Never before has leadership been so critical, and never before has it seemed in such short supply. It takes extraordinary leadership to keep an organization relevant in a world of relentless change. It takes extraordinary leadership to navigate the complexities of global supply chains, industry ecosystems, and labyrinthine regulation. And it takes extraordinary leadership to unleash the human capabilities—initiative, imagination and passion—that fuel success in the “creative economy.”
Yet for the all the effort that is put into selecting, training and assessing leaders, there still seems to be a dearth of truly top-level executive talent. Hyperkinetic change has a way of turning today’s iconic leaders into tomorrow’s bewildered bureaucrats. Tellingly, only 5 of the 30 CEOs Barron’s picked in 2008 as the world’s best showed up on a similar list in 2012.
When leaders come up short, as they often do, the problem may have less to do with them as individuals than with the top-down structures in which they operate. In most organizations, the responsibility for setting direction, developing strategy and allocating resources is highly centralized. Maybe that mattered less in a world where change was better behaved, but today, senior management’s monopoly on “strategic leadership” can rapidly turn a leader into a laggard.
Beyond these structural limits are cognitive limits. Even the most malleable minds can only attend to so much. With 25 billion gigabits of digital information getting created every day, each of us is becoming ignorant faster. Senior executives have limited time and attention. A problem or an opportunity has to be big to elbow its way into a CEO’s consciousness—and by the time it does, it’s often too late for the organization to intercept the future.
Corporate boards, headhunters and HR professionals often look at the leadership problem as identifying and developing exceptionally talented individuals who can step into critical roles. While understandable, this elitist approach to leadership development is ultimately bound to fail—there just aren’t enough extraordinary leaders to go around.
That doesn’t mean we should lower our standards when searching for C-suite executives. It does mean we should be working a lot harder to unleash the leadership talents of everyone else. Put simply, a pyramidal organization demands too much of too few, and squanders the leadership talents of those who don’t have leadership “roles.”
In the future, a company that strives to build a leadership advantage will need more than a celebrity CEO and a corporate university that serves up tasty educational morsels to the “high potentials.” It will need an organizational model that gives everyone the chance to lead if they’re capable; and a talent development model that helps everyone to become capable.
At W.L. Gore, the innovative materials science company that is organized as a lattice rather than a hierarchy, nearly 50% of the associates describe themselves as “leaders.” What proportion of the employees in your company would see themselves that way? Probably not enough.
So what does it take to dramatically enlarge the leadership capacity of an organization? Two things, we think:
‣ First, you have to redistribute power in a way that gives many more individuals the opportunity to lead.
‣ Second, you have to equip and energize individuals to lead even when they lack formal authority.
These two challenges are at the heart of the Leaders Everywhere Challenge, the second leg of the HBR/McKinsey M-Prize for Management Innovation hosted by the MIX.
As traditional hierarchies get supplanted by networked, or “social,” organizations, leadership will become less a function of “where you sit,” than of “what you can do.” In a tumultuous environment, where customers expect lightening quick responses, decisions have to be made close to the action. And when the next game-changing idea or disruptive threat can come from anywhere, everyone needs to feel responsible for thinking and acting like a strategist.
Authority won’t be something that’s handed down from above and it won’t be something that can be captured by a title. Rather, it will be a currency you earn from your peers. Leaders will be the ones who are capable of attracting followers, rather than the folks who have mastered the dark arts of political infighting and bureaucratic wrangling.
In this regard, the web has already dramatically changed expectations. The web may appear democratic, but it’s far from flat. Everywhere one looks there are hierarchies. Track any discussion forum, explore the blogosphere, or roam around a social networking site and you’ll find that some individuals have more followers, more connections and more clout, than others. Critically, though, all these hierarchies were built bottom-up. They are “natural” hierarchies. On the web, you accumulate influence only when you do something that is useful to others, and you hang on to your influence only as long as you keep adding value.
Having grown up on the web, the next generation of potential leaders are particularly authority-phobic. Remember that classic New Yorker cartoon with Rover sitting in front of a computer? The caption read, “On the Internet, no one knows you’re a dog.” Well, on the web, no one knows you’re a senior vice president either. That’s why every leader is going to have to learn how to get things done in a world where authority is the reciprocal of followership.
What does all this mean practically? What are some of the ways an organization might broaden its internal leadership franchise? Several leverage points come to mind. A company could …
‣ Break big units into smaller units, thereby creating more opportunities for individuals to become full-fledged business leaders.
‣ Support the formation of informal teams and “self-organizing” communities where “natural leaders” get the chance to shine.
‣ Push down P&L responsibility and give lower level employees a lot more decision-making autonomy.
‣ Syndicate the work of executive leadership by opening up the strategic planning and budgeting processes to everyone in the organization.
‣ Use peer-based review and compensation systems to identify and reward leadership wherever it occurs.
‣ Systematically de-emphasize the formal hierarchy in favor of more fluid, project-based structures.
‣ Work to legitimize the notion of “bottom-up” leadership through communication and recognition systems.
‣Distribute the work of critical staff functions by giving associates at all levels the opportunity to help reengineer core management systems and processes.
‣ Hold leaders responsible for increasing the stock of “leadership capital” within their organizations through coaching and delegation.
‣ And perhaps most importantly, systematically train individuals in the art and science of “leading without power.” [SIDEBAR]
So now it’s up to you. What is your organization doing to build its leadership advantage? How is it working to escape the limits of top-down power structures? What is it doing to equip and energize individuals to exercise their leadership gifts, wherever they are in the organization? How is it nurturing the sort of leaders others will want to follow in a post-bureaucratic world? And what are you doing to strengthen your own leadership capacity?
If you share our desire to build organizations where everyone has the right and the responsibility to lead, jump in.
Hello Maverick friends! Reporting in with a long overdue update on my latest project and some news about my speaking.
For the last three years I’ve been building an open innovation platform dedicated to making all of our organizations fit for the future—and fit for human beings. I joined Gary Hamel and Michele Zanini as a cofounder of the MIX (Management Innovation eXchange) in order to both shine a light on and promote progress when it comes to all the incredible, progressive work being done by in-the-trenches management mavericks around the world to hack the status quo.
It’s been an amazing ride: we’ve created a real discovery engine for the most progressive stories and bold ideas around making organizations more resilient, inventive, inspiring, and accountable; we’ve launched a series of “M-Prize” competitions in collaboration with McKinsey and Harvard Business Review that have yielded hundreds of incredible case studies from around the world; we’ve developed a “management hackathon” methodology for involving hundreds or thousands of far-flung management innovators to create the “open source code” for adaptable organizations; we’ve created a signature event, the MIX Mashup, gathering the vanguard of management innovators and hackers; and we’ve created a thought leadership hub around all of these new ideas. There’s so much more–and I’ll be highlighting specific initiatives and sharing insights and lessons from the MIX here. But, please, check it out and join in on one of our current challenges or hackathons.
I continue to do lots of reporting and writing on these topics–you can find my blog on the Fresh MIX, HBR, and Fortune.
In other news, my new speaking manager, Tony D’Amelio, has just launched me on his slick site. All you need to know about my current speaking topics and videos and writing, you can find here. And of course, you can always find me on Twitter. We even updated the ancient headshot!
It is with great pleasure that I announce that my next book, Practically Radical, will be released on January 4, 2011—the first business day of the New Year. To learn more about the book, and to stay connected in the weeks leading up to its release, please visit me at my new Web site. And be sure to follow me on Twitter.I am eager to keep the conversation going!
Mavericks at Work was launched in October 2006—shockingly, at least for us, more than three years ago now. The book’s acceptance and impact continues to amaze and delight both Polly and me. It’s been translated into all sorts of languages all across the world, we continue to share our key messages with leaders and lecture audiences in all kinds of fields, and we keep receiving lovely phone calls, letters, and emails from readers who enjoyed what we had to say and who want to know more.
So long live Mavericks!
In the meantime, of course, we have been at work on other projects as well. As for me, it is with great pleasure that I can report that I just delivered the completed manuscript of my next book, called Practically Radical, to the folks at William Morrow–the fabulous company that published Mavericks at Work. Morrow hasn’t set an official release date yet, but it should be this Fall, hopefully right after Labor Day. Between now and then, I will be blogging like mad at a site devoted to the ideas in Practically Radical. It’s a blog I’m doing in conjunction with Harvard Business Review Online, and the folks at HBR.org have been a blast to work with.
So if you’re looking for my newest ideas and latest thinking, be sure to visit my Harvard Business Review blog. That’s the place to find me in 2010. Thanks for all the enthusiasm and support, and please do visit my HBR blog and follow me on Twitter (@practicallyrad).
Here’s to a healthy and prosperous 2010!
Over on my Practically Radical blog, I report on my recent conversation with Jack Welch, in front of a conference of several thousand bankers in Boston, and consider the question of whether size in and of itself is a strategy. Check it out here–it was a fun discussion.
Over at Practically Radical, I offer my thoughts on the recent news that Jeff Bezos and Amazon are going to buy Zappos.com, the remarkable company created by Tony Hsieh. Here’s hoping Jeff and Tony can become the “power couple” that revolutionizes customer service in America–and the world!
You can read the post here.
As leaders, we have no control over how fast markets grow or how wisely banks lend. But we do control our own mindsets and “animal spirits”—the phrase coined by John Maynard Keynes in the depth of the Great Depression. If all you’ve got is a spreadsheet filled with red ink and dire forecasts, it’s easy to be paralyzed by fear and resistant to change. But if you can summon some leadership nerve, then hard times can be a great time to separate yourself from the pack and build advantages for years to come.
Indeed, when it comes to creating the future, the only thing more worrisome than the prospect of too much change may be too little change—especially in an economy where there are too many competitors chasing too few customers with products and services that look too much alike. Now is the time to rethink long-held strategic assumptions inside your company, to challenge decades of conventional wisdom in your industry, and to push yourself to learn, grow, and innovate. As Albert Einstein famously said, “Problems cannot be solved at the same level of awareness that created them.” Or, in the spirit of some unknown Texas genius: “If all you ever do is all you’ve ever done, then all you’ll ever get is all you ever got.”
It’s time to do—and get—something different. Here, then, are ten questions that leaders must ask of themselves and their organizations—questions that speak to the challenges of change at a moment when change is the name of the game. The leaders with the best answers win.
1. Do you see opportunities the competition doesn’t see? IDEO’s Tom Kelly likes to quote French novelist Marcel Proust, who famously said, “The real act of discovery consists not in finding new lands but in seeing with new eyes.” The most successful companies don’t just out-compete their rivals. They redefine the terms of competition by embracing one-of-a-kind ideas in a world of me-too thinking.
2. Do you have new ideas about where to look for new ideas? One way to look at problems as if you’re seeing them for the first time is to look at a wide array of fields for ideas that have been working for a long time. Ideas that are routine in one industry can be revolutionary when they migrate to another industry, especially when they challenge the prevailing assumptions that have come to define so many industries.
3. Are you the most of anything? You can’t be “pretty good” at everything anymore. You have to be the most of something: the most affordable, the most accessible, the most elegant, the most colorful, the most transparent. Companies used to be comfortable in the middle of the road—that’s where all the customers were. Today, the middle of the road is the road to ruin. What are you the most of?
4. If your company went out of business tomorrow, who would miss you and why? I first heard this question from advertising legend Roy Spence, who says he got it from Jim Collins of Good to Great fame. Whatever the original source, the question is as profound as it is simple—and worth taking seriously as a guide to what really matters.
5. Have you figured out how your organization’s history can help to shape its future? Psychologist Jerome Bruner has a pithy way to describe what happens when the best of the old informs the search for the new. The essence of creativity, he argues, is “figuring out how to use what you already know in order to go beyond what you already think.” The most creative leaders I’ve met don’t disavow the past. They rediscover and reinterpret what’s come before as a way to develop a line of sight into what comes next.
6. Can your customers live without you? If they can, they probably will. The researchers at Gallup have identified a hierarchy of connections between companies and their customers—from confidence to integrity to pride to passion. To test for passion, Gallup asks a simple question: “Can you imagine a world without this product?” One of the make-or-break challenges for change is to become irreplaceable in the eyes of your customers.
7. Do you treat different customers differently? If your goal is to become indispensable to your customers, then almost by definition you won’t appeal to all customers. In a fickle and fast-changing world, one test of how committed a company is to its most important customers is how fearless it is about ignoring customers who aren’t central to its mission. Not all customers are created equal.
8. Are you getting the best contributions from the most people? It may be lonely at the top, but change is not a game best played by loners. These days, the most powerful contributions come from the most unexpected places—the “hidden genius” inside your company, the “collective genius” of customers, suppliers, and other smart people who surround your company. Tapping this genius requires a new leadership mindset—enough ambition to address tough problems, enough humility to know you don’t have all the answers.
9. Are you consistent in your commitment to change? Pundits love to excoriate companies because they don’t have the guts to change. In fact, the problem with many organizations is that all they do is change. They lurch from one consulting firm to the next, from the most recent management fad to the newest. If, as a leader, you want to make deep-seated change, then your priorities and practices have to stay consistent in good times and bad.
10. Are you learning as fast as the world is changing? I first heard this question from strategy guru Gary Hamel, and it may be the most urgent question facing leaders in every field. In a world that never stops changing, great leaders can never stop learning. How do you push yourself as an individual to keep growing and evolving—so that your company can do the same?
Over at Practically Radical, I’m continuing to make a case I’ve been making for months—that a down economy can be a great opportunity to try something different or start something new. My latest source of inspiration and evidence? A great column by James Surowiecki in The New Yorker, which distinguishes between two types of risks that executives face—trying something that doesn’t work (”sinking the boat”) and not trying something that would have worked (”missing the boat”). To me, though, the real opportunity is to recognize the power of “rocking the boat.”
If I haven’t made you seasick, you can read the full post here.
The one growth business in this shrinking economy is speculation about where MBAs and other elite students will flock now that Wall Street is a vast wasteland. “What will new map of talent flow look like?” wondered a piece last month in the New York Times. The tentative answer: towards government, the sciences, and teaching, “while fewer shiny young minds are embarking on careers in finance and business consulting.”
Just five days after that article, the Times was at it again, chronicling the difficult career choices for business students, including one former Goldman Sachs intern who started her own shoe-importing company, and a Wharton grad contemplating rabbinical studies. (He wound up in real estate.)
Now, I understand the use of students from elite business schools as a proxy for “talent” in the business world. But as the economy experiences the most deep-seated changes in decades, maybe it’s time to change our minds about what kinds of people are best-equipped to become business leaders. Is our fascination with the comings and goings of MBAs as obsolete as our lionization of investment bankers and hedge-fund managers? Is it time to look elsewhere for the “best and the brightest” of what business has to offer?
One place to look for answers is the fascinating research of Professor Sara Sarasvathy, who teaches entrepreneurship at the Darden Graduate School of Business at the University of Virginia. It’s been a long time since I’ve encountered academic research as original, relevant, and fascinating as what Professor Sarasvathy has done, in a series of essays, white papers, and a book. Her work revolves around one big question: What makes entrepreneurs “entrepreneurial?” Specifically, is there such as thing as “entrepreneurial thinking”—and does it differ in important ways from, say, how MBAs think about problems and seize opportunities?
The answer, Sarasvathy concludes, is an emphatic yes—and the differences boil down to the “causal” reasoning used by MBAs versus the “effectual” reasoning used by entrepreneurs. Causal reasoning, she explains, “begins with a pre-determined goal and a given set of means, and seeks to identify the optimal—fastest, cheapest, most efficient, etc.—alternative to achieve that goal.” This is the world of exhaustive business plans, microscopic ROI calculations, and portfolio diversification.
Effectual reasoning, on the other hand, “does not begin with a specific goal. Instead, it begins with a given set of means and allows goals to emerge contingently over time from the varied imagination and diverse aspirations of the founders and the people they interact with.” This is the world of bootstrapping, rapid prototyping, and guerilla marketing.
The more Sarasvathy explains the differences in the two styles of thinking, the more obvious it becomes which style matches the times. Causal reasoning is about how much you expect to gain; effectual reasoning is about how much you can afford to lose. Causal reasoning revolves around competitive analysis and zero-sum logic; effectual reasoning embraces networks and partnerships; causal reasoning “urges the exploitation of pre-existing knowledge”; effectual reasoning stresses the inevitability of surprises and the leveraging of options.
The difference in mindset, Sarasvathy concludes, boils down to a different take on the future. “Causal reasoning is based on the logic, To the extent that we can predict the future, we can control it,” she writes. That’s why MBAs and big companies spend so much time on focus groups, market research, and statistical models. “Effectual reasoning, however, is based on the logic, To the extent that we can control the future, we do not need to predict it.” How do you control the future? By inventing it yourself—marshalling scarce resources, understanding that surprises are to be expected rather than avoided, reacting to them fast.
Ultimately, she says, entrepreneurs begin with three simple sets of resources: “Who they are”—their values, skills, and tastes; “What they know”—their education, expertise, and experience; and “Whom they know”—their friends, allies, and networks. “Using these means, the entrepreneurs begin to imagine and implement possible effects that can be created with them…Plans are made and unmade and revised and recast through action and interactions with others on a daily basis.”
Sounds like a plan to me! So the next time you read an article about what MBA are doing, don’t forget to think about what entrepreneurs are doing as well. They’re the ones with the right stuff for tough times.
My friends at the Washington Post, where I am a member of the “On Leadership” panel, asked me to weigh in on a sports-related question, which is really a leadership question: In this period of March Madness, should big-time college coaches take a pay cut to respond to tough times for their colleges? You can read my Post essay here, but what follows give you the essence of it.
Consider these two scenes for a revealing look at the face of leadership in difficult times—and a surprising twist on how we read those faces.
Back on February 21, after his team beat the visitors from the University of South Florida, University of Connecticut men’s basketball coach Jim Calhoun fielded a press-conference question from a gadlfly blogger. Given the state’s economic crisis, this blogger asked, would Calhoun, as the state’s top-paid employee, consider returning some of his $1.6 million salary? “Not one dime,” Calhoun shot back. “I’d like to be able to retire some day.” When the blogger followed up, Calhoun heated up, “What was the take tonight? You’re not really that stupid are you? My best advice to you—shut up.”
Meanwhile, last week, a Boston Globe columnist wrote about Paul Levy, CEO of Beth Israel Deaconess Medical Center, a legendary hospital in a city filled with them. Levy had convened a gathering of employees and executives of the 8,000-employee hospital, to discuss how the organization would respond to the economic crisis. In the days prior to the meeting, the columnist noted, Levy had been walking the halls of the hospital, examining the details of how the place worked—especially how the often-overlooked frontline employees did their jobs. He was impressed by what he saw, and decided to recognize their commitment.
“I want to run an idea by you that I think is important, and I’d like to get your reaction to it,” Levy told the assembly. “I’d like to do what we can do to protect the lower-wage earners—the transporters, the housekeepers, the food-service people…If we protect these workers, it means the rest of us will have to make a bigger sacrifice. It means that others will have to give up more of their salary or benefits.”
Now, I wish I could report that Calhoun’s rant was met by a wave of disgust and revulsion, while Levy’s gesture was met by acclaim and celebration, but the world’s more complicated than that. The latter certainly was the case. Levy’s proposal received “thunderous” applause at the assembly, according to the Globe, and it touched off wave of email brainstorming about how to save money while protecting the lowest-paid employees. The CEO’s challenge to his colleagues became a feel-good episode for the whole city.
As for Calhoun, well, the people of Connecticut spoke loud and clear—in feeling good about their coach. A Quinnipiac University poll showed that 61 percent of respondents thought that Calhoun should keep his full salary, while only 30 percent thought he should give back a portion of it. Even more strikingly, 51 percent approved of his press-conference rant, and even those who disapproved did not think he should be disciplined by the Governor, who said that she found his behavior “embarrassing.”
So how do I make sense of these two contrasting leadership moments? The bottom line is that the idea of leaders taking a pay cut in difficult times really isn’t about money, it’s about mindset—modeling the values and behavior that you’d like to see in the rest of the organization.
At a place like Beth Israel, the values are about healing, compassion, and empathy. So it’s no wonder Levy’s call for sacrifice met with approval. In big-time college sports, the values are about winning at all costs. After all, the players themselves receive no salary for their hard work, no matter how big “the take” at their games every night. But don’t feel sorry for them—their goal is to cash in with NBA contracts that make Jim Calhoun’s salary look like lunch money. As for Calhoun’s “customers,” the citizens of Connecticut? Well, they have overlooked many expletive-filled tirades in the past by Calhoun, who seems to be as execrable a person as he is effective a coach. According to the Quinnipiac poll, Calhoun has a 68 percent favorable rating in the state and an 86 percent favorable rating among basketball fans.
In other words, we get the leaders we ask for. I’m sure the 8,000 employees of Beth Israel Deaconess Medical Center are proud to have a CEO whose leadership values reflect the mission of their hospital. And I guess the people of Connecticut are proud to have a basketball coach who gets fightin’ mad when questioned about his $1.6 million salary—so long as that coach delivers plenty of wins during March Madness.
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