The Idea in BriefYou make commitments—R&D investments, public promises to hit growth targets, hiring decisions, joint ventures—every day. Each involves actions taken today that bind your company to a course of action tomorrow. Commitments shape your business’s identity—defining its strengths and weaknesses, setting its direction, establishing opportunities and limitations, and focusing and energizing employees. But like double-edged swords, commitments are dangerous if wielded carelessly. While each decision defines your company’s capabilities now, it also reduces its flexibility in the future. When competitive conditions change, you may be unable to respond effectively—even if you see the threat and know what’s needed. You can’t anticipate every commitment’s long-term consequences, but you shouldn’t shy away from making commitments. But before each key decision, ask: “Am I locking us into a course of action we’ll regret later?” The Idea in Practice As your company matures, you make different types of commitments: 1. Defining commitments. These earliest, most enduring commitments establish:
Defining commitments determine a young organization’s course and identity well into the future—but hamper later change efforts. To make the right commitments, ask, “Is this a decision we can live with in the long run?” Don’t define commitments hastily if you don’t have to. 2. Reinforcing commitments. These buttress your defining commitments as your firm matures. They include daily actions such as customer contract renewals, and occasional big bets like a major acquisition. They build efficiency, sharpen focus, temper risk, and attract employees, customers, and partners who fit the company’s identity. They also increase your company’s rigidity, closing off needed new options if the competitive landscape shifts. Yet many executives cling to them because they paid off before. 3. Transforming commitments. When disruptive change strikes, pressure to make even more reinforcing commitments mounts. Instead, force your firm out of the status quo—with new, transforming commitments:
Example: When digital technology took off, newspaper publisher Thomson Corporation’s president, Michael Brown, transformed his company. He selected an anchor, publicly stating Thomson’s plan to serve the specialized-information market in the U.S.—a new strategic frame. He secured that anchor, repeatedly communicating the new direction to stakeholders, acquiring information providers in the legal and financial markets, and divesting publishers that didn’t support the new direction. He aligned his organization, integrating new acquisitions and tightening operations to secure financing for more acquisitions. Thomson became the leading provider of specialized information to financial-services, legal, and health-care professionals. Operating in 53 countries, its 2002 revenues exceeded $7 billion. What makes a great manager great? It depends on whom you ask. Many think the secret lies in brilliant strategic insight—the intellectual horsepower to decide where and how a company should compete. Others stress discipline, believing that the ability to execute plans is what sets the superior manager apart. Still others feel that a great manager is, above all, inspirational—capable of uniting an organization and leading employees to great things. These viewpoints are all valid, of course. But while they shed light on how executives’ personal qualities can vary, they tell us little about the underlying practice of management—about the actions successful managers take to weave strategy, execution, and leadership together. By focusing on who executives are, the common explanations distract us from how they manage. As I’ve studied effective and ineffective managers in recent years, I’ve come to a surprising conclusion: Despite differences in their personal attributes, successful managers all excel in the making, honoring, and remaking of commitments. Managerial commitments take many forms, from capital investments to hiring decisions to public statements, but each commitment exerts both immediate and enduring influence on a company. Over time and in combination, a leader’s commitments shape a business’s identity, define its strengths and weaknesses, establish its opportunities and limitations, and set its direction. Commitments are extraordinarily powerful—a fact that executives can all too easily lose sight of. Caught up in the hurly-burly of the present, managers often take actions that, while beneficial in the near term, impose lasting constraints on their operations and organizations. When market or competitive conditions change, they can find themselves unable to respond effectively—even though they may see a threat clearly and know they must take action. They find themselves caught in a web of commitments that they (or their predecessors) have spun. Managers who understand the nature and power of their commitments can wield them more effectively throughout a company’s life cycle. Entrepreneurs can avoid taking actions that imprint a new venture with a dysfunctional character. Managers in established enterprises can reinforce past commitments that are still benefiting the company, and they can learn to recognize when past commitments have become roadblocks to needed changes—and replace them with new, rejuvenating commitments. Double-Edged SwordsA commitment refers to any action taken in the present that binds an organization to a future course of action. Not all managerial choices qualify as commitments. A CEO’s decision to build a war chest of cash, for instance, is not binding because it does not commit the business to a particular course of action—the cash remains available for any kind of investment. If, by contrast, the cash had gone toward erecting a specialized factory or building a brand, the company would have been making a commitment. An action becomes a commitment, in other words, if it restricts a company’s future options in a way that would be costly to reverse. (See the work sheet “Binding Actions” for a list of common types of commitments.) exhibit start  Binding Actions A managerial commitment is an action taken in the present that binds an organization to a future course of action. Eight of the most common kinds of commitments are listed here. For each category, jot down the key commitments that have shaped your company. You may be surprised at the degree to which you’ve locked your business into a specific trajectory for the future. exhibit end Commitments are essential to management. They are the means by which a company secures the resources necessary for its survival. Investors, customers, and employees would likely shun any company whose management refused to commit publicly to a strategy and back its intentions with investments. But commitments are more than just necessities. Used wisely, they can be powerful tools to help a company beat the competition. Preemptive investments in production capacity or brand recognition can deter potential rivals from entering a market, and heavy investments in durable, specialized, and illiquid resources can be difficult for other companies to replicate quickly. Sometimes, just the signal sent by a major commitment can freeze competitors in their tracks. When Microsoft announces a coming product launch, for instance, would-be rivals rethink their plans. Sometimes, just the signal sent by a major commitment—an investment in production capacity or brand recognition—can freeze competitors in their tracks. Commitments can also induce potential partners and investors to play ball. IBM’s public pledge to lead the personal computer market, backed up by large investments and the dedication of top-ranking executives to the PC business in the early 1980s, convinced software vendors to write applications for IBM machines and hardware distributors to reserve shelf space. Commitments can also persuade nervous customers to take the plunge and adopt a new product or technology. Hollywood studios stimulated the adoption of the DVD format, for example, by agreeing to sell the new discs through mass merchandisers and setting prices low enough to entice customers en masse. Commitments can also convince customers to side with one provider over another. Visa’s ad campaign touting the card’s widespread acceptance helped it woo customers from American Express. Commitments provide important benefits inside an organization as well. They give employees a clear sense of focus and help them prioritize and coordinate their actions. They’re also motivational. They can, in particular, create excitement and energy in difficult times, inspiring employees to persevere despite hardships and setbacks. CEO Michael O’Leary’s vision for Irish carrier Ryanair—he has pledged to make it Europe’s biggest airline within five years by offering low-cost fares—motivates employees to excel even in the face of intense competition from entrenched rivals. But the benefits of commitments come at a cost. Because commitments prescribe certain future actions and preclude others, they limit a company’s flexibility. When a management team commits a company to a particular manufacturing technology, for example, it prevents the organization from gaining deep expertise in other methods. When a chief executive announces her intention to lead an organization to dominance in a particular market, she forecloses other strategic avenues. When a business head signs a long-term contract with a component supplier, he narrows his choices about which products his unit can make and sell. The gains in efficiency and focus that commitments provide may outweigh the costs of inflexibility for a long time, but when conditions change, a company may find itself locked into outdated patterns of operation and competition. A commitment’s advantages may turn into liabilities. The gains that commitments provide may outweigh the costs of inflexibility for a long time, but when conditions change, a company may find itself locked into outdated patterns of operation and competition. Commitments are, in short, double-edged swords, and their dual nature is apparent throughout a company’s life cycle. When an entrepreneur starts a business, he makes decisions about products, markets, competitors, and partners that imprint an identity on the organization, defining what it can and cannot do. As the business matures, managers reinforce that identity through new commitments involving strategy, finance, personnel, and operations. At some point in the company’s evolution, the original identity may prove insufficient or even counterproductive, requiring managers to transform the business through a set of new commitments that contradict the earlier ones. An ill-considered commitment during any of these three stages can doom a business. Commitments That DefineMost entrepreneurs live in the moment. Grappling with immediate concerns, struggling just to survive, they rarely have the luxury of considering the long-term implications of their actions. And yet these early actions shape an organization going forward; they become its defining commitments. In some instances they end up being explicitly codified, as with Hewlett-Packard’s “HP Way” or Wal-Mart’s code of conduct for employees. In others they remain tacit; they exist as a shared understanding of “the way we do things here.” But in either case they establish assumptions and routines that become hard to break. During a company’s formative years, its founders and managers can take many different kinds of actions that shape its future. But the most enduring commitments tend to fall into five categories. Strategic frames are the shared mental models that influence how managers and employees see the world. Entrepreneurs mold their organizations by committing to particular world views. They can declare, for example, which opportunity the company is pursuing, how a technology will evolve, which competitors the company should worry about, and how the company will make money. Clear strategic frames prevent the employees (and the entrepreneurs themselves!) from dissipating their focus and energy by pursuing too many opportunities. At the same time, they rule out many business options. Resources include both hard assets, such as land and machinery, and soft assets, such as brands and technology. Resources that are durable, tailored to a specific strategy, and hard to buy and sell can confer a substantial competitive advantage. They can also lock a firm into a future trajectory. Processes are the recurrent procedures that companies employ to get work done. Processes include operating procedures, such as logistics or production, and managerial ones, such as decision making and resource allocation. Establishing formal processes increases efficiency, enables a company to scale up its operations, and facilitates coordination among different parts of an organization. But it also reduces organizational adaptability. Relationships are the associations an entrepreneur forges with external individuals and organizations—customers, regulators, suppliers, distributors, and other partners—who provide resources critical to the company’s success. Choices about relationships also shape the internal organization. Entrepreneurs have to decide, for example, which activities to outsource, which to keep in-house, and how to organize business units. Early relationships provide a fledgling company with access to necessary resources and give it credibility in the marketplace; if its partners thrive, the relationships can also provide it with considerable momentum. They can also be difficult to get out of when conditions and needs change. Values are the shared norms that unite and inspire employees. They are established through both statements and actions. The first people an entrepreneur hires, for example, can leave a lasting impression on a company’s culture. Strong values can attract great employees, fuel their passion, and build strong bonds of loyalty. They can also repel potential employees and, as with other defining commitments, hamper future change efforts. Entrepreneurs pursuing the same opportunity can make very different defining commitments, molding their companies in strikingly divergent ways. Consider two software companies, Siebel Systems and Trilogy Software. The companies were founded within a few years of each other, and both had the same goal: to use software to automate sales and marketing functions. But there the similarities end. Trilogy founder Joe Liemandt believed that cutting-edge technology was the secret to creating the next great software company. Consistent with this strategic frame, he focused his attention on building the company’s technical resources. He hired expert software engineers and challenged them to develop advanced algorithms for configuring built-to-order products—such as automobiles or personal computers—constructed from many components. More concerned with crafting great code than with attracting customers, the company patented its technology before landing its first buyer. Liemandt’s vision informed all the business decisions he and his lieutenants made. The company’s software development process gave considerable power to programmers, granting them wide latitude to add features. Its staffing process emphasized hiring young technical graduates and allowing them to choose which projects to pursue. The company’s culture also placed a high value on individual initiative. Employees believed that Liemandt wanted them to “change the world” and to “question everything.” Tom Siebel and cofounder Pat House framed their strategy in a very different way. They believed that success lay in solving customers’ problems, not in delivering the highest-octane technology. The cofounders spent a year interviewing potential customers before writing the first line of code. They established a development process driven by customer needs rather than engineering talent. And, recognizing that product and service consistency was crucial to a corporate clientele, they hired MBAs and seasoned executives and trained them in highly structured operating and sales procedures. Even dress codes and office color schemes were legislated from above. Tom Siebel referred to his firm as “a new-economy company with old-economy values.” The Siebel and Trilogy cases are not meant to imply that one model is inherently better than the other. Both companies are successful: Trilogy’s focus on specialized technology has made it a strong niche player, while Siebel’s concentration on customers’ business needs has established it as a provider of a broad range of customer-relationship management products. The important point is that a company’s founders need to recognize that their earliest actions will determine the organization’s course and identity well into the future. Sam Walton, for example, continues to influence the daily behavior of Wal-Mart employees more than any living executive does (or could). That doesn’t mean that entrepreneurs should try to anticipate all the long-run consequences of every commitment they make—and it certainly doesn’t mean that they should shy away from making commitments. But it does mean that, before making important decisions about, say, operating processes or partnerships, they should always ask themselves, Is this a process or relationship that we can live with in the future? Am I locking us into a course of action that we’ll come to regret? They may also find it prudent to make their commitments in stages in order to maintain flexibility. They can hire a potential employee as a consultant before bringing her on full time, for example, or run a trial project for a potential customer before committing to a deeper relationship. Entrepreneurs shouldn’t rush into commitments if they don’t have to. Commitments That ReinforceManagers continue to make commitments well after an organization’s formative years. They make investments, issue public statements, hire and fire employees, establish partnerships, and so forth. But these later actions no longer define the organization. They are reinforcing commitments—they buttress the maturing company’s original strategic frames, resources, processes, relationships, and values. (See the table “Building on the Past: Reinforcing Commitments” for a categorization of such commitments.) exhibit start Building on the Past: Reinforcing Commitments As a business matures, managers make five kinds of critical reinforcing commitments that support the status quo. These commitments help the company operate more efficiently, but they also constrain its ability to change. exhibit end Reinforcing commitments include routine day-to-day actions such as renewing a contract with a customer or promoting an executive who exemplifies the company’s values. They also include occasional big bets, such as making a major acquisition, integrating backward to produce components for core products, or publicly stating a bold new goal that furthers the existing strategy. Whether small steps or big leaps, reinforcing commitments are essential to building an efficient and disciplined company. They establish a clear corporate focus that concentrates an organization’s attention and effort and attracts employees, customers, and partners who fit well with the company’s identity. They also decrease costs; maintaining a current customer, for instance, tends to be much cheaper than landing a new one. And they help temper risk; refining an established process or technology is safer than adopting a new one. At the same time, reinforcing commitments inevitably make organizations more rigid and less adaptable. For an analogy, consider how a road system evolves. At first it is merely a network of cart paths marked in the dirt. These are like the defining commitments laid down early in a company’s history. As the paths become more established, they are remade as dirt roads and, finally, paved as highways. Reinforcing commitments are the actions that turn informal corporate pathways into formal highways. On the one hand, they make a business much more productive—you can drive much faster on a highway than on a cart path. On the other hand, they make it less flexible—the road determines your destination and your route. Problems arise when the environment shifts—when economic or trade conditions change, when a powerful new technology emerges, or when a new regulatory regime is imposed. Suddenly, the old route is no longer the best route. And the reinforcing commitments that enabled you to flawlessly execute your business model now trap you in that model. (I explain this process in detail in “Why Good Companies Go Bad,” HBR July–August 1999.) Few cases better illustrate the benefits and dangers of reinforcing commitments than the rise and fall of South Korea’s Daewoo Group. Kim Woo Choong founded Daewoo Industrial in 1967 with only five employees, but he had great aspirations for his enterprise—Daewoo means “great universe.” Within 15 years of its founding, Daewoo had fulfilled its founder’s grand ambitions, emerging as one of South Korea’s largest chaebol, diversified networks of businesses linked by intercompany lending and overseen by a strong chairman. Daewoo’s dramatic rise began in 1970, when Kim—through sheer persistence—convinced major U.S. retailers, including Sears, J.C. Penney, and Montgomery Ward, to purchase inexpensive textiles from his firm. While calling on his new American customers, Kim learned that the U.S government was planning to establish a quota for textile imports and would likely set percentage allocations for foreign suppliers based on their recent market shares. Kim bet all of Daewoo’s limited resources on an effort to increase its share of U.S. textile imports, sacrificing product quality and profits in his quest for volume. When quotas were set in 1972, Daewoo was allocated nearly a third of South Korea’s share, which provided a steady cash flow to fund future growth. Daewoo’s success as an exporter also qualified it for subsidized financing, bank loans, and permits for capacity expansion from the South Korean government. Daewoo’s business model had been established within a matter of just a few years. The company would emphasize quantity over quality, pursuing strong revenue and market-share growth at the expense of profitability, and it would invest comparatively little in resources such as brand and technology. It would also cultivate a close relationship with the South Korean government to secure cheap funds and protection from competitors. Kim benefited in this regard from his personal ties with South Korea’s ruler, General Park Chung Hee, who had been a student of Kim’s father. And Kim’s personal values—relentless perseverance and fearless risk taking—would become the values of his company. Throughout the 1970s and 1980s, Kim made a series of reinforcing commitments that fortified and extended Daewoo’s success formula. In exchange for favorable subsidies and permits from Park, Daewoo invested in industries the government targeted for growth—heavy machinery, shipbuilding, chemicals, automobiles, and consumer electronics. Daewoo expanded aggressively in each industry, competing through high-volume production rather than leadership in brand, quality, or technology. Success was measured in terms of revenue growth, not profits. The South Korean government fueled Daewoo’s growth with subsidized loans. All went well until 1979, when Park was assassinated, and major shifts in the political and regulatory climate threatened Daewoo’s position. Subsequent governments opened South Korea’s product and capital markets to the outside world and withdrew much of the support for Daewoo and the other chaebol. It soon became clear that two decades of heavy investment by the leading chaebol had resulted in overcapacity in many domestic industries. At the same time, Daewoo was caught in a competitive vise. Chinese exporters were undercutting it on price, and Japanese firms had superior technological acumen and brand strength. But even though Kim and other Daewoo executives saw the changes—the developments were impossible to miss—they responded with actions consistent with Daewoo’s old formula. They continued to expand the company aggressively, as though still confident that the government would bail them out in case their bets failed. They continued to court South Korean politicians. They invested heavily to build and acquire production and marketing capacity in developing countries such as China, Vietnam, India, Sudan, and several nations in Eastern Europe, where Kim forged personal bonds with local politicians to secure favorable trade and investment terms. In Uzbekistan, for example, Daewoo received a free factory site and tariff protection in exchange for a large investment in automobile production; commentators joked that the country should be renamed “Daewooistan.” Daewoo borrowed as much as $47 billion to fund the investments, exceeding the national debt of several of the countries the company now operated in. But while local governments could guarantee loans, they couldn’t guarantee consumers’ demand for Daewoo’s products. By the mid-1990s, several of Daewoo’s operations were running well below capacity. Rather than retrenching during South Korea’s recession in 1997, the group kept expanding until, ultimately, it collapsed under the weight of its own debt. The South Korean government intervened—not to save Daewoo but to dismantle it. Kim fled the country to avoid criminal prosecution. Commitments That TransformThe pressure to persist in making reinforcing commitments in the face of disruptive shifts in technology, regulation, or competition is great. But, as Daewoo discovered, it must be resisted. To change a company, managers have to deliberately take bold actions to break and remake their old commitments—they have to make new transforming commitments that force their organizations out of the status quo. They may, for example, exit a legacy business, publicly commit to a new goal, fundamentally shift their performance measures, or fire powerful executives who oppose the new direction. Of course, managers who have spent their careers buttressing a success formula can be overwhelmed by the challenges of transforming it. Reinforcing commitments are comfortable and familiar; commitments that transform are anything but. After studying dozens of transformations, I have found that the successful ones unfold in three steps, in a process that’s analogous to ice climbers’ practice of belaying. Picture a group of climbers perched on a ledge while ascending an ice wall. The leader selects a location for an anchor, considering factors such as the terrain and type of ice, then climbs above the others to secure the anchor. The leader attaches a belay rope to the anchor to guide the rest of the climbers and prevent them from falling should they lose their footing. When managers need to lead their organization in a new direction, they too must first select an anchor—a strategic frame, a revamped process, an investment in new resources, a relationship with a new partner, or a revised set of values. Then they secure the anchor, creating a pivot point that allows the organization to change course. Finally, they realign the entire organization around the new anchor, shifting the company onto the new trajectory. The dramatic transformation of the Thomson Corporation illustrates the process well. Today, Thomson is a leading global provider of specialized information to professionals in a wide range of fields, including financial services, law, education, scientific research, and health care. The company, with 2002 revenues approaching $8 billion, operates in 46 countries and has several prestigious brands including First Call, Yale, Westlaw, and the PDR (Physicians’ Desk Reference). More than 50% of its revenues come from electronic products and services, and more than 70% come from subscriptions and other renewable sources, which provide more predictable profit streams than advertising. But turn the clock back to the mid-1980s. The company was primarily a newspaper publisher. Following years of acquisitions, it owned more than 200 daily and weekly newspapers in Canada, the United States, and the United Kingdom, including Toronto’s Globe and Mail, Scotland’s Scotsman, and scores of regional newspapers, most of which were the sole papers serving their regions. It had also integrated backward into the production of newsprint. Although the company had made forays into other businesses, including specialized information, packaged holiday tours, and North Sea oil drilling, its core business remained newspapers. One could easily imagine Thomson executives persisting in their reinforcing commitments: acquiring more newspapers, refining the existing businesses, measuring success in terms of circulation, and struggling to respond as digital technology took off. Indeed, this is precisely what several other leading newspaper groups did. Why did the Thomson story end differently? Because Thomson executives successfully implemented the three steps of transforming commitments: Select an anchor.When Ken Thomson appointed Michael Brown to head Thomson’s international operations in 1985, they publicly stated their intention to transform the company into a provider of specialized information, with a particular emphasis on the U.S. market. This goal was the anchor that management would use to change Thomson’s course. Its selection illustrates an important point about anchors. Anchors need not be revolutionary—Thomson was already providing a limited amount of specialized information in the United States—but they do need to mark a clear break from the past. At the time, specialized information accounted for less than 15% of Thomson’s total operating profits—a drop in the bucket compared with newspapers. Committing to turn this modest business into the company’s new core forced the organization to rethink all of its assumptions. The management team chose a new strategic frame as Thomson’s anchor. But an anchor can also take the form of a new process, resource, relationship, or set of values. Larry Bossidy, for example, transformed AlliedSignal by using a Six Sigma initiative to change core operating processes. Kun Hee Lee transformed Samsung by investing heavily to build the group’s brand and enhance its technology. Leaders of the Brazilian cosmetics firm Natura committed to a new set of values—truth in cosmetics. Secure the anchor.To overcome the forces of organizational inertia—not to mention the skepticism that greets almost any change management effort—managers need to aggressively promote the new anchor and take concrete actions to secure it. Top executives repeatedly communicated Thomson’s new strategic direction to employees and other stakeholders. They also acquired specialized information providers to build the company’s position in the legal and financial markets and divested traditional publishing businesses that had contributed to the company’s past success but didn’t fit with its future direction. Brown also moved from Britain to the United States to be closer to the focal market. When it comes to securing an anchor, not just any action will work. Effective transforming commitments share three characteristics. First, they are clear. Simple and concrete messages can be passed through an organization with minimum distortion, while vague or complex ones end up being distorted beyond recognition. Second, they are credible. Employees, customers, investors, and partners must believe that the manager is serious about her commitments and will stick with them. Otherwise, a new anchor may be viewed as cheap talk that can safely be ignored. Finally, they are courageous. The new anchor and securing actions must make the status quo untenable; they can’t leave room for retreat. (See the checklist “The Three C’s of Transforming Commitments” for questions to ask about your own transforming commitments.) exhibit start The Three C’s of Transforming Commitments One of the toughest challenges facing any manager is breaking with the entrenched commitments of the past, but it has to be done when a company needs to change course. The best way to get an organization onto a new track is to make transforming commitments that force it out of the status quo. Successful transforming commitments are clear, credible, and courageous. Here are questions you can use to determine whether your actions fit the bill. exhibit end Align the organization.Once the anchor is set and secure, all of the organization’s other frames, processes, resources, relationships, and values must be reconfigured to support it. At Thomson, integrating the newly acquired specialized publishers was as important as the acquisitions themselves, and top executives like future CEO Dick Harrington were dedicated to the task. Thomson also integrated its North American and international operations more closely to finance subsequent acquisitions. Such operational steps lack the drama of bold commitments, but they are every bit as necessary. Like belaying, successful transformation requires the boldness to climb above the group but also the discipline and persistence to guide others to a new foothold. Getting PersonalA commitment is not an impersonal proclamation issued by a faceless bureaucrat. It is a highly visible action, promise, statement, or decision made by an individual and closely associated with that person. To succeed, it must be consistent with the manager’s ethos—her personal values and past actions. Kate Brosnahan Spade, the cofounder of the New York fashion house Kate Spade, personally embodied the classic elegance that distinguishes her company’s purses and accessories. The late Marvin Bower, who transformed McKinsey & Company into a truly professional firm, exemplified the values he espoused, having trained as a lawyer and practiced law at a well-established firm before joining the consultancy. To succeed, a commitment must be consistent with the manager’s personal values and past actions. Consistency between what managers commit to and who they are confers several benefits. First, it helps ensure that managers have an intuitive understanding of their business and its markets: Kate Brosnahan Spade has been able to consistently design hit products because she makes what she (and her friends) would like to own. Consistency also enables managers to walk their talk: Marvin Bower spent decades patiently reminding McKinsey consultants that they worked for a “firm,” not a “company,” and served “clients,” not “customers.” It gives a manager credibility: Lou Gerstner’s status as a former IBM customer underscored his commitment to reshaping the organization to solve customer problems rather than peddle boxes. Finally, it can imbue an executive with the passion necessary to get others on board and persist in the face of setbacks. The right commitments made by the wrong person, by contrast, often fail. A freewheeling, technology-obsessed entrepreneur, for example, may recognize that his start-up requires processes and structure to grow, and he may publicly commit to imposing discipline. But if his heart isn’t in it, he’s unlikely to stay the course. Employees will sense the ambivalence, conclude that the founder is just paying lip service to the new direction, and continue in start-up mode. Similarly, a CEO who rose by taking actions that reinforced the status quo may be unable to make the bold commitments needed to transform a company, even if she recognizes intellectually what should be done. Managers who find themselves in this situation sometimes try to fudge it. An entrepreneur might hire a “suit” as COO to instill discipline. The CEO of an established firm might empower a change management committee. This approach rarely pans out. Opponents of the new direction appeal directly to the founder or CEO, who ends up making compromises that stall necessary changes and frustrate those trying to lead the charge. Managers need to personally get on board with the necessary commitments or else get out of the way. Changing an organization can be very difficult, but changing a person’s ethos is nearly impossible. Commitments define individuals just as they do organizations. They enable and constrain. They provide continuity over time. They make us what we are. Understanding the link between personal ethos and professional commitment is, in the end, what allows good managers to become great leaders. A version of this article appeared in the June 2003 issue of Harvard Business Review. Which of the following techniques is the most popular method of evaluation used in organizations today?Certainly, the most popular method of evaluation used in organizations today is the graphic rating scale. One study found that 57 percent of the organizations surveyed used rating scales, and another study found the figure to be 65 percent.
Which of the following represents the final step in the decisionThe correct answer is evaluating the decision's effectiveness. The last step in the process of decision-making is Evaluating or Monitoring the decision's effectiveness.
Which of the following is a discipline process of evaluating the quality of information?Critical thinking is the intellectually disciplined process of actively and skillfully conceptualizing, applying, analyzing, synthesizing, and/or evaluating information gathered from, or generated by, observation, experience, reflection, reasoning, or communication, as a guide to belief and action.
Is the process for reviewing key roles and determining the readiness levels of potential internal and external candidates to fill these roles?Succession planning is the process for reviewing key roles and determining the readiness levels of potential internal (and external!) candidates to fill these roles. It is an important process that is a key link between talent development and talent acquisition/recruiting.
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In the exchange process, which of the following invests status and recognition?
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