is an easy read and straight to the point. The authors constantly reinforce their points by providing case studies to allow the reader to see their theory or practice in action. The authors even acknowledge some of their own mistakes to illustrate the importance of harmonizing the three components of the business model and constantly revisiting it to determine if it still works. The most useful advice in this book is the chapter on how to manage change in an organization and how the any change that is implemented needs to be consistent with the culture of the company. The authors emphasize learning the company culture, conditioning the culture, then committing time and energy into the change initiative. They use the example of Home Depot, and how the CEO had to ease very slowly into change due to the company’s laissez – faire , decentralized retail structure. However, while this chapter is probably incredibly useful to a leader heading or about to head a change in their organization, Bossidy and Charan omit an element that I think is vital. Engendering and reinforcing an organizational culture of change is something that CEOs of most organizations should undertake at all times. Leaders should know their organization’s state of change readiness before they even consider such an initiative because it is so ingrained in corporate America and is eventually bound to occur (Franken, Edwards, & Lambert, 2009).
While the book may be helpful to an entrepreneur or small business owner, for a tenured CEO or high-level executive, the information isn’t likely to break new ground. As established through the case theories, CEOs have been implementing the business model as described since the late 1990s. The information tends to be a generalization whereas business owners and leaders likely need advice tailored specifically to their industry and organization to truly be able to examine their environment, plan and implement a strategy. Last, ego-driven managers who are too stubborn to be the knowledge seeking leaders Bossidy and Charan discuss are unlikely to believe that they fall into the category of being unable to face reality. Another weakness in the book is that the authors tend to emphasis outsourcing as the only real way to cut costs, while this may not be practical or the best advice for all organizations.
Bossidy, L., & Charan, R. (2004). Confronting Reality: Doing What Matters to Get Things Right [. New York: Crown Business.
Casadesus-Masanell, R., & Ricart, J. E. (2011). How to Design a Winning Business Model. Harvard Business Review, 89(1/2), 100-107. Retrieved from EBSCOhost.
Franken, A., Edwards, C., & Lambert, R. (2009). Executing Strategic Change: UNDERSTANDING THE CRITICAL MANAGEMENT ELEMENTS THAT LEAD TO SUCCESS. California Management Review, 51(3), 49-73. Retrieved from EBSCOhost.
Lawrence Bossidy – Bio. (n.d.). Leigh Bureau. Retrieved February 22, 2011, from http://www.leighbureau.com/speaker.asp?id=34