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The Essentials If You Read Nothing Else on Management, Read These Definitive Articles from Harvard Business Review

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The Essentials If You Read Nothing Else on Management, Read These Definitive Articles from Harvard Business Review The Essentials If you read nothing else on management, read these definitive articles from Harvard Business Review. 91848 00 i-viii r2 kj 8/16/10 4:35 PM Page i 10HBR’S MUST READS The Essentials 91848 00 i-viii r2 kj 8/16/10 4:35 PM Page ii 91848 00 i-viii r2 kj 8/16/10 4:35 PM Page iii 10HBR’S MUST READS The Essentials HARVARD BUSINESS REVIEW PRESS Boston, Massachusetts 91848 00 i-viii r2 kj 8/16/10 4:35 PM Page iv Copyright 2011 Harvard Business School Publishing Corporation All rights reserved No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise), without the prior permission of the publisher. Requests for permission should be directed to [email protected], or mailed to Permissions, Harvard Business School Publishing, 60 Harvard Way, Boston, Massachusetts 02163. Library of Congress Cataloging-in-Publication Data HBR’s 10 must reads : the essentials. p. cm. Includes index. ISBN 978-1-4221-3344-6 (pbk. : alk. paper) 1. Management. I. Harvard Business Review. II. Title: HBR’s ten must reads. III. Title: Harvard Business Review’s 10 must reads. HD31.H3948 2010 658—dc22 2010030742 91848 00 i-viii r2 kj 8/16/10 4:35 PM Page v Contents Meeting the Challenge of Disruptive Change 1 Clayton M. Christensen and Michael Overdorf Competing on Analytics 23 Thomas H. Davenport Managing Oneself 43 Peter F. Drucker What Makes a Leader? 63 Daniel Goleman Putting the Balanced Scorecard to Work 85 Robert S. Kaplan and David P. Norton Innovation: The Classic Traps 113 Rosabeth Moss Kanter Leading Change: Why Transformation Efforts Fail 137 John P. Kotter Marketing Myopia 153 Theodore Levitt What Is Strategy? 181 Michael E. Porter The Core Competence of the Corporation 219 C.K. Prahalad and Gary Hamel About the Contributors 247 Index 249 v 91848 00 i-viii r2 kj 8/16/10 4:35 PM Page vi 91848 00 i-viii r2 kj 8/16/10 4:35 PM Page vii 10HBR’S MUST READS The Essentials 91848 00 i-viii r2 kj 8/16/10 4:35 PM Page viii 91848 01 001-022 r1 sp 8/16/10 4:36 PM Page 1 Meeting the Challenge of Disruptive Change by Clayton M. Christensen and Michael Overdorf THESE ARE SCARY TIMES for managers in big companies. Even before the Internet and globalization, their track record for dealing with major, disruptive change was not good. Out of hundreds of depart- ment stores, for example, only one—Dayton Hudson—became a leader in discount retailing. Not one of the minicomputer companies succeeded in the personal computer business. Medical and business schools are struggling—and failing—to change their curricula fast enough to train the types of doctors and managers their markets need. The list could go on. It’s not that managers in big companies can’t see disruptive Tchanges coming. Usually they can. Nor do they lack resources to confront them. Most big companies have talented managers and specialists, strong product portfolios, first-rate technological know- how, and deep pockets. What managers lack is a habit of thinking about their organization’s capabilities as carefully as they think about individual people’s capabilities. One of the hallmarks of a great manager is the ability to identify the right person for the right job and to train employees to succeed at 1 91848 01 001-022 r1 sp 8/16/10 4:36 PM Page 2 CHRISTENSEN AND OVERDORF the jobs they’re given. But unfortunately, most managers assume that if each person working on a project is well matched to the job, then the organization in which they work will be, too. Often that is not the case. One could put two sets of identically capable people to work in different organizations, and what they accomplished would be significantly different. That’s because organizations themselves—independent of the people and other resources in them—have capabilities. To succeed consistently, good managers need to be skilled not just in assessing people but also in assessing the abilities and disabilities of their organization as a whole. This article offers managers a framework to help them under- stand what their organizations are capable of accomplishing. It will show them how their company’s disabilities become more sharply defined even as its core capabilities grow. It will give them a way to recognize different kinds of change and make appropriate organiza- tional responses to the opportunities that arise from each. And it will offer some bottom-line advice that runs counter to much that’s as- sumed in our can-do business culture: if an organization faces major change—a disruptive innovation, perhaps—the worst possible ap- proach may be to make drastic adjustments to the existing organiza- tion. In trying to transform an enterprise, managers can destroy the very capabilities that sustain it. Before rushing into the breach, managers must understand pre- cisely what types of change the existing organization is capable and incapable of handling. To help them do that, we’ll first take a sys- tematic look at how to recognize a company’s core capabilities on an organizational level and then examine how those capabilities mi- grate as companies grow and mature. Where Capabilities Reside Our research suggests that three factors affect what an organization can and cannot do: its resources, its processes, and its values. When thinking about what sorts of innovations their organization will be able to embrace, managers need to assess how each of these factors might affect their organization’s capacity to change. 2 91848 01 001-022 r1 sp 8/16/10 4:36 PM Page 3 MEETING THE CHALLENGE OF DISRUPTIVE CHANGE Idea in Brief Why do so few established compa- • “Does my organization have nies innovate successfully? Of hun- the right processes to dreds of department stores, for innovate?” Processes support- instance, only Dayton Hudson be- ing your established business— came a discount-retailing leader. decision-making protocols, And not one minicomputer com- coordination patterns—may pany succeeded in the personal- hamstring your new venture. computer business. • “Does my organization have What’s going on? After all, most the right values to innovate?” established firms boast deep Consider how you decide pockets and talented people. But whether to commit to a new when a new venture captures their venture. For example, can you imagination, they get their people tolerate lower profit margins working on it within organizational than your established enter- structures (such as functional prise demands? teams) designed to surmount old • “What team and structure will challenges—not ones that the new best support our innovation venture is facing. effort?” Should you use a team To avoid this mistake, ask: dedicated to the project within your company? Create a sepa- • “Does my organization have rate spin-off organization? the right resources to support this innovation?” Resources By selecting the right team and supporting business-as-usual— organizational structure for your people, technologies, product innovation—and infusing it with designs, brands, customer and the right resources, processes, supplier relationships—rarely and values—you heighten your match those required for new chances of innovating ventures. successfully. Resources When they ask the question, “What can this company do?” the place most managers look for the answer is in its resources—both the tangi- ble ones like people, equipment, technologies, and cash, and the less tangible ones like product designs, information, brands, and relation- ships with suppliers, distributors, and customers. Without doubt, ac- cess to abundant, high-quality resources increases an organization’s 3 91848 01 001-022 r1 sp 8/16/10 4:36 PM Page 4 CHRISTENSEN AND OVERDORF Idea in Practice Selecting the Right Structure for Your Innovation If your Select this type innovation . of team . To operate . Because . Fits well with your Functional teams Within your Owing to the good existing values who work sequen- existing fit with existing and processes tially on issues, or organization processes and lightweight values, no new teams—ad hoc capabilities or cross-functional organizational teams who work structures are simultaneously on called for. multiple issues Fits well with Heavyweight team Within your The poor fit with existing values dedicated exclu- existing existing processes but poorly with sively to the organization requires new types existing innovation project, of coordination processes with complete among groups and responsibility individuals. for its success Fits poorly with Heavyweight Within your In-house develop- existing values team dedicated existing organiza- ment capitalizes on but well with exclusively to the tion for develop- existing processes. existing processes innovation project, ment, followed A spin-off for the with complete by a spin-off for commercialization responsibility commercialization phase facilitates for its success new values—such as a different cost structure with lower profit margins. Fits poorly with Heavyweight In a separate A spin-off enables your existing team dedicated spin-off or the project to be processes and exclusively to the acquired governed by differ- values innovation project, organization ent values and en- with complete sures that new responsibility processes emerge. for its success 4 91848 01 001-022 r1 sp 8/16/10 4:36 PM Page 5 MEETING THE CHALLENGE OF DISRUPTIVE CHANGE chances of coping with change. But resource analysis doesn’t come close to telling the whole story. Processes The second factor that affects what a company can and cannot do is its processes. By processes, we mean the patterns of interaction, co- ordination, communication, and decision making employees use to transform resources into products and services of greater worth.
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