KEEP WHAT’S GOOD, FIX WHAT’S WRONG, AND UNLOCK GREAT PERFORMANCE GARY L. NEILSON & BRUCE A. PASTERNACK RESULTS NEW YORK Copyright © 2005 by Booz & Company Inc. Org DNA Profiler is a servicemark of Booz & Company Inc. All rights reserved. Originally published in the United States by Crown Business, an imprint of the Crown Publishing Group, a division of Random House, Inc., New York. Crown Business is a trademark and the Rising Sun colophon is a registered trademark of Random House, Inc. Library of Congress Cataloging-in-Publication Data Neilson, Gary L. Results : keep what’s good, fix what’s wrong, and unlock great performance / Gary L. Neilson and Bruce A. Pasternack.—1st ed. Includes bibliographical references and index. 1. Organizational change. 2. Decision making. 3. Organizational effectiveness. 4. Management by objectives. 5. Performance. I. Pasternack, Bruce A. II. Title. HD58.8.N446 2005 658.4'06—dc22 2005009527 ISBN 13: 978-1-4000-9839-2 ISBN 10: 1-4000-9839-4 Printed in the United States of America Design by Robert Bull 10 9 8 7 6 5 4 3 2 1 First Edition Praise for Gary L. Neilson and Bruce A. Pasternack’s Results: “Whether a minion, manager, or monarch in your organization, Results is a thoughtful and well-researched tool that will help you understand the DNA of your company. Do you plan with the precision of a military machine or play it by ear? Can you turn on a dime or with the aplomb of an oil tanker? Whatever the size of your business, and wherever you play in it, you’ll find something of interest and use in this book.” —Stephen Carter, CEO of Superior Essex and former CEO of Cingular Wireless “Bad management is like the weather—everyone likes to talk about it, but it’s hard to get anyone to actually do anything about it. This well- researched, thorough book is your first step to fixing the big picture.” —Seth Godin, author of All Marketers Are Liars “As the velocity of change accelerates, everyone has to be on the alert for weaknesses in their business. Neilson and Pasternack have given us a clear plan for how to apply the right remedy to achieve better results.” —Frank Zarb, chairman of AIG and former CEO of Nasdaq & Smith Barney “Highly readable and right on target, Results will help readers at all leadership levels understand why their organizations fall short, frustrate talented people, and deny even the most obvious needs for change. In the hands of committed leaders, Results will get results.” —Hank McKinnell, chairman and CEO of Pfizer Inc., and author of A Call to Action: Taking Back Healthcare for Future Generations “I highly recommend this practical book of how to organize and deliver the optimal results you always wanted but never achieved.” —Dick Kovacevich, chairman and CEO of Wells Fargo Bank “Results makes a solid case for organization types and the four building blocks that make up a company’s DNA. Neilson and Pasternack show how business leaders can use these tools to diagnose problems and mod- ify their company’s DNA to create sustainable solutions and a healthy company.” —Chad Holliday, chairman and CEO, DuPont “Results is critical for any executive. You’ll learn how to figure out the DNA of your organization and then act on that knowledge. With read- able tales and enlightening examples, it shows how to build on what’s good and discard what’s bad.” —Walter Isaacson, CEO of Aspen Institute, author of Benjamin Franklin: An American Life “Results identifies a number of all-too-common organizational pa- thologies that get in the way of business performance. More than that, Neilson and Pasternack provide explicit, example-filled advice on how to fix the problems and take your organization to the next level.” —Jeffrey Pfeffer, professor of organizational behavior, Stanford Business School, coauthor of The Knowing-Doing Gap Also by Bruce A. Pasternack THE CENTERLESS CORPORATION CONTENTS ONE: A Tale of Two Managers 1 TWO: The Four Building Blocks: Laying the Foundation for Results 13 THREE: The Passive-Aggressive Organization: Everyone Agrees but Nothing Changes 39 FOUR: The Fits-and-Starts Organization: Let 1,000 Flowers Bloom 65 FIVE: The Outgrown Organization: The Good Old Days Meet a Brave New World 89 SIX: The Overmanaged Organization: “We’re from Corporate and We’re Here to Help” 117 SEVEN: The Just-in-Time Organization: Succeeding by the Skin of Our Teeth 139 EIGHT: The Military Precision Organization: Flying in Formation 169 NINE: The Resilient Organization: As Good as It Gets 193 TEN: Caterpillar’s Journey to Resilience: The Cat That Came Back 217 The Research Behind the Book 243 Notes 259 Acknowledgments 269 Index xxx RESULTS ONE A TALE OF TWO MANAGERS hy is it that some organizations can bob and weave and roll with the punches, consistently delivering on commitments and Wproducing great results, while others can’t seem to leave their corner of the ring without tripping on their own shoelaces? To answer that question, let’s start by taking a closer look at what’s going on be- neath the surface. It’s late in the morning one day in early April as Judy DeGrasse and George Sullivan emerge from the quarterly management meeting deep in conversation about what the CEO, Bill Corrigan, has just said. Judy, a new account manager in ZZ Electronics’* core media products divi- sion, is invigorated. Corrigan has just announced a major new device that promises to not only accelerate sales growth but also to catapult the company to the forefront of the industry. It will deliver greater perfor- mance at lower cost and resurrect the company’s flagging brand . all by Christmas, when the new product is scheduled for release. George, on the other hand, is unenthused. A director in the market research department and fifteen-year company veteran, he has seen this show before, and he knows how it will end. The top brass paint a good big picture, but they never provide the resources that the rank-and-file need to deliver on the vision—not just the bodies and the budget, but the information, the decision-making authority, and the incentives to get it done. In his gut, George knows this will be just another failed program- of-the-month. Of course, his cynicism did not keep him from raising his *Composite company names are indicated in italics at their first mention. 2 RESULTS hand along with everyone else when Corrigan asked them all to signal their commitment. “You want to grab some lunch?” George asks Judy. “Thanks, but I’d better eat at my desk today. I’ll need to meet with my team this afternoon to start brainstorming. I’m not sure how we’ll get this all done before the holiday shopping season hits.” “Whoa, Judy, let me give you a little advice. You’ve got to pace your- self or you’re going to burn out. There’s no way we’re going to make that deadline, and there’s no sense killing yourself in the attempt. Never in my fifteen years with ZZ Electronics have we turned a new product around in six months, and we’re not going to start now. We just lost ten people in my unit during the last round of cutbacks, and the ones I have left are working on that market analysis project that was last week’s prior- ity number one. If anyone had bothered to ask me before this meeting, I would have told them this was a nonstarter.” “Yes, but Bill said we’re going to halve the cycle time on this, and I think we can do it,” persists Judy. “We’ve got the best engineers in the industry. So, it takes a few nights and weekends. This might just put us back on the map.” George chuckles, “Well, then go for it. I admire your spirit, Judy.” Judy returns to the office to find it empty. Her colleagues, like George, are at lunch. So Judy takes the initiative and draws up an action plan, which she e-mails to various people in the organization who will provide critical inputs. A week passes and no response. Judy hopes that their silence means they are in agreement and implementing the plan, but she harbors the suspicion that maybe George is right. Meanwhile, the marketing department has sent out a press release and industry analysts are talking up this new product. It is better, faster, cheaper, and will be in stores everywhere in time for Christmas. The trains of internal commitment and external expectation have left the sta- tion, and they are on a collision course. The first casualty: the CEO. When the third quarter closes at the end of September and the promised new product is not ready for shipment, ZZ Electronics’ stock takes a nosedive . as does Bill Corrigan’s cred- ibility with the trade and financial community. The board, feeling the heat of an irate market, summarily ousts Corrigan, installing a senior director as interim head of the company. The search commences for a A TALE OF TWO MANAGERS 3 permanent replacement ... and the organization hangs in limbo, not sure what the new regime will bring. George and Judy meet at the end of the year for lunch. George is so- licitous. Judy is chastened. Not only did her e-mail fall on deaf ears, but she’s been reprimanded by her boss for reaching out to other parts of the organization without his express approval. Her wings have been clipped. “You were right,” she admits as she orders a glass of wine.