Small Business Sttrategy: 6 Leadership Styles, And When You Should Use Them

Taking a team from ordinary to extraordinary means understanding and embracing the difference between management and leadership. According to writer and consultant Peter Drucker, "Management is doing things right; leadership is doing the right things." 

Manager and leader are two completely different roles, although we often use the terms interchangeably. Managers are facilitators of their team members’ success. They ensure that their people have everything they need to be productive and successful; that they’re well trained, happy and have minimal roadblocks in their path; that they’re being groomed for the next level; that they are recognized for great performance and coached through their challenges.

Conversely, a leader can be anyone on the team who has a particular talent, who is creatively thinking out of the box and has a great idea, who has experience in a certain aspect of the business or project that can prove useful to the manager and the team. A leader leads based on strengths, not titles.

The best managers consistently allow different leaders to emerge and inspire their teammates (and themselves!) to the next level.

When you’re dealing with ongoing challenges and changes, and you’re in uncharted territory with no means of knowing what comes next, no one can be expected to have all the answers or rule the team with an iron fist based solely on the title on their business card. It just doesn’t work for day-to-day operations. Sometimes a project is a long series of obstacles and opportunities coming at you at high speed, and you need every ounce of your collective hearts and minds and skill sets to get through it.

This is why the military style of top-down leadership is never effective in the fast-paced world of adventure racing or, for that matter, our daily lives (which is really one big, long adventure, hopefully!). I truly believe in Tom Peters’s observation that the best leaders don’t create followers; they create more leaders. When we share leadership, we’re all a heck of a lot smarter, more nimble and more capable in the long run, especially when that long run is fraught with unknown and unforeseen challenges.

Change leadership styles

Not only do the greatest teammates allow different leaders to consistently emerge based on their strengths, but also they realize that leadership can and should be situational, depending on the needs of the team. Sometimes a teammate needs a warm hug. Sometimes the team needs a visionary, a new style of coaching, someone to lead the way or even, on occasion, a kick in the bike shorts. For that reason, great leaders choose their leadership style like a golfer chooses his or her club, with a calculated analysis of the matter at hand, the end goal and the best tool for the job.

My favorite study on the subject of kinetic leadership is Daniel Goleman’s Leadership That Gets Results, a landmark 2000 Harvard Business Review study. Goleman and his team completed a three-year study with over 3,000 middle-level managers. Their goal was to uncover specific leadership behaviors and determine their effect on the corporate climate and each leadership style’s effect on bottom-line profitability.

The research discovered that a manager’s leadership style was responsible for 30% of the company’s bottom-line profitability! That’s far too much to ignore. Imagine how much money and effort a company spends on new processes, efficiencies, and cost-cutting methods in an effort to add even one percent to bottom-line profitability, and compare that to simply inspiring managers to be more kinetic with their leadership styles. It’s a no-brainer.

Here are the six leadership styles Goleman uncovered among the managers he studied, as well as a brief analysis of the effects of each style on the corporate climate:

1. The pacesetting leader expects and models excellence and self-direction. If this style were summed up in one phrase, it would be “Do as I do, now.” The pacesetting style works best when the team is already motivated and skilled, and the leader needs quick results. Used extensively, however, this style can overwhelm team members and squelch innovation.

2. The authoritative leader mobilizes the team toward a common vision and focuses on end goals, leaving the means up to each individual. If this style were summed up in one phrase, it would be “Come with me.” The authoritative style works best when the team needs a new vision because circumstances have changed, or when explicit guidance is not required. Authoritative leaders inspire an entrepreneurial spirit and vibrant enthusiasm for the mission. It is not the best fit when the leader is working with a team of experts who know more than him or her.

3. The affiliative leader works to create emotional bonds that bring a feeling of bonding and belonging to the organization. If this style were summed up in one phrase, it would be “People come first.” The affiliative style works best in times of stress, when teammates need to heal from a trauma, or when the team needs to rebuild trust. This style should not be used exclusively, because a sole reliance on praise and nurturing can foster mediocre performance and a lack of direction.

4. The coaching leader develops people for the future. If this style were summed up in one phrase, it would be “Try this.” The coaching style works best when the leader wants to help teammates build lasting personal strengths that make them more successful overall. It is least effective when teammates are defiant and unwilling to change or learn, or if the leader lacks proficiency.

5. The coercive leader demands immediate compliance. If this style were summed up in one phrase, it would be “Do what I tell you.” The coercive style is most effective in times of crisis, such as in a company turnaround or a takeover attempt, or during an actual emergency like a tornado or a fire. This style can also help control a problem teammate when everything else has failed. However, it should be avoided in almost every other case because it can alienate people and stifle flexibility and inventiveness.

6. The democratic leader builds consensus through participation. If this style were summed up in one phrase, it would be “What do you think?” The democratic style is most effective when the leader needs the team to buy into or have ownership of a decision, plan, or goal, or if he or she is uncertain and needs fresh ideas from qualified teammates. It is not the best choice in an emergency situation, when time is of the essence for another reason or when teammates are not informed enough to offer sufficient guidance to the leader.

Bottom line? If you take two cups of authoritative leadership, one cup of democratic, coaching, and affiliative leadership, and a dash of pacesetting and coercive leadership “to taste,” and you lead based on need in a way that elevates and inspires your team, you’ve got an excellent recipe for long-term leadership success with every team in your life.

Robyn Benincasa is a two-time Adventure Racing World Champion, two-time Guinness World Record distance kayaker, a full-time firefighter, and author of the new book, HOW WINNING WORKS: 8 Essential Leadership Lessons from the Toughest Teams on Earth, from which this article is excerpted. (Harlequin Nonfiction, June 2012)

[Image: Flickr user Bas Kers]

via fastcompany.com

Social Innovation: How Businesses and Communities Can Learn to Work Together

The most powerful component within social innovation is collaboration. There are signs that this new approach is helping shape the planet’s future. There is huge support for collaborative, multi-sector processes focused on modest initiatives; now is also the time for corporations to take on the challenges, work locally across sectors and push for better reporting, and more accountability. It’s a view supported by former U.S President, Bill Clinton who at a recent appearance in Oxford at Resource 2012, called for more to be done to persuade voters to support schemes that tackle global warming and resource scarcity. He highlighted his view of a multi-sector strategy and that the way forward is not more conferences with politicians, but lies in the ability of governments, businesses and NGOs to work together.

With the collapse of intergovernmental and global processes, it is becoming clear that we must use new mechanisms and social innovation that bring businesses and communities together. Sustainability must be advanced through collaborations among multiple business sectors, levels of government and not- for-profit organisations. Politicians no longer lead the process; instead they work with those who can identify issues and propose solutions. A good example of how this has worked well is collaborative water stewardship.

Companies in the developing world have stepped in to bridge the water network gap and between 2000 and 2007 the number of people served by private water operators in emerging markets almost doubled from 94 million to more than 160 million.

Now businesses are playing an integral role in supporting sustainable development through access to portable water and sanitation. In a world where vast amounts of information are widely accessible and corporate transparency is fundamental to leading companies, businesses are now meeting the demands from consumers, investors, regulators and the NGO community to work holistically and together. I have recently written about big, global brands such asHershey, PepsiCo and Chrysler which are leading on innovative environmental and community projects. These corporations have focused on stewardship in direct operations, supply chain, collective action, public policy andcommunity engagement.

These efforts are a direct reflection of the corporate sector’s understanding of their role in stewardship in the face of dwindling natural resources. For the planet as whole to survive and succeed, we need social innovation, new ways to define and measure goals, and achievements. Saving the planet is no longer the work of political leaders or even superheroes. It is down to us all – grass root communities, small, big businesses and organisations to create combined solutions. Together, we are the real superheroes to save the planet.

Photo Credit: buyhomesindetriot.com  via socialearth.org

 

For more than 25 years  Jim Woods and the Nonprofit Center for Creative Leadership and Entrepreneurial Strategy  has worked towards a singular goal of innovating organizations, children, families and communities as they strengthen and create conditions that propel vulnerable children and people everywhere to achieve success as individuals and as contributors to the larger community and society. Learn more about what you can do to help entrepreneurism and personal leadership improve the world. You’ll also learn to instill innovation and principled centered leadership into the core of your organization. Please join us.

 

Creating A Life of Purpose - Clayton Christensen

How My Depression Can Help You - Jim Woods

You probably haven’t noticed I was depressed recently. I hope this post will help you.

Despite what many think my ranting has a dual purpose. To be authentic. To help you as well as myself. We have far too many shallow people. I am a smart man but I'm working out my life as I go along just like you. The last two months have been the most traumatic of my life. I married the love of my life only to awaken one morning with her having absconded with everything I had owned. Everything!! By the time I entered my office that morning she had not only left with everything she had changed her Facebook status as well. She took more than things. My hard earned reputation. Emptied my bank and PayPal accounts. Literally everything. And worst cheated on me. So, here is the point to this personal, very painful story. 

I went into a state of depression which you would not have known. Wondering what did I do wrong. Where could I have been better. I worked hardest on myself not her. I forgave her. Then I went back to work. So, here is why you should listen carefully. All change comes from the inside out. And, if love or a business does not work out, you open the blinds, and go back to work on every area of your life. Just like I did. Because my friend, it takes guts not stupidity for me to write this. If I can rise above what has happened to me, so can you. Whatever you are going through I understand you. You will be just fine. Now stand up into the light.

www.innothinkgroup.com

How Did Peter Drucker See Corporate Responsibility? - Frances Hesselbein - What Does Business Owe the World?

(Editor's note: This post is part of the HBR Debate "What Does Business Owe the World?")

What must our organizations do today to help our country maintain its greatness and to sustain the democracy? What does business owe the world?

These are not abstract questions we can ignore as someone else's business, or with "comfortable indifference," to use Dr. John W. Gardner's memorable admonition. For our country is made up of institutions, enterprises, and organizations in three interdependent and equal sectors, and its greatness will be determined in part by how we in our own enterprises and institutions, in our own way, respond to these challenging questions.

According to Peter Drucker, "Leaders in every single institution and in every single sector ... have two responsibilities. They are responsible and accountable for the performance of their institutions, and that requires them and their institutions to be concentrated, focused, limited. They are responsible also, however, for the community as a whole."

Peter strived to make business leaders see the community as the responsibility of the corporation. He called on leaders to embody "the Spirit of Performance" by exhibiting high levels of integrity in their moral and ethical conduct; focusing on results; building on strengths; and leading beyond borders to meet the requirements of stakeholders, ultimately serving the common good.

It is my passionate belief that leadership is a matter of how to be, not how to do. Yet it is what leaders do that others see and judge, not what leaders are. So what can a leader do?

Ensure that your actions are congruent with your values. Challenge the gospel — there should be no sacred cows as we challenge every policy, practice, procedure, and assumption. Joseph A. Maciariello, a great Drucker disciple, tells us that an organization high in spirit of performance is one that is led by executives who are committed to doing the right thing and to getting the right things done.

The world continues to be more connected and more than ever the actions of organizations are scrutinized by the media and the public. Having an effective appreciation and approach toward corporate social responsibility and ethical, principled leadership is essential. The need to make a profit should be balanced with fair trade, sustainability, corporate social responsibility, and other ethical principles.

Ignoring externalities threatens excellence, ethics, and engagement in organizations, but addressing these externalities can transform challenges into opportunities. When we truly focus on the common good, service is a privilege —not a chore but a remarkable opportunity.

In the complexity and the context of our lives as leaders, leading in tenuous times, there are the most magnificent, most compelling, most significant opportunities to lead, to find solutions, and to build a healthy, diverse, inclusive community that cares about all of its people.

For leaders in all three sectors there is a new appreciation that when we build the healthy community, it is for the greater good. And even for a leader with little concern about the greater good, there is the reality that a sick and ailing community cannot produce the healthy, energetic, productive workforce our enterprises demand if indeed they are to be viable and even present at the end of this turbulent decade.

The bottom line of every social sector organization is "changed lives." That is possibly why Peter Drucker said, "It is the social sector that may yet save the society." But only in collaboration with our partners in the private and public sectors can we move beyond the walls and build this essential, cohesive community.

Frances Hesselbein is President and CEO of the Leader to Leader Institute, formerly the Peter F. Drucker Foundation. She is the co-editor of 27 books in 29 languages.

via blogs.hbr.org

 

How Can Leaders Reinvent Themselves? 3 Leadership Questions with Ken Blanchard

It’s that time of year when many of us pause, look back, and reflect on the past twelve months.  One of the most powerful ways you can improve the performance of your company is by evaluating the quality of your leadership.  What can you do for this coming year?  Here’s some advice for leaders from bestselling author and management guru Ken Blanchard.

How can a leader reinvent himself or herself? 

A. I think a leader reinvents himself or herself by constantly wanting to learn.  When you stop learning, you might as well lie down because you’re dead. I think every leader ought to set a personal goal each year about what will they be able to put on their resume next year that they didn’t have last year.  It might be learning a new language.  It could be learning a new computer program.  Constantly put yourself in a learning mode.

What does it take to be a good leader?

A. The biggest thing it takes to be a good leader is humility.  People with humility don’t think less of themselves—they just think about themselves less.  I think Rick Warren said it well in his book, The Purpose Driven Life.  The first sentence of that book is a whole leadership training program.  He said, “It’s not about you.”  We can accomplish that if we can get leaders to realize that they are there for the mission, for their clients, for their people, and not for themselves.

Can a leader also be a good coach?

 A. Yes, coaching is a definite part of leadership.  There are two parts of leadership.  One is the visionary direction part of leadership which is, “Where are we going?” and “What are we trying to accomplish?”  That has to be the responsibility of the traditional hierarchy.  It doesn’t mean that you don’t involve other people, but people look to the president, department chairman, and other traditional leaders to make sure that everybody knows where they are going.

The second part of leadership is implementation, which is “How do we live according to the vision, direction, and values that we have established?”  With that you have to turn the traditional hierarchy upside down.  So now the leaders who played a major role in setting the vision are at the bottom cheerleading, supporting, and coaching.

This is where the coaching process comes in because in developing your people there are three parts: Performance Planning where you are setting the goals and objectives; Day-to-Day Coaching when you are helping people win and accomplish their goals; and then there is Performance Evaluation.

In most companies, the majority of time is spent on performance evaluation with managers focused on judging people’s behavior.  Some companies do a pretty good job of goal setting but then they file the goals away until somebody says it is performance review time and then they run around looking for the goals. The thing that is least done is the day-to-day coaching, so coaching is a very important part of leadership.

What can you do from a personal leadership perspective to help your people and your organization perform at a higher level in 2011? 

Successful leaders recognize that profit is the applause you get for taking care of your customers and creating a motivating environment for your people.  What can you do to create that type of environment within your organization? The New Year is a great time to start!

PS: Ken Blanchard will be conducting a free webinar with Colleen Barrett, president emeritus of Southwest Airlines, on January 26.  It’s based on their new book, Lead with LUV.  To learn more, or to register, visit Lead with LUV: A Different Way to Create Real Success at the Blanchard website. via leaderchat.org

 

More Than Innovation Adaptability is The New Competitive Advantage

Globalization, new technologies, and greater transparency have combined to upend the business environment and give many CEOs a deep sense of unease. Just look at the numbers. Since 1980 the volatility of business operating margins, largely static since the 1950s, has more than doubled, as has the size of the gap between winners (companies with high operating margins) and losers (those with low ones).

Market leadership is even more precarious. The percentage of companies falling out of the top three rankings in their industry increased from 2% in 1960 to 14% in 2008. What’s more, market leadership is proving to be an increasingly dubious prize: The once strong correlation between profitability and industry share is now almost nonexistent in some sectors. According to our calculation, the probability that the market share leader is also the profitability leader declined from 34% in 1950 to just 7% in 2007. And it has become virtually impossible for some executives even to clearly identify in what industry and with which companies they’re competing.

All this uncertainty poses a tremendous challenge for strategy making. That’s because traditional approaches to strategy—though often seen as the answer to change and uncertainty—actually assume a relatively stable and predictable world.

Think about it. The goal of most strategies is to build an enduring (and implicitly static) competitive advantage by establishing clever market positioning (dominant scale or an attractive niche) or assembling the right capabilities and competencies for making or delivering an offering (doing what the company does well). Companies undertake periodic strategy reviews and set direction and organizational structure on the basis of an analysis of their industry and some forecast of how it will evolve.

But given the new level of uncertainty, many companies are starting to ask:

• How can we apply frameworks that are based on scale or position when we can go from market leader one year to follower the next? 

• When it’s unclear where one industry ends and another begins, how do we even measure position? 

• When the environment is so unpredictable, how can we apply the traditional forecasting and analysis that are at the heart of strategic planning? 

• When we’re overwhelmed with changing information, how can our managers pick up the right signals to understand and harness change? 

• When change is so rapid, how can a one-year—or, worse, five-year—planning cycle stay relevant?

The answers these companies are coming up with point in a consistent direction. Sustainable competitive advantage no longer arises exclusively from position, scale, and first-order capabilities in producing or delivering an offering. All those are essentially static. So where does it come from? Increasingly, managers are finding that it stems from the “second-order” organizational capabilities that foster rapid adaptation. Instead of being really good at doing some particular thing, companies must be really good at learning how to do new things.

Those that thrive are quick to read and act on signals of change. They have worked out how to experiment rapidly, frequently, and economically—not only with products and services but also with business models, processes, and strategies. They have built up skills in managing complex multi-stakeholder systems in an increasingly interconnected world. Perhaps most important, they have learned to unlock their greatest resources—the people who work for them. In the following pages we’ll look at how companies at the leading edge are using these four organizational capabilities to attain adaptive advantage. We’ll also discuss the implications of this fundamental strategic shift for large, established corporations, many of which have built their operations around scale and efficiency—sources of advantage that rely on an essentially stable environment.

A pattern similar to that illustrated in the exhibit above can be observed in many other industries.Learn more here.

The Ability to Read and Act on Signals

In order to adapt, a company must have its antennae tuned to signals of change from the external environment, decode them, and quickly act to refine or reinvent its business model and even reshape the information landscape of its industry.

Think back to when Stirling Moss was winning Formula One car races: The car and the driver determined who won. But today the sport is as much about processing complex signals and making adaptive decisions as about mechanics and driving prowess. Hundreds of sensors are built into the cars; race teams continuously collect and process data on several thousand variables—ranging from weather and road conditions to engine rpm and the angles of curves—and feed them into dynamic simulation models that guide the drivers’ split-second decisions. A telemetric innovation by one team can instantly raise the bar for all.

In this information-saturated age, when complex, varying signals may be available simultaneously to all players, adaptive companies must similarly rely on sophisticated point-of-sale systems to ensure that they acquire the right information. And they must apply advanced data-mining technologies to recognize relevant patterns in it.

For example, a leading media company that was suffering from a high rate of customer churn revamped its analytic approach to customer data, applying “neural network” technologies in order to understand patterns of customer loss. The company found hidden relationships among the variables that were driving churn and launched retention campaigns targeting at-risk customers. The accuracy rate in predicting churn was an impressive 75% to 90%—a huge benefit, given that every percentage point in churn reduction added millions of dollars to the bottom line.

Companies are also leveraging their signal-reading capabilities to make operational interventions in real time, bypassing slow-moving decision hierarchies. The UK-based grocery retailer Tesco continually performs detailed analyses of the purchase patterns of the more than 13 million members of its loyalty-card program. Its findings enable Tesco to customize offerings for each store and each customer segment and provide early warning of shifts in customer behavior. They also supported the development of Tesco’s hugely successful online platform, which has extended the company’s business model, enabling Tesco to become a store without walls and to offer a broader range of products and services, including media and financial services. To put the icing on the cake, instead of being purely a cost center, the rich databases and analytical capabilities produce a stream of direct revenue: For a fee, Tesco allows other enterprises to access its technologies and insights.

Google is another example. It uses algorithms to update the position of an ad on the basis of the ad’s relevance to an individual search or website as well as the advertiser’s bids on key words. The more relevant an ad, the higher the click-through rate—and because advertisers pay per click, this means more revenue for Google. By linking its advertising data directly to its operations, Google can respond to changing ad conditions on a split-second basis, without the intervention of human decision makers.

The Ability to Experiment

That which cannot be deduced or forecast can often be discovered through experimentation. Of course, all companies use some form of experimentation to develop and test new products and services. Yet the traditional approaches can be costly and time-consuming, and may saddle the organization with an unreasonable burden of complexity. Furthermore, research based on consumers’ perceptions is often a remarkably poor predictor of success. The real world is an expensive medium for experimentation, and failed market-facing tests and pilots may jeopardize a company’s brand and reputation.

To overcome these barriers, a growing number of adaptive competitors are using an array of new approaches and technologies, especially in virtual environments, to generate, test, and replicate a larger number of innovative ideas faster, at lower cost, and with less risk than their rivals can. Procter & Gamble is a case in point. Through its Connect + Develop model, it leverages InnoCentive and other open-innovation networks to solve technical design problems. It uses a walk-in, 3-D virtual store to run experiments that are quicker and cheaper than traditional market tests. And by employing Vocalpoint and other online user communities, it can introduce and test products with friendly audiences before a full launch. In 2008 alone, 10 highly skilled employees were able to generate some 10,000 design simulations, enabling the completion in hours of mock-ups that might once have taken weeks. More than 80% of P&G’s new-business initiatives now make use of its growing virtual toolbox.

In addition to changing the way in which they conduct experiments, companies need to broaden the scope of their experimentation. Traditionally, the focus has been on a company’s offerings—essentially new products and services. But in an increasingly turbulent environment, business models, strategies, and routines can also become obsolete quickly and unpredictably. Adaptive companies therefore use experimentation far more broadly than their rivals do. We’ve seen that Tesco illustrates the power of experimenting with business models as well as with product range.

Ikea, like Tesco, leverages existing assets and capabilities to experiment with business models. After the company entered Russia, managers noticed that whenever it opened a store, the value of nearby real estate increased dramatically. So Ikea decided to explore two business models simultaneously: retailing through its stores and capturing the appreciation in real estate values through mall development. It now makes more profit in Russia from developing and operating malls than from its traditional retail business.

Finally, experimentation necessarily produces failure. Adaptive companies are very tolerant of failure, even to the point of celebrating it. For example, the software company Intuit, which has been extremely successful at using adaptive approaches to grow new businesses, launched a marketing campaign in 2005 to reach young tax filers through a website called rockyourrefund.com. The site offered discounts at Expedia and Best Buy and the opportunity to get tax refunds in the form of prepaid gift cards. The campaign was a flop, and practically no one used the site. The amount of money involved was negligible—“almost a rounding error,” says Rick Jensen, the vice president of product management for Intuit’s consumer tax division. But the marketing team documented what it had learned from the failure and won an award from company chairman Scott Cook, who said, “It is only a failure if we fail to get the learning.”

The Ability to Manage Complex Multicompany Systems

Signal detection and experimentation require a company to think beyond its own boundaries and perhaps to work more closely and smartly with customers and suppliers. This flies somewhat in the face of the unspoken assumption that the unit of analysis for strategy is a single company or business unit.

With an increasing amount of economic activity occurring beyond corporate boundaries—through outsourcing, offshoring, value nets, value ecosystems, peer production, and the like—we need to think about strategies not only for individual companies but also for dynamic business systems. Increasingly, industry structure is better characterized as competing webs or ecosystems of codependent companies than as a handful of competitors producing similar goods and services and working on a stable, distant, and transactional basis with their suppliers and customers.

In such an environment advantage will flow to those companies that can create effective strategies at the network or system level. Adaptive companies are therefore learning how to push activities outside the company without benefiting competitors and how to design and evolve strategies for networks without necessarily being able to rely on strong control mechanisms.

Typically, adaptive companies manage their ecosystems by using common standards to foster interaction with minimal barriers. They generate trust among participants—for example, by enabling people to interact frequently and by providing transparency and rating systems that serve as “reputational currency.” Toyota’s automotive supply pyramids, with their kanban and kaizen feedback mechanisms, are early examples of adaptive systems. EBay’s complex network of sellers and buyers is another; the company relies on seller ratings and online payment systems to support the online marketplace.

If the experience curve and the scale curve were the key indicators of success, Nokia would still be leading the smartphone market; it had the advantage of being an early mover and the market share leader with a strong cost position. But Nokia was attacked by an entirely diff erent kind of competitor: Apple’s adaptive system of suppliers, telecom partnerships, and numerous independent application developers, created to support the iPhone. Google’s Android operating system, too, capitalized on a broad array of hardware partners and application developers. The ability to bring together the assets and capabilities of so many entities allowed these smartphone entrants to leapfrog the experience curve and become new market leaders in record time. As Stephen Elop, Nokia’s CEO, wrote in a memo to his staff , “Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem.” Through broader signal detection, parallel innovation, superior flexibility, and rapid mobilization, multicompany systems can enhance the adaptiveness of individual companies.

The Ability to Mobilize

Adaptation is necessarily local in nature—somebody experiments first at a particular place and time. It is also necessarily global in nature, because if the experiment succeeds, it will be communicated, selected, amplified, and refined. Organizations therefore need to create environments that encourage the knowledge flow, diversity, autonomy, risk taking, sharing, and flexibility on which adaptation thrives. Contrary to classical strategic thinking, strategy follows organization in adaptive companies.

A flexible structure and the dispersal of decision rights are powerful levers for increasing adaptability. Typically, adaptive companies have replaced permanent silos and functions with modular units that freely communicate and recombine according to the situation at hand. To reinforce this framework, it is helpful to have weak or competing power structures and a culture of constructive conflict and dissent. Cisco is one company that has made this transformation. Early on, it relied on a hierarchical, customercentric organization to become a leader in the market for network switches and routers. More recently the CEO, John Chambers, has created a novel management structure of cross-functional councils and boards to facilitate moves into developing countries and 30 adjacent and diverse markets (ranging from health care to sports) with greater agility than would previously have been possible.

As they create more-fluid structures, adaptive companies drive decision making down to the front lines, allowing the people most likely to detect changes in the environment to respond quickly and proactively. For example, at Whole Foods the basic organizational unit is the team, and each store has about eight teams. Team leaders—not national buyers—decide what to stock. Teams have veto power over new hires. They are encouraged to buy from local growers that meet the company’s quality and sustainability standards. And they are rewarded for their performance with bonuses based on store profitability over the previous four weeks.

Creating decentralized, fluid, and even competing organizational structures destroys the big advantage of a rigid hierarchy, which is that everyone knows precisely what he or she should be doing. An adaptive organization can’t expect to succeed unless it provides people with some substitute for that certainty. What’s needed is some simple, generative rules to facilitate interaction, help people make trade-offs, and set the boundaries within which they can make decisions.

For example, Netflix values nine core behaviors and skills in its employees: judgment, communication, impact, curiosity, innovation, courage, passion, honesty, and selflessness. The company’s executives believe that a great workplace is full of “stunning colleagues” who embody these qualities; thus the Netflix model is to “increase employee freedom as we grow, rather than limit it, to continue to attract and nourish innovative people, so we have a better chance of long-term continued success.” Consistent with this philosophy, Netflix has only two types of rules: those designed to prevent irrevocable disaster and those designed to prevent moral, ethical, and legal issues. It has no vacation policy and does no tracking of time—the company’s focus is on what needs to get done, not how many hours or days are worked. As the Netflix “Reference Guide on Our Freedom & Responsibility Culture” puts it, “Avoid Chaos as you grow with Ever More High Performance People—not with Rules.”

The Challenge for Big Business

Becoming an adaptive competitor can be difficult, especially for large, established organizations. Typically, these companies are oriented toward managing scale and efficiency, and their hierarchical structures and fixed routines lack the diversity and flexibility needed for rapid learning and change. Such management paradigms die hard, especially when they have historically been the basis for success.

However, several tactics have proved effective at fostering adaptive advantage even in established companies. To the managers involved, they may look like nothing more than an extension of business as usual, but in fact they create a context in which adaptive capabilities can thrive. If you are the CEO of a large company that wants to be more adaptive, challenge your managers to:

Look at the mavericks. Fast-changing industries are characterized by the presence of disruptive mavericks—often entirely new players, sometimes from other sectors. Ask your managers to shift their focus from traditional competitors’ moves to what the new players are doing and to think of ways to insure your company against this new competition or neutralize its effect. They should also look at what’s happening in adjacent or analogous industries and markets and ask, “What if this happened in mine?” Although pattern recognition is harder in an uncertain environment and can easily be obstructed by entrenched beliefs and narrow industry definitions, it has tremendous competitive value.

Identify and address the uncertainties. Get your managers to put aside the traditional single-business forecast and instead examine the risks and uncertainties that could significantly affect the company. This simple extension of the familiar long-range strategy exercise can force people to realize what they don’t yet know and to address it. Your organization needs to distinguish “false knowns” (questionable but firmly held assumptions) from “underexploited knowns” (megatrends you may recognize and perhaps have even acted on, but without sufficient speed or emphasis) and “unknown unknowns” (intrinsic uncertainties that you can prepare for only by hedging your bets).

Put an initiative on every risk. Most companies have a portfolio of strategic initiatives. It should become the engine that drives your organization into adaptability—and it can, with a couple of simple enhancements. First, every significant source of uncertainty should be addressed with an initiative. Depending on the nature of the uncertainty, the goal of the initiative may be responding to a neglected business trend, creating options for responding to it down the line, or simply learning more about it. In managing these initiatives, your company should be as disciplined with metrics, time frames, and responsibilities as it would be for the product portfolio or the operating plan.

Examine multiple alternatives. In a stable environment it is sufficient to improve what already exists or to examine single change proposals. The simple step of requiring that every change proposal be accompanied by several alternatives not only surfaces a more varied and powerful set of moves, but also legitimizes and fosters cognitive diversity and organizational flexibility.

Increase the clock speed. The speed of adaptation is a function of the cycle time of decision making. In a fast-moving environment, companies need to accelerate change by making annual planning processes lighter and more frequent and sometimes by making episodic processes continual.

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The adaptive approach is no universal panacea. If your industry is stable and relatively predictable, you may be better off sticking to the traditional sources of advantage. But if your competitive reality is uncertain and rapidly changing, as is true in an increasing number of industries, you need a dynamic and sustainable way to stay ahead. Your survival may depend on building an organization that can exploit the four capabilities behind what we think of as adaptive advantage. via BCG

This article originally appeared in the Harvard Business Review and is republished here with permission.

 

 

Why Most Leaders (Even Thomas Jefferson) Are Replaceable - Kim Girard

Harvard Business School Assistant Professor Gautam Mukunda leads off his new book, Indispensable: When Leaders Really Matter, with the results of social science research that executives may wish not to consider: individual leaders rarely make a difference.

Although many heads of organizations would like to think of themselves as truly indispensable—impact makers, history movers, culture changers—few reach the bar set by Steve Jobs, Napoleon, or Martin Luther King Jr., Mukunda says. (Even some people you might think would be shoo-ins for the indispensable category don't make Mukunda's cut, including Thomas Jefferson and Jack Welch. More on them later.)

Under most circumstances, a leader is elected or appointed. And it makes no difference who ends up in power so long as the person is experienced and is hired through the structured processes that most organizations use to vet everyone from CEOs to military officers to presidential candidates, Mukunda says.

Read an excerpt from the book

"Are individual leaders truly responsible for the end result, or do they just happen to be there, for better or worse?" Mukunda asks. "We revere Lincoln. He must matter. But it's not so clear that that this is the case, and it is certainly not clear that every leader matters."

Out of the blue

Every once in a while, though, someone comes to power who is inexperienced or appointed in an unusual way. The incumbent dies suddenly, for example. Or a country experiences extreme historical circumstances. It's this person who has the potential to become an unconventional, powerful leader—a Hitler, perhaps, but maybe a Winston Churchill.

These people—total extremes on both ends—are usually "unfiltered" leaders, those who are unproven in their area of leadership, Mukunda explains. They are also, in most cases, the ones who matter when history is written.

"Unfiltered leaders are much more likely to have a high impact"

"Unfiltered leaders are much more likely to have a high impact," Mukunda says. "Unfiltered leaders will do extremely well or extremely poorly. Everything else boils out of that."

In his research, Mukunda wanted to identify "those particular individuals who were the right people, in the right place, at the right time, to change history." By doing so, he hopes to improve our understanding of contemporary leaders and "perhaps help us choose better ones."

Mukunda knew he needed solid data to answer the question of who mattered. So he made lists of US presidents and British prime ministers that dated back to George Washington in 1789 and Britain's Charles Grey in 1830. He noted how historians ranked them on performance, how much political experience they had before entering office, and how they got the top job.

The result was his Leader Filtration Theory, or LFT, which states that a leader's impact can be predicted by his or her career. The more unfiltered the leader, the larger the prospect of big impact. The more a leader has relevant experience, the less chance of high impact.

Filtering a leader

There are three factors that social scientists agree minimize the impact of leaders:

• An external environment in which responses of competitors limits the leader's discretion to act.
• Internal organizational dynamics, bureaucratic politics, or constituents' interests that leaders must respond to.
• The selection systems used to pick leaders, which he says homogenize the pool of potential CEOs and presidents. These are especially important, Mukunda argues, because they preserve the status quo and prevent incompetent or disturbed leaders from gaining power.

Take General Electric. What if GE's board had picked someone other than Jack Welch as CEO? Would the company have performed the same?

Most likely, GE would have chosen someone quite similar to Welch had he not accepted the job, Mukunda says. Because of this, Mukunda calls Welch a leader of "low individual impact." It's likely that another candidate chosen by GE management would have performed nearly or as well as he did.

On the other end from low impact leaders are those whom Mukunda terms "extremes." These people, who slip through the cracks of conventional leadership filtering processes, are more likely to be high-impact and make their mark on history "for better or worse." The book studies both kinds of leadership through historical cases that Mukunda teaches in his courses.

In the book, Mukunda classifies every US president from George Washington to G.W. Bush as "filtered" or "unfiltered" based on their experience in offices that would prepare them for the presidency, and how they became president. A filtered president is one with a high amount of relevant experience, an unfiltered one with little or no such domain experience.

George Washington, as the first president, was an unfiltered revolutionary leader. Teddy Roosevelt was unfiltered, because he was a vice president who got the top job following the assassination of William McKinley. John F. Kennedy was a filtered leader with 13 years in the House and Senate. George W. Bush was unfiltered, Mukunda says, because he spent less than six years as governor and was boosted by family connections.

Mukunda's findings support the LFT theory that unfiltered presidents often turn up at the high and low ends—four of the five highest ranked presidents and four of the five lowest ranked ones were unfiltered.

In case studies he analyzes three presidents and two prime ministers: Jefferson, whom he called "the hardest possible case," Lincoln, Woodrow Wilson, and Prime Ministers Winston Churchill and Neville Chamberlain, comparing their approaches to decision-making with people who plausibly could have been in their shoes.

Chamberlain is a perfect example of "how a British prime minister reaches the top of the greasy pole" by climbing the political system and serving as postmaster general, minister for health, and chancellor for the exchequer before becoming PM. He was a filtered, low-impact prime minister who never willingly stood up to Hitler. Churchill, on the other hand, was widely considered a "failed, right-wing politician," named prime minister because Halifax, Chamberlain's Foreign Minister, didn't want the job, not because the king and the cabinet decided that Churchill was the best choice.

"They didn't have any alternatives," Mukunda says.

"We revere Lincoln. He must matter. But it's not so clear that that this is the case"

An unfiltered, extreme leader, Churchill made history. "His energy, his talents, his indomitable courage, his rhetorical abilities, and his rigidity and inflexibility were enormously unlike the vast majority of politicians," Mukunda says.

On the other hand, there is Thomas Jefferson, whom Mukunda argues had low impact, despite his success as a filtered president. There were others who could have easily taken Jefferson's place, including James Madison and John Adams. While Jefferson secured his place in history with the critical Louisiana Purchase, Mukunda argues that "no diplomatic virtuosity or intellectual brilliance was required…there is nothing in the events surrounding it that suggests any normal president could not or would not have done the same."

Results may vary

These two cases—Jefferson and Churchill —illustrate Mukunda's theory that a filtered leader can deliver excellent results without being extreme, and an extreme leader can be a force for great change.

Mukunda hopes future research will expand the Leader Filtration Theory, which he believes can be applied by companies trying to make better CEO choices—and even in evaluating presidential candidates.

The trick for a company or country picking an extreme leader is to realize that it is a high-stakes gamble, and that the candidates are difficult to evaluate—it happens over time as they are observed leading and making decisions. In the book Mukunda offers specific ways to avoid making a poor candidate choice:

• Avoid deceptive signals. Someone who has ridden family wealth to high office, for example, may have accomplished less than meets the eye.
• Match the leader's characteristics to your situation and remove them from power when situations change.
• Take seriously the statements made by unfiltered leaders before they take power.
• Choose unfiltered leaders who have been successful filtered leaders in other contexts.
• Shape the position to fit the leader you choose.

Want to see an unfiltered leader in action? Check out the mercurial ups and downs of the nearest startup. "They're always unfiltered," Mukunda says. "In pretty much every case the personal quirks of the entrepreneur will have a huge impact."

About the author

Kim Girard is a freelance writer based in Brookline, Massachusetts. via hbswk.hbs.edu

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Sex and the Working Mom - Herminia Ibarra

At one of the companies with which I work there is a legendary story about work life balance.

The firm's most senior line woman was asked to join a newly constituted high-level diversity committee, which included the company CEO. One of the hurdles that was holding women back, everyone agreed, was the high degree of transcontinental travel required of executives in the uppermost echelons, who had to attend a variety of global and regional meetings. Asked about her experience, she told the high-level group: "Let me tell you what diversity means to me. My husband told me 'there will be sex in this house at least once a week, whether you are here or not.' "

As politically incorrect as the anecdote may seem, it speaks to a reality that is rarely if ever broached in the current, raging work-life balance debate. From Anne Marie Slaughter's viral Atlantic piece on why women still can't have it all to the large array of books on the "opting out" phenomenon, relationships with partners are rarely mentioned, except with regard to their role in household and child rearing duties. A less discussable set of issues — sex, intimacy, the role that partners play in helping each other grow and develop, personally and professionally — is somehow off the table.

Yet in private conversations women talk about how juggling kids and work affects their intimate relationships. In my interviews, executive women uniformly described the same work pattern: Get up early, get the kids off to school, go to work, come back for dinner with the family, get the kids to bed, get back online for a few hours, fall into bed exhausted. Repeat again the next day unless travelling. What could get squeezed out of that routine?

Recent studies in France (where I live) describe the rise of the "hub decider woman," who not only works full time but also manages all family decisions and logistics, including those involving her partner's kids from an earlier marriage and her aging parents. She often works an extra shift helping out her partner professionally, providing behind the scenes counsel, organizing dinners at home, accompanying him to professional events, and doing editing and bookkeeping and the like. The "hub decider" doesn't feel guilty about not devoting more time to her children, the studies show. Rather, she is worried about neglecting her personal life.

One woman I know recounted how her relationship with her partner suffered when they adopted a child. She had a busy career; the child needed her attention and her partner felt displaced. She told me "I don't think it's hard to combine kids and career. But, it's really hard to do kids, career and a husband. One of the three invariably gets the short shrift." One of her friends, she told me, gave up a high-powered career when she remarried. Her first marriage failed because of the demands her job placed on her time. She resolved to make her relationship the priority the second time around.

Two different career stages for women in particular have built-in fault lines from a life partner standpoint (they also happen to be the two points when companies complain about losing their high potential women): In mid to late 30's, after having kids, when the woman is scrambling to get her career back on track but the children are still small and physically demanding. And, from the mid 40's on, when the kids are older but more demanding emotionally (think Slaughter's 14-year old), aging parents require more attention, and the push for a more senior role or career switch requires more travel, attention and investment. All this coincides with the partner's parallel push to reach a higher level professionally or, as is more frequent these days, to change careers, and thus, have a greater need for support, not to mention biological changes on the woman's part that affect intimate relationships unless they're dealt with head on.

Why is none of this part of the conversation? Should it be? via HBR

More blog posts by Herminia Ibarra

More on: Diversity, Stress, Work life balance

Learn The Signs of CEO and Small Business Failure

Experts say leadership failure has many signs but they have narrowed the cause to a few that stand out. Few site competence, or knowledge, or lack of experience. When Claudio Fernando-Araoz, head of research for the executive recruitment firm Egon Zehnder International, looked at CEOs who had succeeded and those who had failed, he found the same pattern in America, Germany and Japan: those who failed were hired on the basis of their drive, IQ, and business expertise – but fired for lack of emotional intelligence. They simply could not win over, or sometimes even just get along with, their board of directors, or their direct reports, or others on whom their own success depended.”

In 1999, CEO consultant and advisor RamCharan and Fortune’s Geoffrey Colvin studied over 40 failed CEOs from Fortune 500 companies to see what went wrong. They identified the fatal flaw of these CEOs as execution. But the reason for the execution failure was even simpler and more basic. The problem was with people, specifically their inability in not having the right person in the right job. In some case they held on to some people too long, in other cases they were unable to coach them in the desired direction.

In their Fortune article, Charan and Colvin explained that unsuccessful CEOs lacked emotional strength when it came down to personnel decisions. In short, the fatal flaw of “failure to execute” was due to bad personnel decisions.

Ronald Riggio, the Henry Kravis professor of leadership and organizationqal Psychology at Claremont McKenna College, and author of “The Clueless Leader,” thinks leaders in dysfunctional organizations are simply out of touch with how bad things are. He compares them to Michael Scott from the TV show “The Office,” who simply doesn’t realize how bad thing are or simply doesn’t care. Riggio recalls discussing with the president of one organization the possibility of an employee survey to try to get a handle on how disgruntled employees had become. “Why would we want to do that?” was the clueless response.

In their book, “Why CEOs Fail: The 11 Behaviors That Can Derail Your Climb To The Top And How To Manage Them, “ David Dotlich, a former Honeywell executive and Peter Cairo offer 11 cogent reasons why CEOs fail, most of which have to do with hubris, ego and a lack of emotional intelligence. They describe the most common characteristics of derailed top executives and how you can avoid them:

§ Arrogance— you think that you’re right, and everyone else is wrong.

§ Melodrama— you need to be the center of attention.

§ Volatility— you’re subject to mood swings.

§ Excessive Caution— you’re afraid to make decisions.

§ Habitual Distrust— you focus on the negatives.

§ Aloofness — you’re disengaged and disconnected.

§ Mischievousness— you believe that rules are made to be broken.

§ Eccentricity— you try to be different just for the sake of it.

§ Passive Resistance— what you say is not what you really believe.

§ Perfectionism— you get the little things right and the big things wrong.

§ Eagerness to Please— you try to win the popularity contest.

There are no universal ways to prevent failures, except perhaps to be alert for the warning signs. In today’s culture some executives are larger than life and expected to be perfect. Few like to admit they have flaws—even when those around them can plainly see their flaws.

Candid feedback is seen as helpful and a corrective, but who can provide this? Not employees or board members. A confidante, mentor or a trusted coach can help. But in today’s high-pressure environment, leaders need someone they can trust to tell the truth about their behavior. This is where an outside professional executive coach can help leaders reduce or eliminate blind spots and be open to constructive feedback, not only reducing the likelihood of failure, and premature burnout, but also provide an atmosphere in which the executive can express fears, failures and dreams. via chiefexecutive.net

 

How to be a Real Leader - Kevin Cashman

If leadership is so important, why are effective business leaders so rare? Kevin Cashman, a Minneapolis-based leadership coach, thinks that he has the answer: "Too many people separate the act of leadership from the leader. They see leadership as something that they do -- rather than as an expression of who they are."

Cashman is the founder and CEO of LeaderSource, which has helped executives from companies such as Pillsbury, American Express, and Rollerblade to explore what it means to lead. His flagship program, the Executive Leadership Institute, has been dubbed "the Mayo Clinc of Leadership." Why do leaders come to Cashman for a checkup? "Leaders lead by virtue of who they are," he replies. "If we want to be more effective with others, we first need to be more effective with ourselves."

Cashman's most recent book, Leadership from the Inside Out (Executive Excellence Publishing, 1998), distills his insights about becoming a real leader. In an interview, he distilled his thoughts even further.

What does an effective leader look like?

There are three core qualities to leadership: authenticity, self-expression, value creation. "Authenticity" refers to a link between the inner and the outer person. Truly authentic leaders are open both to their gifts and to their underdeveloped qualities. People who understand who they are tend to have a more powerful voice -- and to make a more profound contribution to an enterprise.

We do a lot of work with Pillsbury. The current CEO, Paul Walsh, came to the job from finance. He had none of the marketing experience that's so critical to running a consumer-products company. The first thing he did was to admit to that knowledge gap; he then created a plan to learn everything he could about marketing. Because he was so open, people enthusiastically helped him.

What separates authentic leaders from the rest of the pack?

Most of us know more about our favorite sports team or vacation spot than we know about ourselves. Leadership comes from one of two places: persona or character. Persona is the coping part of our personality -- a mask that we create to protect ourselves from external stresses and internal fears. Character is the essence of who we are; it goes beyond what we do. It's critical to spot the cues that signal when you're in character and when you're relying on a persona: Under what circumstances do you tend to get stuck? When do you overreact? When does everything come together and flow?

The second attribute of leadership is self-expression.

Does that mean "straight talk"? It means something more than straight talk. How often have you held back from saying something that you felt was important -- just because you were worried about how you would express yourself? How often have you feigned modesty about something that you were really proud of? Authentic expression goes beyond telling the truth: It demonstrates a total congruence between who you are and what you do and say.

Leaders are measured by results. How does authentic expression translate into value creation?

Leaders create value through relationships. But many leaders still have the illusion that they are the ones who really "make things happen." Admitting that you don't have all the answers is a big part of building good relationships -- and a big part of getting good results.

Sidebar: How Authentic are You?

It's impossible to lead people who don't trust you, and it's impossible to build trust without cultivating authenticity. According to Kevin Cashman, asking these three questions will help you to explore your authenticity.

Do you know yourself? Get in the habit of asking yourself two crucial questions: "Why do I pursue the work and the life that I do?" and "What do I act like during the most fulfilling times of my life?" Your answers will help you spot the defining thread of your experiences, and they will lead you to your purpose.

Do you know how to listen -- and to hear? Most leaders think that not speaking is the same as listening. But hearing people's words is only the beginning. Do you also hear their fears? Their intentions? Their aspirations? When you start to hear at a deeper level, you'll start getting information from people. Better yet, people will know that you care about them, and they will eagerly commit to you.

What's your appreciation ratio? In the business world, confrontation, criticism, and even hate are more socially acceptable than expressions of appreciation. That's too bad, because appreciation is a truly value-creating activity. It energizes people, and it makes them want to exceed their goals and perceived limits.

For more information, visit the Web (www.leadersource.com) or contact Kevin Cashman by email (kevin@leadersource.com).

via fastcompany.com