Active inertia is an idea closely identified with Donald Sull, an associate professor at London Business School and a rising star in a new generation of management gurus. Educated almost exclusively at Harvard (first degree, doctorate and MBA), Sull worked in consulting (with McKinsey & Company) and private equity (with Clayton, Dubilier & Rice) before moving to an academic career.
At the core of his idea is the observation that managers often get stuck in a rut, so when an entirely new situation arises they revert to old responses. Active inertia, Sull says, is “management's tendency to respond to the most disruptive changes by accelerating activities that succeeded in the past”.
He quotes the example of tyre company Firestone's response to the introduction by Michelin of radial technology. Instead of embracing the new technology and all the changes that it implied, Firestone undertook more of the activities that had worked for it in the past, in the pre-radial era?extending its existing technology, making more tyres on existing equipment and keeping old factories working at full throttle. As Sull puts it, “It just dug itself an even deeper hole.”
When managers are in a hole, they should stop digging. Instead, like a car stuck in the mud, they keep the engine turning as if they are on a normal road. They do this partly because they “equate inertia with inaction”. But inaction does not have to mean that nothing is going on. When troops are not in battle, they keep themselves in a state of active preparedness. Companies should do likewise.
The focus of Sull's research has been successful companies in uncertain markets. Over a six-year period he monitored more than 20 pairs of comparable companies in a number of what he calls unpredictable industries (telecommunications and software, for example) in unpredictable markets (China, in particular). What he found was that the more successful of each pair consistently responded “more effectively to volatile factors that influenced performance, such as unexpected shifts in regulation, technology, competition and macroeconomics”. They did not behave like Firestone. Rather, they exemplified what Sull calls “active waiting”, a strategy that he explains as “anticipating and preparing for opportunities and threats that executives can neither fully predict nor control”.
We all know the power of waiting quietly for the right moment to pounce upon an opportunity. But Sull's idea is that waiting does not have to be quiet. While they are waiting there are lots of useful things that companies can do?build up a war chest, for instance, streamline operations, carry out scenario planning, and so on.
To avoid active inertia, Sull says leaders should not march “head-long toward a well-defined future”. Instead, they should “articulate a fuzzy vision … a fuzzy vision works because it provides a general direction and sets aspirations without prematurely locking the company into a specific course of action”.
Further reading
Sull, D., “
Revival of the Fittest
”, Harvard Business School Press, 2003
Sull, D., “
Strategy as Active Waiting
”,
Harvard Business Review
, September 2005
Sull, D., “
Made in China
”, Harvard Business School Press, 2005
More management ideas
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