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Setting You Up to Fail?
This is an MIT Sloan Management Review article. It's hard to pick up a major management magazine -and we're not excluding this one -and not find several articles outlining in painful detail where a leader went wrong in a particular case. Implicitly or explicitly in these stories, the employees are treated as receptive individuals waiting only for the boss to offer a productive channel to their intrinsic energies. But when a boss stumbles, it may be as a direct result of actions taken by employees who have sabotaged their actions. To keep this from happening, leaders must: 1. Understand the situation they are walking into. Leaders need to know how they are likely to be perceived and what their predecessor was like. 2. Invest early in subordinates. New bosses need to spend significant time one-on-one with employees for three reasons: to understand them; to get to know them; and to establish a rapport. 3. Be mindful of their own behavior. New leaders often overestimate the extent to which their good intentions and good character will shine through. Demonstrating one's "authentic self " does not mean "being natural." Rather, it requires managers to seize everyday opportunities to demonstrate that they are trustworthy, supportive and fair. 4. Intervene early. New bosses need to take action if there is a problem. Letting things fester only postpones the inevitable. -
STRIKE AT BRITISH AIRWAYS: UNAVOIDABLE OR SET-UP-TO-FAIL?
The case considers the steadily deteriorating relationship between BA's top management and its cabin crew union - and highlights the self-fulfilling and self-reinforcing nature of the dysfunctional dynamic that develops between the three key parties. We concentrate on the cognitive, motivational and behavioral mechanisms that drive the parties toward an avoidable stalemate. The airline ultimately got its way, but at the expense of a three-day strike estimated to have cost £125 million. In the process, it also inflicted huge damage on employee morale and corporate reputation. The strike proved to be a turning point in BA's fortunes, sending the once soaring share price into a long decline - as measured against its direct competitors. Although Ayling's radical cost-cutting strategy was in many ways farsighted, it was implemented in a way that alienated staff and angered the unions - moves that ultimately sent the company crashing out of the FTSE100. Learning objectives: We have written this case in response to demand from instructors to provide material for teaching the set-up-to-fail syndrome in different courses and in different contexts than the typical dyadic boss-subordinate relationship. This case shows how the process plays out in an intra-organizational situation between a company and its union - though a similar dynamic could easily develop with other stakeholders such as suppliers, alliance partners, shareholders, analysts or NGOs. It is a case about individual "opponents" who demonize each other - thus triggering a gigantic self-fulfilling and self-reinforcing process. The key lesson is that leaders and their teams have to be careful about labeling processes toward other parties. When they start caricaturing another stakeholder, they risk triggering vicious spirals. -
Terry Tesco's Long Shelf Life
This case covers Terry Leahy's career at Tesco, the UK-based retailer, and especially the ten years since he became CEO in 1997. Tesco has come a long way since the early 1990s, when it was playing second fiddle to Sainsbury's. It now has a 30% share of the UK groceries market, almost as big as its two closest competitors, Sainsbury's and the Wal-Mart-backed Asda, put together. It has used its solid domestic base to develop its international operations, culminating with the launch of a chain of convenience stores on Wal-Mart's home turf in late 2007. The case looks at the leader who has overseen this remarkable progress, Terry Leahy. It traces his rise from council house kid to Britain's most admired business leader (five times running) and adviser to the British prime minister. His success is all the more surprising given his low-key style and lack of charisma. We look at the other factors - such as ambition, passion and personal example - that have contributed to his rise, effectiveness and longevity as a leader. Learning Objectives: This case allows instructors to examine Terry Leahy's leadership through three lenses: in terms of the desirable personal traits of an effective leader; the main competencies required; and the critical roles played by the leader. These three perspectives are complementary and allow participants to get a full appreciation of the challenge of leadership - covering how leaders need to be, what they need to know, and what they need to do. The case also allows exploration of other issues, related to learning, surrounding oneself, time allocation and maintaining one's edge over time. -
Tesco: Delivering the Goods (B)
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Tesco: Delivering the Goods (A)
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British Airways Hits Turbulence
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Collision Course: Bob Nardelli and the Home Depot Shareholders
The case covers Bob Nardelli's 6-year tenure at Home Depot from 2000-2006. During this time, he posted impressive numbers as well as changed Home Depot's strategic orientation. He failed however to improve the company's share price. This difficulty, allied to Nardelli's pay package (negotiated at a time of economic euphoria when he was one of the two most wanted executives in America), severely strained his relationship with the company's shareholders. The case traces their deteriorating relationship through the lens of the annual general meetings. These were transformed from "lovefests" under his predecessor into increasingly fractious occasions - culminating with a disastrous meeting in May 2006 that indirectly led to Nardelli's resignation at the beginning of 2007. The case considers Nardelli's relationship with two key stakeholders - the board and the shareholders - as well as issues of self-management. At first view, this case can be read as a story of greed and weak corporate governance - an excessively greedy CEO/Chairman who manipulates the board into giving him high compensation and reducing performance pressures. While acknowledging some of these aspects, we are proposing a different take on the situation, focusing instead on the self-fulfilling and self-reinforcing nature of the dysfunctional dynamic between the CEO and the shareholders - and on the inability of the board to offset it. We concentrate on the psychological and behavioral processes that drove the parties toward a perfectly avoidable collision. Learning objectives: The core issue is Bob Nardelli's growing difficulties in dealing constructively with the company's shareholders - and their misunderstanding of his role (as a change agent) and motivation (assuming it is only about money). It is also a case about a board that does not understand how to help a CEO that it rates very highly. The case allows discussion of the role of the board in helping the CEO to overcome such problems. -
Prudential UK: Rebuilding a Mighty Business
In the mid-1980s, Prudential completely dominated the UK insurance market. Fifteen years later it was in grave danger of becoming irrelevant, and then things got worse with the post 9/11 collapse of stock markets and the ensuing downfall of its major product ("with profits" insurance). Led by a new CEO, Mark Wood, Prudential UK's management team embarked on a four-year rebuilding journey. The company was fragmented and had lost its direction. The product mix and distribution channels needed to be overhauled, as did the customer service systems and philosophies. The company had zero partnerships. And the corporate culture resembled that of a "country club". Yet, being in the insurance sector, the company had to continue projecting a reassuring image. This severely constrained the possibilities of making the case for change. Nevertheless, in the space of four years, Mark Wood and his team refocused the company, restored its pride and brought it back among the contenders. It emerged with solid assets - outstanding service, genuine innovation, funds for growth and improved relations with clients, IFAs and the regulator. It created options for itself. Learning objectives: The case focuses on the managerial and leadership aspects of a large-scale restructuring. It features some classic turnaround aspects, but also some unusual ones: 1) the rotating appointment of a "quartermaster" to drive performance in each quarter; 2) a leadership story that projects employees forward 1000 days; 3) regular periods of reflection time as a team; 4) the development of an internal business transformation capability, which involved up to 15 per cent of the workforce working off-line on change projects full-time. The case also raises issues around institutionalizing change. -
Tata Steel: A Century of Corporate Social Responsibility
For a century, Tata Steel has provided a level of compassion that is unmatched in its sector or its country. But the onslaught of global competition and, crucially, global capital markets have sparked serious debate on the role, level and the sustainability of social spending at Tata Steel. In particular, a new emphasis on EVA risks upsetting the century-old commitment to CSR. -
Helen Ramsay: A Mediation Attempt
Two reasonable people, a boss and a subordinate, find each other 'impossible to handle'. Through their descriptions of each other's behavior we realize that they are in a self-perpetuating dynamic. An attempted intervention by the HR manager not only fails to resolve the situation; it actually makes it worse. -
Redesigning Nissan (B): Leading Change
This is the first of a two-case series. When Renault sent Carlos Ghosn to turnaround its alliance partner Nissan, observers were skeptical of his chances. After soliciting recommendations from the employees, he unveiled a three-year plan involving plant closures, job cuts, and a refocus on design. Within two years, the company had achieved a dramatic recovery, posting record profits and proposing a dazzling array of new models. Note that there are two versions of the case: 'Redesigning Nissan (A) & (B)' covers the dynamics of taking charge (case A) and the process of leading change (case B). There is also a combined and condensed version of the cases: 'Nissan's U-Turn: 1999-2001', for instructors wishing to cover the material in a single session. -
Nissan's U-Turn: 1999-2001: Condensed Version of Redesigning Nissan (A & B)
This is the first of a two-case series. When Renault sent Carlos Ghosn to turnaround its alliance partner Nissan, observers were skeptical of his chances. After soliciting recommendations from the employees, he unveiled a three-year plan involving plant closures, job cuts, and a refocus on design. Within two years, the company had achieved a dramatic recovery, posting record profits and proposing a dazzling array of new models. Note that there are two versions of the case: 'Redesigning Nissan (A) & (B)' covers the dynamics of taking charge (case A) and the process of leading change (case B). There is also a combined and condensed version of the cases: 'Nissan's U-Turn: 1999-2001', for instructors wishing to cover the material in a single session. -
Redesigning Nissan (A): Carlos Ghosn Takes Charge
This is the first of a two-case series. When Renault sent Carlos Ghosn to turnaround its alliance partner Nissan, observers were skeptical of his chances. After soliciting recommendations from the employees, he unveiled a three-year plan involving plant closures, job cuts, and a refocus on design. Within two years, the company had achieved a dramatic recovery, posting record profits and proposing a dazzling array of new models. Note that there are two versions of the case: 'Redesigning Nissan (A) & (B)' covers the dynamics of taking charge (case A) and the process of leading change (case B). There is also a combined and condensed version of the cases: 'Nissan's U-Turn: 1999-2001', for instructors wishing to cover the material in a single session. -
Flying into a Storm: British Airways (1996-2000)
This case considers the transition at the head of British Airways (BA) from Lord Marshall, key architect of BA's spectacular restructuring and revitalisation in the 1980s, to his chosen successor Robert Ayling. In an increasingly deregulated market, Ayling's challenge is to sustain BA's position of leadership in the airline industry. He pursues an ambitious strategic alliance, a massive cost cutting drive and initiates a controversial change of corporate identity. Although the stock market initially approves of most of his strategy, he runs into trouble on the industrial relations front. A cabin crew strike in the summer of 1997 hits employee morale and triggers a sustained dive in the airline's share price. For all Ayling's efforts over the following three years, he does not manage to redress the slump and his eventual removal does not come as much of a surprise. What is surprising is the insistence by BA's chairman that Ayling had set the right strategy, but was the wrong person to implement it. The case explores what went wrong. -
Bertelsmann - Corporate Structures for Value Creation (A)
Case A: This case exposes the growing pains of an older, brick-and-mortar, company as it attempts to join the New Economy. The focus is on synergy; pushed by converging technologies and managed by a young and energetic leader, Bertelsmann attempts to overcome a history of decentralization to create a more integrated and Internet savvy corporation. -
Set-Up-to-Fail Syndrome
Why do some employees perform poorly? Most managers would answer this question by ticking off a list that includes weak skills, insufficient experience, inability to prioritize assignments, or sometimes even a lack of motivation. In other words, most managers would contend that poor performance is the employee's fault. But is it? Not always, according to Jean-Francois Manzoni, assistant professor at INSEAD, and Jean-Louis Barsoux, research fellow at INSEAD. Their research with hundreds of executives strongly suggests that it is bosses themselves--albeit accidentally and with the best intentions--who are often responsible for an employee's sub-par achievement. They call this dynamic "The Set-Up-to-Fail Syndrome," and in this provocative look at what makes--and sustains--dysfunctional work relationships, the authors conclude with a detailed description of how to break out of the negative spiral that can drain both individuals and organizations of valuable productive energy. -
Making of a French Manager
In France, management is not a task. It is a "state of mind." Alumni of the grandes ecoles, the elite colleges, dominate the upper echelons of business and have the same social prestige as doctors or lawyers. Movement from public to private sector managerial positions is common, reflecting and reinforcing a rich relationship between French industry and government, not unlike Japan's.