Revival of the Fittest: Why Good Companies Go Bad and How Great Managers Remake Them.

• Author: Marshall, Jeffrey
• Position: Bookshelf

Revival of the Fittest: Why Good Companies Go Bad and How Great Managers Remake Them. By Donald N. Sull. Harvard Business School Press, 203 pages. $29.95.

A core concept in this intriguing and well-conceived book is that successful companies often sow the seeds of later failure by creating a formula that shapes the way they approach all competitive situations. When change is required, they respond by accelerating their time-tested techniques instead of making tough choices and what Sull calls a "transforming commitment" required for true revival.

Sull, an assistant professor at Harvard Business School and a former consultant with McKinsey & Co., dubs this strategy of working the key channels harder "active inertia."

That develops, in large part, "because they are committed to strategies and processes and relationships, as well as to resources, brands, technologies and a set of values," he said in an interview. "You almost have to commit to those things to succeed, but they really tend to shape how people in the company see the world."

international Business Machines Corp., he says, presents a classic example. In the 1980s and into the early '90s, through the first couple of years of former CEO Louis Gerstner's tenure, "they made boxes, and all of their resources were tied around manufacturing mainframes. They were selling the mainframe; the PC was the bait to hook the fish," Sull says.

"When Gerstner came in, he decided that it was not a box company but a customer solutions company. That was a very different take on what IBM is and was." IBM succeeded in part because it had a powerful brand and highly regarded technologies.

The transformation commitment, Sull says, revolves at first blush around "two big questions. Does change threaten your core business? Will responding require us to change everything?" Smith-Corona, he noted, had to respond to the threat to its core product, the typewriter, posed by the word processor. Likewise, Kodak and Polaroid have had to respond to digital...