October 20, 2004
News & Opinion: Confronting Reality: Larry Bossidy Interview
Q: Would this book be any different if you had written in five or ten years ago?
Bossidy: It has always been appropriate to confront reality under any conditions. The difference today is that the penalties for not doing so are far more stark and significant. You have a business environment that is moving at record speed, and which is more competitive than ever before. And so if you are in a stymied position with your company and you dont do anything about it you are in better chance of losing it than ever before. There are more industries that are structurally defective, in the sense that their business model doesnt work anymore. Steel companies, rubber companies, large airlines. And because they have waited so long they dont have the same luxuries they had before. So either you can capitalize on that and take your business to new heights and or not face it, and see your business fail.
One example of failing to confront reality is the steel industry. They were confronted with adversity for so many years and so it is a shell of its former self. Same with airlines. The big ones dont have good choices moving forward. Going into bankruptcy might be only choice they have. On the other hand look at Jetblue, which has responded positively. It has a different cost structure is having different success.
Q: Too much change?
Bossidy: I dont think this book is about change. The principle message is to try to take a realistic standing of where you are. We provide a business model, which, if applied correctly, gives people a standing of where they are as a business. Look at the business envirronment, the people, the strategy. If you are honest in assessing these characteristics you can get a pretty good handle on where you areand understand whether you have to change or not. There are many people who change simply for the sake of change. We argue that it is as important to not change as it is to change. Developing this realistic assessment of where you are gives you choices and options.
In fact, in this book we cite cases where people have had the courage not to change radically. They responded to the business environment with iterations that were not radical but were the right thing to do. In addition to P&G, Cisco is good example. They faced many problems in the market. But they added products while staying true to their basic business model. They are in essentially the same business today in terms of what they are trying to convey to their customers, across what has become a broader marketfront. But at the same time they didnt change radically in the face of the telecom explosion.
Q: Doesnt culture often drive leaders away from reality?
Bossidy: I define culture as nothing more than the behavior of the leader of the business. That is what influences and frames the business. I always blame leadership for cultural decisions. The leaders can have their heads in the sand and are unwilling to deal with the realities around them, or they can be constantly looking for new information on what is going on with regulatory frontiers, technology, whether they executing, whether their people are growing. If leaders are constantly working on those things and make the right decisions about the future the culture takes care of itself.
The results speak for themselves. You dont change culture by films or speeches. You do it by having people meeting targets. You put out goals that have to be met and demand accountability.
Credibility throgh immediate folks.
Bossidy: I dont think that presidential election years are very responsive to confronting reality. There is too much rhetoric. Reality will only happen when the winners are declared and they are faced with the reality of dealing with deficits. If these are two of the more challenging financial matters why haven t we heard more debate? This isnt a time period where people face reality and it wont be up to the election. When the people elected are forced to del with these issues, then they will take some action.
One last interesting pointthere seems to be a certain type of person who is more suited to confront reality. They have courage, can contain their ego, be capable of dealing with failure, and are willing to grow themselves and change. People who have been successful with one model and insists on staying with the same model will not be successful in the next decade. The trick is to stick to the same principles and values while changing strategies and operations according to the demands of different business environment. You must be adaptable and light on your feet. Those who are defensive and internally protective will have the most trouble in the next decade. internally will have the most troubles in the next decadewill have the most trouble.
About Dylan Schleicher
Dylan Schleicher has been a part of the 800-CEO-READ claque since 2003. Even though he's stayed on at the company, he has not stayed put. After beginning in shipping & receiving, he joined customer service and accounting before moving into his current, highly elliptical orbit of duties overseeing the ChangeThis and In the Books websites, the company's annual review of books and in-house design. He lives with his wife and two children in the Washington Heights neighborhood on Milwaukee's West Side.