Articles by Professor Don Sull
How to Thrive in Turbulent Markets
Publisher: Harvard Business Review. February
Date: February 1, 2009
Description: In today’s volatile world, doing business feels like competing in a heavyweight boxing ring. To prevail, should your company rely on agility (nimbleness) to quickly spot and exploit market changes? For instance, shifting resources from struggling divisions to more promising ones can spur revenues. Or should you rely on absorption (toughness) to withstand punches? For example, keeping a lot of cash on hand might enable your firm to weather unexpected threats. Sull recommends agile absorption: deploying both capabilities in various combinations as needed. Through agile absorption, you consistently identify and seize opportunities while also retaining the structural heft your company needs to thrive. Toyota, for example, maintains absorption by employing a large workforce, but unlike U.S. automakers, enhances agility with a combination of flexible work rules, variable job assignments, and employee involvement.
Seizing the upside of a downturn
Publisher: Financial Times Mastering Management. January
Date: January 23, 2009
Description: In the midst of this a downturn, it is easy to fixate on the negative—falling demand, tight credit, layoffs. This focus on bad news obscures a crucial truth: The worst of times for the economy as a whole can be the best of times for individual firms to create value. Companies including Nokia, Samsung, Toyota, and Cisco have emerged from past downturn stronger than they entered them. In a recession, competitors retrench and distressed sellers unload assets at bargain prices creating opportunities for agile firms. Downturns provide a unique opportunity to drive changes in an organization. They mark a sharp break with the past, provide an external rationale to justify difficult decisions, and create urgency for change. Effective managers can seize the moment to position their firm to thrive in the long term.
Fast fashion lessons
Publisher: Business Strategy Review Vol. 19, No. 2, pages 4-11
Date: Summer 2008
Description: In recent decades, retailers such as Benetton, H&M, Topshop and Zara have revolutionised the fashion industry following an approach known as fast fashion - the retail strategy of adapting merchandise to current and emerging trends as quickly and effectively as possible.Fast fashion replaces the traditional designer-push model, with an opportunity-pull approach enabling retailers to respond to shifts in the market within just a few weeks, versus the industry average six months. Retailers such as Zara do so by developing and maintaining shared situation awareness, an organisation's ability to recognise an opportunity in a fluid situation and anticipate what might happen next.Zara's pioneering approach offers lessons for any company operating in rapidly changing markets.
Growing fast--and smart
Publisher: Sloan Management Review Business Insight. June
Date: June 15 2007
Description: Entrepreneurs and managers with good ideas often stumble by being unprepared for the countless challenges involved in scaling a promising initiative.The rapid growth required to seize an opportunity can strain an organization's resources, balance sheet and management.Test your preparedness with five questions, including: "Do you know what you're betting on?"
Promise-Based Management: The Essence of Execution
Publisher: Harvard Business Review. April pp. 78-86
Date: April 1, 2007
Description: Critical initiatives stall for a variety of reasons--employee disengagement, a lack of coordination across units, matrix organizations that obscure accountability, among others. To overcome these obstacles, managers should fundamentally rethink how work gets done. Most of the obstacles stem from poorly crafted or broken promises. That's because a company, at its heart, is a dynamic network of promises up and down the chain of command, across units and to external stakeholders. Executives can overcome many short term problems and foster an agile organization in the long-term by practicing "promise-based management," which consists of cultivating and coordinating promises in a systematic way. The best promises share five characteristics--they are public, active, voluntary, explicit and mission based. To develop and execute an effective promise, the provider and the customer should go through three phases of conversation. The first consists of achieving a meeting of minds on what is to be done and why it matters, and tackles fundamental questions such as Do you understand what I mean? What should I do? What do you need from me? Who else should we talk to? In the next phase, making it happen, the provider executes on the promise. The final stage consists of closing the loop, when the customer publicly declares satisfaction or dissatisfaction that the provider delivered the goods. Leaders must weave and manage their webs of promises with great care--encouraging iterative conversation and making sure commitments are fulfilled reliably. If they do, they can enhance coordination and cooperation among colleagues, build the organizational agility required to seize new business opportunities, and tap employees' entrepreneurial energy.
How Companies Can Avoid a Midlife Crisis
Publisher: Sloan Management Review. Vol. 48, No. 1, pp. 26- 34
Date: Oct 1, 2006
Description: According to conventional wisdom, companies resemble organisms destined to pass through the stages of start-up, scaling, maturity and decline. In reality, business opportunities — and not firms — pass through these stages, and most organizations consist of multiple opportunities arrayed across the different stages of the life cycle. Executives who understand this crucial distinction can view their organization as a portfolio of opportunities that requires constant re-jiggering to balance the demands of the present with the promise of the future. The authors suggest that, when assessing any opportunity portfolio, executives should remain on the lookout for the following common pathologies: waiting too long to exit a declining business, failing to salvage usable pieces of a business that is shutdown, shunning promising new markets because of an overly conservative fiscal approach, trying to scale too many business opportunities so that none of them receives the necessary resources), applying the same management style to business opportunities at different life cycle stages, and erring on the side of loss aversion.
Using commitments to manage across units
Publisher: Sloan Management Review. 47, (1): 73-81.
Date: September 01, 2005
Description: A company's installed business processes are typically designed to execute routine activities. As such, they can have great difficulty handling novel initiatives, particularly when it requires coordination across different business units. Such cases are often better handled by a new framework that views the organization as a nexus of personal promises that employees make to each other. As defined by the authors, a commitment is a promise made by a performer to satisfy the concerns of a customer within the organization. "Customer" and "performer" refer simply to roles: An individual acts as a customer when making a request and a performer when fulfilling a request. In committing to a customer, a performer promises to fulfill the customer's "conditions of satisfaction," that is, the specific terms (such as cost, timing, and quality) required to meet the customer's needs. In general, the most powerful commitments are public, active, voluntary, explicit, and motivated. Moreover, effective commitments tend to arise out of ongoing discussions between the customer and performer that proceed through four basic steps preparation, negotiation, execution, and acknowledgment.
Do your commitments match your convictions?
Publisher: Harvard Business Review
Date: Jan 1, 2005
Description: How many of us keep pace day to day, upholding our obligations to our bosses, families, and the community, even as our overall satisfaction with work and quality of life decline? And, yet, our common response to the situation is: "I'm too busy to do anything about it now." Unfortunately, unless a personal or professional crisis strikes, very few of us step back, take stock of our day-to-day actions, and make a change. In this article, London Business School strategy professors Donald Sull and Dominic Houlder examine the reasons why a gap often exists between the things we value most and the ways we actually spend our time, money, and attention. They also suggest a practical approach to managing the gap. The framework they propose is based on their study of organizational commitments--the investments, promises, and contracts made today that bind companies to a future course of action. Such commitments can prevent organizations from responding effectively to change. A similar logic applies to personal commitments--the day-to-day decisions we make about how we allocate our precious resources. These decisions are individually small and, therefore, easy to lose sight of. When we do, a gap can develop between our commitments and our convictions. Sull and Houlder make no value judgments about the content of personal commitments; they've devised a somewhat dispassionate tool to help you take a thorough inventory of what matters to you most. It involves listing your most important values and assigning to each a percentage of your annual salary, the hours out of your week, and the amount of energy you devote. Using this exercise, you should be able to identify big gaps--stated values that receive little or none of your scarce resources or a single value that sucks a disproportionate share of resources--and change your allocations accordingly.
Strategy as active waiting
Publisher: Harvard Business Review
Date: Sep 1, 2005
Description: Successful executives who cut their teeth in stable industries or in developed countries often stumble when they face more volatile markets. They falter, in part, because they assume they can gaze deep into the future and develop a long-term strategy that will confer a sustainable competitive advantage. But visibility into the future of volatile markets is sharply limited because of the many different variables at play. Factors such as technological innovation, customers' evolving needs, government policy, and changes in the capital markets interact with one another to create unexpected outcomes. Over the past six years, Donald Sull, an associate professor at London Business School, has led a research project examining some of the world's most volatile markets, from national markets like China and Brazil to industries like enterprise software, telecommunications, and airlines. One of the most striking findings from this research is the importance of taking action during comparative lulls in the storm. Huge business opportunities are relatively rare; they come along only once or twice in a decade. And, for the most part, companies can't manufacture those opportunities; changes in the external environment converge to make them happen. What managers can do is prepare for these golden opportunities by managing smart during the comparative calm of business as usual. During these periods of active waiting, leaders must probe the future and remain alert to anomalies that signal potential threats or opportunities; exercise restraint to preserve their war chests; and maintain discipline to keep the troops battle ready. When a golden opportunity or "sudden death" threat emerges, managers must have the courage to declare the main effort and concentrate resources to seize the moment.
Publisher: Sloan Management Review
Date: Oct 1, 2004
Description: Although the pursuit of opportunity promises outsized rewards to entrepreneurs and established enterprises, it also entails great uncertainty. The critical task of entrepreneurship lies in effectively managing the uncertainty inherent in trying something new. Some entrepreneurs foolishly try to ignore uncertainty; others go to the opposite extreme of attempting to avoid it altogether by believing naively that every contingency can be anticipated. Instead, entrepreneurs should manage uncertainty by taking a disciplined approach. Over the past five years, the author conducted systematic research into how entrepreneurs manage the inevitable risks while pursuing opportunities. A synthesis of the research revealed that discipline--and its byproduct, the successful management of uncertainty--comes through the adoption of an iterative experimentation model. In this three-step process, an entrepreneur formulates a working hypothesis about an opportunity, assembles the resources to test the hypothesis, and finally designs and runs real-world experiments. Depending on the results of a round of experimentation, the entrepreneur may revise the hypothesis and run another experiment, harvest the value created through a sale, or abandon the hypothesis and pull the plug. The model provides insights into some of the most daunting questions entrepreneurs face--including how to screen an opportunity, how much money to raise, when to make key hires, and how to use limited resources most efficiently.
Managing by commitments
Publisher: Harvard Business Review
Date: Jun 1, 2003
Description: What makes a great manager great? Despite differences in their personal attributes, successful managers all excel in the making, honoring, and remaking of commitments. Managerial commitments take many forms, from capital investments to personnel decisions to public statements, but each exerts both immediate and enduring influence on a company. A leader's commitments shape a business's identity, define its strengths and weaknesses, establish its opportunities and limitations, and set its direction. Executives can all too easily forget that commitments are extraordinarily powerful. Caught up in the present, managers often take actions that, while beneficial in the near term, impose lasting constraints on their operations and organizations. Managers who understand the nature and power of their commitments can wield them more effectively throughout a company's life cycle. It doesn't mean you should try to anticipate all the long-run consequences of every commitment. But it does mean that before making important decisions about, say, operating processes or partnerships, you should always ask yourself: Is this a process or relationship that we can live with in the future? Am I locking us into a course that we'll come to regret?
Strategy as Simple Rules
Publisher: Harvard Business Review
Date: Jan 1, 2001
Description: The success of Yahoo!, eBay, Enron, and other companies that have become adept at morphing to meet the demands of changing markets can't be explained using traditional thinking about competitive strategy. These companies have succeeded by pursuing constantly evolving strategies in market spaces that were considered unattractive according to traditional measures. In this article--the third in an HBR series by Kathleen Eisenhardt and Donald Sull on strategy in the new economy--the authors ask, what are the sources of competitive advantage in high-velocity markets? The secret, they say, is strategy as simple rules. The companies know that the greatest opportunities for competitive advantage lie in market confusion, but they recognize the need for a few crucial strategic processes and a few simple rules. In traditional strategy, advantage comes from exploiting resources or stable market positions. In strategy as simple rules, advantage comes from successfully seizing fleeting opportunities. Key strategic processes, such as product innovation, partnering, or spinout creation, place the company where the flow of opportunities is greatest. Simple rules then provide the guidelines within which managers can pursue such opportunities. Simple rules, which grow out of experience, fall into five broad categories: how-to rules, boundary conditions, priority rules, timing rules, and exit rules. Companies with simple-rules strategies must follow the rules religiously and avoid the temptation to change them too frequently. A consistent strategy helps managers sort through opportunities and gain short-term advantage by exploiting the attractive ones.
Networked Incubators: Hothouses of the New Economy
Publisher: Harvard Business Review
Date: Sep 1, 2000
Description: Business incubators such as Hotbank, CMGI, and Idealab! are a booming industry. Offering office space, funding, and basic services to start-ups, these organizations have become the hottest way to nurture and grow fledgling businesses. But are incubators a fleeting phenomenon born of an overheated stock market, or are they an important and lasting way of creating value and wealth in the new economy? The authors argue that one type of incubator, called a networked incubator, represents a fundamentally new and enduring organizational model uniquely suited to growing businesses in the Internet economy. Its key distinguishing feature is its ability to give start-ups preferential access to a network of potential partners. Such incubators institutionalize their networking. That doesn't mean incubatees get preferential treatment; it means only that they have built-in access to partnerships that might not have existed without the incubator. Even with this advantage, however, networked incubators can easily follow the road to ruin. To avoid failure, they must create a portfolio of companies and advisers that their incubatees can leverage.
Why Good Companies Go Bad
Publisher: Harvard Business Review
Date: Jul 1, 1999
Description: One of the most common business phenomena is also one of the most perplexing: when successful companies face big changes, they often fail to respond effectively. Many assume that the problem is paralysis, but the real problem, according to Donald Sull, is active inertia--an organization's tendency to persist in established patterns of behavior. Most leading businesses owe their prosperity to a fresh competitive formula--a distinctive combination of strategies, relationships, processes, and values that sets them apart from the crowd. But when changes occur in a company's markets, the formula that brought success instead brings failure. Stuck in the modes of thinking and working that have been successful in the past, market leaders simply accelerate all their tried-and-true activities. In attempting to dig themselves out of a hole, they just deepen it. In particular, four things happen: strategic frames become blinders; processes harden into routines; relationships become shackles; and values turn into dogmas. To illustrate his point, the author draws on examples of pairs of industry leaders, like Goodyear and Firestone, whose fates diverged when they were forced to respond to dramatic changes in the tire industry. In addition to diagnosing the problem, Sull offers practical advice for avoiding active inertia. Rather than rushing to ask, "What should we do?" managers should pause to ask, "What hinders us?" That question focuses attention on the proper things: the strategic frames, processes, relationships, and values that can subvert action by channeling it in the wrong direction.
- 2006 With D. Houlder, "How companies can avoid a midlife crisis", Sloan Management Review, 48, (1). Forthcoming. Order
- 2006 With C. Spinosa, "Delivering on the promise of innovation," Harvard Business Review. Forthcoming.
- 2006 With A. Ruelas-Gossi, "Strategic orchestration for innovation in emerging markets." Harvard Business Review Latin America. Forthcoming July. Order
- 2006 With Ben Bryant, "Discussions for strategic agility," Financial Times Mastering Uncertainty. 21 March. Download
- 2006 "Difficult decisions for an uncertain world," Invited lead article in Financial Times Mastering Uncertainty. 17 March. Download
- 2006 "How to get lucky," Financial Times. 6 February. Download
- 2006 With Felipe Monteiro, "Case study: Emirates Airlines," European Business Forum, 23 (Winter). Order
- 2005 "No Exit: The Failure of Bottom-up Strategic Processes and the Role of Top-down Disinvestment." J. L. Bower and C. Gilbert (eds.), From Resource Allocation to Strategy. (New York: Oxford University Press): 135-175. Download
- 2005 "When the Bottom-up Resource Allocation Process Fails" J. L. Bower and C. Gilbert (eds.), From Resource Allocation to Strategy. (New York: Oxford University Press): 135-175. Download
- 2005 "Ingrained success breeds failure," Financial Times. 3 October 2005. Download
- 2005 "Strategy in uncertain markets." European Business Forum. 21 (Spring).
- 2005 "Dynamic partners." Business Strategy Review. 16 (2, Summer): 4-10. Lead article. Download
- 2005 "Managing relationships dynamically." Ivey Business Journal. May-June. Download
- 2005 "Globalizing out of Russia." Harvard Business Review Russia. June/July: 60-68.
- 2005 "Emerging markets set the risk standard," Financial Times Mastering Risk. 16 Sept. Download
- 2005 "Emerging markets give flight to new industry champions," Financial Times, 5 August. Download
- 2005 With F. Monteiro and S. Ghoshal. "The Hub of the World: The Emirates Airline story." Business Strategy Review. 16, (1): 35-40. Download
- 2004 "Good to global." The Smart Manager. 3 (4): 29-35. Download
- 2004 "Going global out of China." Harvard Business Review China. October.
- 2004 With A. Ruelas-Gossi, "The Art of Innovating on a shoestring." Financial Times Mastering Innovation. 24 September, 10-11. Download
- 2004 With M. Escobari. "Good to global: Lessons from Latin America's emerging global competitors." Harvard Business Review Latin America. September. Order
- 2004 With M. Escobari. "Creating value in an unpredictable world." Business Strategy Review. 15, (3): 14-20. Download
- 2004 "The tunnel vision trap." Financial Times. August 4. Download
- 2004 With M. Escobari. "Lessons from Brazil: How to save a company from a sudden-death threat" Harvard Business Review Latin America. (February): 94-104. Download
- 2003 "Active inertia in India: Why good companies go bad." The Smart Manager. April-June, 2003: 30-39. Reprinted in the Financial Express (25 September 2003).
- 2003 With A. Ruelas-Gossi and M. Escobari. "Innovating around obstacles" Harvard Business School Press Strategy & Innovation newsletter. November. Order
- 2002 "A Strategy to Meet the Challenges of Entrepreneurship." Mastering Management. 12 August. Reprinted in R.W. Price (ed.), Entrepreneurship, (McGraw Hill, 2003). Download
- 2001 "Success flows from business development." Financial Times Mastering Management (January 18).
- 2001 "From Community of Innovation to Community of Inertia: The Rise and Fall of the Akron Tire Cluster." The Academy of Management Best Paper Proceedings. Download | Download Figures
- 2000 "Management through Commitment." Leader to Leader, Drucker Foundation. Spring.
- 1999 "easyJet: The $500 Million Gamble." European Management Journal, 17 (1):20-38. Featured case in Mastering Management Review, April 1999: 44.
- 1999 "The Dynamics of Standing Still: Firestone Tire & Rubber and the Radial Revolution." Business History Review, 73,3 (Autumn):430-464. Winner of Newcomen Award for most outstanding article published in the Business History Review in the year 1999. Download
- 1999 "The Rhetoric of Transformation." Mastering Management Review. December.
- 1999 "Spinning Steel into Gold: The Case of Ispat International N.V." European Management Journal, 17 (4):368-381. Reprinted in Sumantra Ghoshal et al. (eds.), World Class in India (New Delhi: Penguin Books India, 2001). Download
- 1998 "After the chainsaw." Director. 51 (10), May.
- 1997 With S. Ghoshal. "The Courage to Dream." Financial Times, 2 April. Download
- 1997 With S. Ghoshal. "Loss of Faith in Managers?" Financial Times, 6 June. Download
- 1997 "Blinded by Science." Financial Times, 3 February. Download
- 1997 With R. Tedlow and R. Rosenbloom. "Managerial Commitments and Technological Change in the U.S. Tire Industry." Industrial and Corporate Change, 6,2:461-501.
- 1997 "No Exit: Overcapacity and Plant Closure in the U.S. Tire Industry." The Academy of Management Best Paper Proceedings, 1997: 45-49.