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Look Out For These 3 Telltale Signs Of Transformation Theater

2024 May 19
by Greg Satell

When Bob Nardelli took over as CEO at The Home Depot, he was geared up for the challenge. Passed over for the CEO job at GE in a high-profile succession process, he was determined to show that he could, in fact, be a transformational leader. As Uber-consultant Ram Charan put it, ”What got Home Depot from zero to $50 billion in sales wasn’t going to get it to the next $50 billion.”

He sought to replace the retail firm’s famously decentralized, entrepreneurial culture with the six-sigma driven performance culture he brought from GE. He intended to ruthlessly seek out ways to cut costs, and streamline operations. Under Nardelli, everything would be measured to his exacting standards.

It didn’t turn out well. The truth is that what Nardelli did was not genuine transformation, but transformation theater. Despite the hype, he took the company backward and it lost ground. In the end, he was fired, but walked away with $210 million. Today, Nardelli has spawned an army of imitators. We need to learn to recognize these 3 telltale signs.

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There Are Things That Machines Can’t Do (And Never Will)

2024 May 12
by Greg Satell

I recently went to an event that featured a panel of experts discussing the impact artificial intelligence will have on society. As the discussion was winding down, the moderator asked what humans could still do that today’s superpowered algorithms cannot. One of the panelists, a renowned neuroscientist, replied, “die.”

“Well that was morbid,” I thought. It’s also completely untrue. There are lots of things machines will never do. Machines will never strike out at a Little League game, have their hearts broken in a summer romance or see their children born. These things may seem incredibly prosaic, but they’re actually deeply consequential and far reaching.

As MIT’s  Sandy Pentland has put it, “We teach people that everything that matters happens between your ears, when in fact it actually happens between people.” Collaboration, with humans and machines, is becoming a key to competitive advantage and that’s where we need to focus. As I wrote in Forbes a decade ago, the future of technology is always more human.

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Why The Suckers Always Think They’re Playing It Smart

2024 May 5
by Greg Satell

A 2021 Pew survey found that roughly half of US adults get their news often or sometimes from social media, sources are subject to influence by not only run-of-the-mill trolls and hucksters, but also by nation states deliberately looking to shape and distort what we think. Clearly, we live in an era of misinformation and disinformation.

The effect goes far beyond those directly exposed. Much like an epidemic, those influenced by misinformation and disinformation tend to pass it on and, since we tend to be heavily influenced by our local environments, fiction can begin to seem more real than fact. In social theory, this is called the principle of reflexivity.

We tend to assume that getting taken in is due to a lack of education and intelligence, but that’s rarely the case. Smart people get fooled all the time. In fact, those who intend to deceive us often start by flattering our intelligence, making us feel that we’re privy to information that others fail to grasp. It is by boosting our confidence that they take us in.

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Here’s Why “Creating Awareness” Is Usually A Waste Of Time

2024 April 28
by Greg Satell

I recently posted something on LinkedIn that drew a lot of angry comments, mostly from change professionals lashing out. What struck me was that while my comments were based on extensive evidence, my interlocutors seemed completely unaware of any of the facts. They even claimed that I was “using headlines to gain attention.”

The statement that mostly drew their ire was that “creating awareness is usually a waste of time.” While this is contrary to how most change management professionals are trained, the simple fact is that decades of research show that shifts in knowledge and attitudes usually don’t lead to a significant change in practice.

The truth is that change management has a startling track record of failure. McKinsey has found that 69% of transformation efforts fail. A more recent study by Bain found that only 12% succeeded and 75% had mediocre results. Misguided communication efforts are a big part of the problem. We desperately need to take a more evidence-based approach to change.

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Jack Welch’s GE Was The Wrong Model To Take From The 90s. Lou Gerstner’s IBM Is The Right One

2024 April 21
by Greg Satell

When Fortune magazine named  General Electric CEO Jack Welch “Manager of the Century.” it lauded the CEO’s ability to increase the stock price and deliver consistent earnings growth. Nicknamed “Neutron Jack,” he was known as a fierce competitor and a ruthless cost cutter. In the late 20th century, he was nothing less than an icon, an example other leaders wanted to emulate.

When Lou Gerstner took over at IBM in 1993, the company was near bankruptcy. Many thought it should be broken up. Yet Gerstner saw enormous value could be unlocked through reviving the culture that made the iconic company successful in the first place. His turnaround of the firm was perhaps the most impressive in corporate history.

It’s been a quarter century since both left their jobs at the helm and it’s time to take stock on the two radically different approaches. Welch created a fiercely competitive environment. Gerstner stressed values. By now it should become clear that Gertner’s approach was far more successful, creating enormous value for IBM and for society. Welch is a cautionary tale.

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Why The Right Way Is Usually The Hard Way

2024 April 14
by Greg Satell

In an interview he gave to Harvard Business Review, Jerry Seinfeld was asked about whether a consulting firm like McKinsey could make the creative process faster. That’s the assumption that many business leaders make, that every process can be optimized. As much as we like to imagine we’ve evolved, we’re still largely stuck with Frederick Taylor’s 20th century management ideas.

“Who’s McKinsey?” Seinfeld then asked. “Are they funny?” When told no, he said, “If you’re efficient, you’re doing it the wrong way. The right way is the hard way. The show was successful because I micromanaged it—every word, every line, every take, every edit, every casting.”

Anybody who’s been a successful performer, whether as an athlete, an actor or anything else knows what Seinfeld means. While there’s something to be said for honing processes to make them more predictable and efficient,  to create something new you need to do the opposite.  You need to explore to discover and that means being inefficient. Not all who wander are lost.

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Change Always Involves Strategic Conflict. Here’s How You Build Strategies To Win:

2024 April 7
by Greg Satell

Change is often a story told as a hero’s journey. We discover a cause, are called to set out on a mission and seek to bring about some alternative future state. If we are good and true, do all the right things in the right way, and our cause is righteous, we will prevail in the end. Like Luke Skywalker in Star Wars, much of the struggle is internal.

Yet like Star Wars, that story is a fantasy. The true story of change is that of strategic conflict between that alternative future state and the status quo. There are always sources of power keeping the status quo in place and that’s where the battle lies. As long as those sources of power remain, nothing will ever change.

Once you internalize this story, however, you are ready to build an effective strategy. Power always lies in institutions and, by identifying and analyzing those forces at play, you can begin designing actions to influence them.. If you can remove—or even mitigate—the sources of power on which the status quo depends, you can make genuine transformation a reality.

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Pundits Love To Blame Bureaucracy. Here’s Why You Shouldn’t Listen To Them:

2024 March 31
by Greg Satell

When Bill Anderson joined Bayer last June, he knew that the 160-year old firm had its challenges. In addition to high debt and expensive litigation involving the herbicide Roundup, the firm also faces a slew of patent expirations and a faltering development pipeline for new drugs.

Yet Anderson has his eyes set on even a more menacing bugbear. “Bureaucracy has put Bayer in a stranglehold,” he recently wrote in Fortune. “Our internal rules for employees span 1,362 pages. We have excellent people…but they are trapped in 12 levels of hierarchy, which puts unnecessary distance between our teams, our customers, and our products.”

I’m skeptical. While pointing to a nameless, amorphous bureaucracy as the source of all evil may be convenient, it’s not at all clear to me that it’s evidence of a strategy. In fact, middle management is often crucial to enabling organizations to function, playing critical roles in helping to coordinate and execute complex tasks. We need to be careful what we cut.

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Want A True Formula For Success? Prepare For Luck.

2024 March 24
by Greg Satell

One of my favorite podcasts is Derek Thompson’s Plain English and, on a recent episode, he focused on how Stanley water bottles got so popular. It’s a great story that involves a heritage-laden, 166-year-old company, a group of Mormon mothers, astute executives and social media. It’s hard not to listen to the podcast and be inspired to follow in Stanley’s footsteps.

That would be a mistake. As Thompson points out on the podcast and in his book, Hit Makers, runaway successes are unique. They succeed by doing things differently. If everybody followed in the same footsteps, it would be hard for any of them to break away from the pack.

The simple fact is that there is no tried-and-true formula for success. We can compute the odds any way we want, but the truth is that mathematics tells us anything can happen. Take a look at any runaway success and luck played an important part. Yet results aren’t completely random either. We all have luck, both good and bad, the difference is how you prepare for it.

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If You Want To Lead, You Need To Embrace The Basic Human Need For Status

2024 March 17
by Greg Satell

Scientists have long found that our brains evolved to accommodate more social relationships. For example, the British anthropologist Robin Dunbar’s research suggests that the optimal group size for humans is 150, significantly larger than other primates. Throughout history, humans have developed hierarchies to help us to collaborate on complex tasks.

Yet recently, pundits started advocating for flatter organizations. In 2014, Gary Hamel declared that Bureaucracy Must Die in Harvard Business Review. Around the same time, entrepreneur Brian Robertson developed the non-hierarchical Holacracy, that was adopted by firms such as Zappos and Medium.

It hasn’t gone well and the idea of leaderless organizations has largely been discredited. In The Status Game, veteran science reporter Will Storr explains why. Evolution has wired our brains to seek status in order to carve out our identity within and between groups. To lead effectively we need to support, not ignore, the basic human need for identity and status.

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