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whoyg2967 on Thursday, November 12, 2009 9:16:14 PM
For Fritz Henderson, who knew Rick Wagoner well and spent the early part of 2009 working around the clock with him to
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solve the company's problems, our research suggests that their tight
connection alone could undermine Henderson's independence. It also
implies that GM might have been better-served following Ford Motor
Company's ( F - news - people ) lead: Ford appointed an outsider, Alan
Mulally, from Boeing ( BA - news - people ), to turn around the
company, with comparative success. Finally, it suggests that some
members of the Obama administration may have understood this issue, at
least intuitively, when they appointed a true outsider, former AT&T
( T - news - people ) executive Ed Whitacre, to chair GM's new board.
In general, our research implies that business organizations trying to shed failed legacies might want to
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follow Ford's example. Organizations hoping to escape past failures
need to balance their preference for the familiarity and knowledge that
an insider affords against the entrapment an insider may suffer.
Although outsiders undoubtedly take longer to understand a problem, our
research suggests that once they do, their psychological independence
can limit their tendency to throw good money after bad.
Adam
Galinsky is the Morris and Alice Kaplan Professor of Ethics and
Decision in Management at Northwestern University's Kellogg School of
Management. Brian Gunia is a doctoral candidate at
freshwater pearl bracelet Kellogg. Niro Sivanathan is an assistant professor of organizational behavior at London Business School.