Monday, March 6, 2006

A Helpful History Book For CEOs

I came across an impressive book, which would be very helpful to any CEO. It is an interesting historical effort and was referenced in a footnote of a best selling business book “Good to Great”. It proved to be a better book on management in my opinion, than the popular business publication.

Barbara Tuchman wrote “The March of Folly”. In the work, she reviews four historical debacles. The reasons for these past failures, was primarily due to “wooden-headedness and cognitive dissonance”.

Ms. Tuchman's essential definitions:
“Wooden-Headedness”: the source of self deception, assessing a situation in terms of preconceived fixed notions while ignoring or rejecting any contrary signs – acting according to wish while not allowing oneself to be deflected by the facts, the refusal to benefit from experience.

“Cognitive Dissonance”: reject objective evidence and rigidly hold on to strongly held beliefs regardless of rationality of disproof.

“Folly”: the obstinate attachment to a disserviceable goal.
This book gives meaningful perspectives on:
  • How to manage,
  • Why open and cross-functional communication is important,
  • Hubris,
  • The true meaning and benefits of “hard-work, homework, hands-on”.
The most interesting of the debacles is the British handling of the American Colonies prior to the Revolutionary War. Not one member of the British Parliament, their staff and the King’s staff had ever been in the Colonies. They did not send anyone to evaluate it.

The British Generals who had been in the Colonies were essentially opposed to a land war, but there was no “cross functional” type communication and their advice was not heard.

The King and the Parliament believed America was small, populated with criminals and other worthless people. In fact it had a population of 2.5 million, was an economic locomotive populated with many well-educated and independent people.

The taxes the British levied totaled only 50,000 pounds sterling annually. Imports from Britain into the Colonies totaled 3 million pounds sterling annually, one-half of which were lost when Americans boycotted British goods.

Completing their homework in a hands-on manner would probably have caused Britain to handle the situation differently and retain America as one of its Colonies.

“Good to Great” by James Collins is the book that referenced “The March of Folly”. Worthwhile reading, it studies how companies built themselves into great companies.

Characteristics of successful companies:
  • Disciplined focus,
  • No hubris,
  • Openness in that everything is discussed,
  • A self-effacing CEO only interested in the company’s success - who is not a tyrant,
  • Accountability for tangible results,
  • Staff the right people – wrong people get fired,
  • Only deal in brutal facts and truth, simplicity,
  • A culture of freedom and responsibility,
  • Have defined what the company is “best” at.