MIT Sloan Management Review

Leadership and Organizational Studies

Rebuilding Behavioral Context: A Blueprint for Corporate Renewal

By Sumantra Ghoshal and Christopher A. Bartlett

January 15, 1996

IN THEIR FALL 1995 ARTICLE, THE AUTHORS DISCUSSED THE FOUR ELEMENTS NECESSARY TO ESTABLISH A BEHAVIORAL CONTEXT THAT REJUVENATES A COMPANY’S EMPLOYEES — discipline, support, trust, and stretch. In this sequel, they trace the common threads in successful companies’ transformation processes — simplification, integration, and regeneration. In an extensive study, they discovered that carefully phased or sequenced processes were more effective than sudden frenzied commitment to the latest management fad. Along with a phased approach, the successful companies recognized that the real challenge in transformation was to change people’s attitudes, assumptions, and behaviors. Only when managers committed to the long-term effort required to establish the four characteristics necessary for a new behavioral environment were they able to create companies that could renew themselves.

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Few companies around the world have not tried to reinvent themselves — some more than once —during the past decade. Yet, for every successful corporate transformation, there is at least one equally prominent failure. GE’s dramatic performance improvement starkly contrasts with the string of disappointments and crises that have plagued Westinghouse. ABB’s ascendance to global leadership in power equipment only emphasizes Hitachi’s inability to reverse its declining fortunes in that business. And Philips’s successful revitalization since 1990 only highlights its own agonizingly slow turnaround in the preceding ten years.

What accounts for the success of some corporations and the failure of so many others? How did some organizations turn around transformation processes that had clearly stalled? In the course of five years of research into the nature and implications of the radically different organization and management models that have begun to emerge during the past decade, we studied more than a dozen companies as they implemented a succession of programs designed to rationalize their inefficient operations, revitalize their ineffective strategies, and renew their tired organizations. In the process, we have gained some insight into the reasons that some made recognizable progress in their transformational change process while others only replaced the dead weight of their bureaucracies with change program overload.

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