Confronting reality: doing what matters to get things right.

Confronting Reality (Crown Business 2004) is a powerful book, packed with practical ideas that would benefit any enterprise when properly applied. A metalcasting firm will be able to develop solutions to any problem using the business model and techniques that the authors (Larry Bossidy and Rain Charan with Charles Burck) develop and share.

In making their argument for confronting reality, the authors say: "Though business people like to think of themselves as realists, the fact is that wishful thinking, denial and other forms of avoiding reality are deeply embedded ... But what's been tolerated in the past can't be tolerated in this new environment. The price for failing to confront reality is simply too high."

They continued, "It boils down to this: We are entering a new era defined by structural changes that won't reverse themselves anytime soon. Such epochal shifts have a habit of changing the rules for running a business ..."

If you agree with the authors' observation, you may want to determine if your firm can benefit from the case histories of managers who have confronted reality in all its challenging aspects and made the appropriate response. The responses chronicled in Confronting Reality are highly different from one another--ranging from "it isn't broke, so we won't fix it" to exiting losing markets and finding significantly different products to sell and customers to sell them to.

The case histories are full of insights. They help clarify what goes into making a strategic decision and how much uncertainty is involved. The first part of the decision-making process is knowing how to gather and evaluate market trend information. More than any other part of the book, these examples show how others have discovered how to dig out the critical factors that reshape markets and relationships.

The authors then show how managers have used their knowledge of these factors to sharpen their market analysis and find a viable future for their companies. The book also underscores the importance of a clear-eyed market analysis. Although the general ideas of these stories are familiar to American business people, the insights added by this book become all the more credible and applicable to a reader's situation.

The authors also present their recommended business model, which is quite simple. The foundation is a hard-nosed assessment that sets achievable financial targets. The strategies revealed to avoid pitfalls in this area are worth the cost of the book many times over. An analysis of external realities (all carefully outlined and described) and internal activities (made up of strategy, operations, people and organization) then is presented. The authors' idea of "iteration" tests the assumptions that underlie the plan over and over again, consciously and at regular intervals, until managers can separate what works from what doesn't.

It sounds simple and, on one level, using hindsight is simple. However, when launching a new strategy that grows out of confronting reality the Bossidy-Charan way, it is clear that uncommon courage is frequently required. All of the winners in this story faced a host of usual suspects from inside the company and from outsiders, who found fault early on with the new direction. As all of the managers described in the book had "business savvy," which the authors define as "understanding how to make money," they were successful in leading their organizations out of corporate-life-threatening business situations.

The authors caution that big change is not something that should occur too quickly. The chapter "Getting Ready" invests a significant amount of time pointing out the importance of understanding your firm's culture as a determining factor in achieving success with any initiative. This sounds obvious, but the case histories show how many pitfalls exist and how easy it is to fall into them.

In the end, the authors single out being able to find "clarity in complexity" as the key. If you have the best information but don't know how to make sense of it, your confrontation with reality won't have a positive outcome. Confronting Reality is actually a how-to manual for making sense of the complexity of your situation.

For any casting organization that is watching its customer base defect to low-cost producers whose prices cannot be matched, the book's analysis of how one firm completely exited the business it was in and successfully started another offers hope and guidance.

William J. Libby, Libby Communications, Ridgefield, Connecticut