Product #12546 · 70 Level 5 Leadership : The Triumph of Humility and Fierce Resolve by Jim Collins...

On LeadershipIf you read nothing else on leadership, read these definitive articles from Harvard Business Review.

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Included with this collection:

2 What Makes a Leader?

by Daniel Goleman

23 What Leaders Really Do

by John P. Kotter

60 Crucibles of Leadership

by Warren G. Bennis and Robert J. Thomas

HBR’s 10 Must Readson Leadership

14 What Makes an Effective Executiveby Peter F. Drucker

35 The Work of Leadership

by Ronald A. Heifetz and Donald L. Laurie

49 Why Should Anyone Be Led by You?

by Robert Goffee and Gareth Jones

83 Seven Transformations of Leadershipby David Rooke and William R. Torbert

70 Level 5 Leadership: The Triumph of Humility and Fierce Resolveby Jim Collins

98 Discovering Your Authentic Leadershipby Bill George, Peter Sims, Andrew N. McLean, and Diana Mayer

108 In Praise of the Incomplete Leaderby Deborah Ancona, Thomas W. Malone, Wanda J. Orlikowski, and Peter M. Senge

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What Makes a Leader?

by Daniel Goleman

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Included with this full-text Harvard Business Review article:

The Idea in Brief—the core idea

The Idea in Practice—putting the idea to work

3

Article Summary

4


A list of related materials, with annotations to guide further

exploration of the article’s ideas and applications

13

Further Reading

IQ and technical skills are

important, but emotional

intelligence is the sine qua non

of leadership.

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The Idea in Brief The Idea in Practice

EI Component Defi nition Hallmarks ExampleSelf-awareness

Knowing one’s emotions, strengths, weaknesses, drives, values, and goals—and their impact on others

Self-confi dence• Realistic self-• assessmentSelf-deprecating sense • of humorThirst for constructive • criticism

A manager knows tight deadlines bring out the worst in him. So he plans his time to get work done well in advance.

Self-regulation

Controlling or redirecting disruptive emotions and impulses

Trustworthiness• Integrity• Comfort with • ambiguity and change

When a team botches a presentation, its leader resists the urge to scream. Instead, she considers possible reasons for the failure, explains the consequences to her team, and explores solutions with them.

Motivation Being driven to achieve for the sake of achievement

A passion for the work • itself and for new challengesUnfl agging energy to • improveOptimism in the face • of failure

A portfolio manager at an investment company sees his fund tumble for three consecutive quarters. Major clients defect. Instead of blaming external circumstances, she decides to learn from the experience—and engineers a turnaround.

Empathy Considering others’ feelings, especially when making decisions

Expertise in attracting • and retaining talentAbility to develop • others Sensitivity to cross-• cultural diff erences

An American consultant and her team pitch a project to a potential client in Japan. Her team interprets the client’s silence as disapproval, and prepares to leave. The consultant reads the client’s body language and senses interest. She continues the meeting, and her team gets the job.

Social Skill Managing relationships to move people in desired directions

Eff ectiveness in leading • changePersuasiveness• Extensive networking• Expertise in building • and leading teams

A manager wants his company to adopt a better Internet strategy. He fi nds kindred spirits and assembles a de facto team to create a prototype Web site. He persuades allies in other divisions to fund the company’s participation in a relevant convention. His company forms an Internet division—and puts him in charge of it.

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What distinguishes great leaders from merely good ones? It isn't IQ or technical skills, says Daniel Goleman. It's

emotional intelligence:

a group of five skills that en-able the best leaders to maximize their own

and

their followers' performance. When se-nior managers at one company had a criti-cal mass of EI capabilities, their divisions outperformed yearly earnings goals by 20%.

The EI skills are:

•

Self-awareness

—knowing one's strengths, weaknesses, drives, values, and impact on others

•

Self-regulation

—controlling or redirect-ing disruptive impulses and moods

•

Motivation

—relishing achievement for its own sake

•

Empathy

—understanding other people's emotional makeup

•

Social skill

—building rapport with others to move them in desired directions

We're each born with certain levels of EI skills. But we can strengthen these abilities through persistence, practice, and feed-back from colleagues or coaches.

UNDERSTANDING EI'S COMPONENTS

STRENGTHENING YOUR EI

Use practice and feedback from others to strengthen specific EI skills.

Example:

An executive learned from others that she lacked empathy, especially the ability to listen. She wanted to fix the problem, so she asked a coach to tell her when she exhibited poor listening skills. She then role-played incidents to practice giving better responses; for example, not inter-rupting. She also began observing executives skilled at listening-and imitated their behavior.

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by Daniel Goleman

harvard business review • january 2004

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IQ and technical skills are important, but emotional intelligence is the

sine qua non of leadership.

It was Daniel Goleman who first brought the term “emotional intelligence” to a wide audience with his 1995 book of that name, and it was Goleman who first applied the concept to business with his 1998 HBR article, reprinted here. In his research at nearly 200 large, global companies, Goleman found that while the qualities traditionally asso-ciated with leadership—such as intelligence, toughness, determination, and vision—are re-quired for success, they are insufficient. Truly ef-fective leaders are also distinguished by a high degree of emotional intelligence, which includes self-awareness, self-regulation, motivation, em-pathy, and social skill.

These qualities may sound “soft” and unbusi-nesslike, but Goleman found direct ties between emotional intelligence and measurable busi-ness results. While emotional intelligence’s rele-vance to business has continued to spark debate over the past six years, Goleman’s article re-mains the definitive reference on the subject, with a description of each component of emo-tional intelligence and a detailed discussion of how to recognize it in potential leaders, how

and why it connects to performance, and how it can be learned.

Every businessperson knows a story about ahighly intelligent, highly skilled executivewho was promoted into a leadership posi-tion only to fail at the job. And they also knowa story about someone with solid—but notextraordinary—intellectual abilities and tech-nical skills who was promoted into a similarposition and then soared.

Such anecdotes support the widespread be-lief that identifying individuals with the “rightstuff” to be leaders is more art than science.After all, the personal styles of superb leadersvary: Some leaders are subdued and analyti-cal; others shout their manifestos from themountaintops. And just as important, differentsituations call for different types of leader-ship. Most mergers need a sensitive negotiatorat the helm, whereas many turnarounds re-quire a more forceful authority.

I have found, however, that the most effec-tive leaders are alike in one crucial way: They

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all have a high degree of what has come to beknown as

emotional intelligence

. It’s not that IQand technical skills are irrelevant. They do mat-ter, but mainly as “threshold capabilities”; thatis, they are the entry-level requirements for ex-ecutive positions. But my research, along withother recent studies, clearly shows that emo-tional intelligence is the sine qua non of leader-ship. Without it, a person can have the besttraining in the world, an incisive, analyticalmind, and an endless supply of smart ideas,but he still won’t make a great leader.

In the course of the past year, my col-leagues and I have focused on how emotionalintelligence operates at work. We have examinedthe relationship between emotional intelligenceand effective performance, especially in leaders.And we have observed how emotional intelli-gence shows itself on the job. How can youtell if someone has high emotional intelli-gence, for example, and how can you recog-nize it in yourself? In the following pages,we’ll explore these questions, taking each ofthe components of emotional intelligence—self-awareness, self-regulation, motivation, em-pathy, and social skill—in turn.

Evaluating Emotional Intelligence

Most large companies today have employedtrained psychologists to develop what areknown as “competency models” to aid them inidentifying, training, and promoting likelystars in the leadership firmament. The psy-chologists have also developed such modelsfor lower-level positions. And in recent years, Ihave analyzed competency models from 188companies, most of which were large and glo-bal and included the likes of Lucent Technolo-gies, British Airways, and Credit Suisse.

In carrying out this work, my objective wasto determine which personal capabilities droveoutstanding performance within these organi-zations, and to what degree they did so. Igrouped capabilities into three categories: purelytechnical skills like accounting and businessplanning; cognitive abilities like analytical rea-soning; and competencies demonstrating emo-tional intelligence, such as the ability to workwith others and effectiveness in leading change.

To create some of the competency models,psychologists asked senior managers at thecompanies to identify the capabilities that typi-fied the organization’s most outstanding leaders.To create other models, the psychologists used

objective criteria, such as a division’s profitabil-ity, to differentiate the star performers at se-nior levels within their organizations from theaverage ones. Those individuals were then ex-tensively interviewed and tested, and their ca-pabilities were compared. This process resultedin the creation of lists of ingredients for highlyeffective leaders. The lists ranged in lengthfrom seven to 15 items and included such ingre-dients as initiative and strategic vision.

When I analyzed all this data, I found dra-matic results. To be sure, intellect was a driverof outstanding performance. Cognitive skillssuch as big-picture thinking and long-term vi-sion were particularly important. But when Icalculated the ratio of technical skills, IQ, andemotional intelligence as ingredients of excellentperformance, emotional intelligence provedto be twice as important as the others for jobsat all levels.

Moreover, my analysis showed that emo-tional intelligence played an increasingly impor-tant role at the highest levels of the company,where differences in technical skills are of neg-ligible importance. In other words, the higherthe rank of a person considered to be a star per-former, the more emotional intelligence capa-bilities showed up as the reason for his or hereffectiveness. When I compared star perform-ers with average ones in senior leadership posi-tions, nearly 90% of the difference in their pro-files was attributable to emotional intelligencefactors rather than cognitive abilities.

Other researchers have confirmed that emo-tional intelligence not only distinguishes out-standing leaders but can also be linked to strongperformance. The findings of the late DavidMcClelland, the renowned researcher in humanand organizational behavior, are a good exam-ple. In a 1996 study of a global food and bever-age company, McClelland found that when se-nior managers had a critical mass of emotionalintelligence capabilities, their divisions outper-formed yearly earnings goals by 20%. Mean-while, division leaders without that criticalmass underperformed by almost the sameamount. McClelland’s findings, interestingly,held as true in the company’s U.S. divisions asin its divisions in Asia and Europe.

In short, the numbers are beginning to tellus a persuasive story about the link between acompany’s success and the emotional intelli-gence of its leaders. And just as important, re-search is also demonstrating that people can, if

Daniel Goleman

is the author of

Emo-tional Intelligence

(Bantam, 1995) and a coauthor of

Primal Leadership: Realizing the Power of Emotional Intelligence

(Harvard Business School, 2002). He is the cochairman of the Consortium for Research on Emotional Intelligence in Organizations, which is based at Rut-gers University’s Graduate School of Applied and Professional Psychology in Piscataway, New Jersey. He can be reached at [email protected].

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they take the right approach, develop theiremotional intelligence. (See the sidebar “CanEmotional Intelligence Be Learned?”)

Self-Awareness

Self-awareness is the first component of emo-tional intelligence—which makes sense whenone considers that the Delphic oracle gave theadvice to “know thyself” thousands of yearsago. Self-awareness means having a deep un-derstanding of one’s emotions, strengths, weak-nesses, needs, and drives. People with strongself-awareness are neither overly critical nor un-realistically hopeful. Rather, they are honest—with themselves and with others.

People who have a high degree of self-awareness recognize how their feelings affectthem, other people, and their job performance.Thus, a self-aware person who knows that tightdeadlines bring out the worst in him plans histime carefully and gets his work done well in ad-vance. Another person with high self-awarenesswill be able to work with a demanding client.She will understand the client’s impact on hermoods and the deeper reasons for her frustra-

tion. “Their trivial demands take us away fromthe real work that needs to be done,” she mightexplain. And she will go one step further andturn her anger into something constructive.

Self-awareness extends to a person’s under-standing of his or her values and goals. Some-one who is highly self-aware knows where he isheaded and why; so, for example, he will beable to be firm in turning down a job offer thatis tempting financially but does not fit with hisprinciples or long-term goals. A person who lacksself-awareness is apt to make decisions thatbring on inner turmoil by treading on buriedvalues. “The money looked good so I signedon,” someone might say two years into a job,“but the work means so little to me that I’mconstantly bored.” The decisions of self-awarepeople mesh with their values; consequently,they often find work to be energizing.

How can one recognize self-awareness? Firstand foremost, it shows itself as candor and anability to assess oneself realistically. People withhigh self-awareness are able to speak accu-rately and openly—although not necessarilyeffusively or confessionally—about their emo-

Self-Awareness

Self-Regulation

Motivation

Empathy

Social Skill

Definition

the ability to recognize and understand your moods, emotions, and drives, as well as their effect on others

the ability to control or redirect disruptive impulsesand moods

the propensity to suspend judgment – to think before acting

a passion to work for reasons that go beyond money or status

a propensity to pursue goals with energy and persistence

the ability to understand the emotional makeup of other people

skill in treating people according to their emotionalreactions

proficiency in managing relationships and buildingnetworks

an ability to find common ground and build rapport

Hallmarks

self-confidence

realistic self-assessment

self-deprecating sense of humor

trustworthiness and integrity

comfort with ambiguity

openness to change

strong drive to achieve

optimism, even in the face of failure

organizational commitment

expertise in building and retaining talent

cross-cultural sensitivity

service to clients and customers

effectiveness in leading change

persuasiveness

expertise in building and leading teams

The Five Components of Emotional Intelligence at Work

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tions and the impact they have on their work.For instance, one manager I know of was skepticalabout a new personal-shopper service that hercompany, a major department-store chain, wasabout to introduce. Without prompting fromher team or her boss, she offered them an ex-planation: “It’s hard for me to get behind therollout of this service,” she admitted, “because Ireally wanted to run the project, but I wasn’tselected. Bear with me while I deal with that.”The manager did indeed examine her feelings;

a week later, she was supporting the project fully.Such self-knowledge often shows itself in the

hiring process. Ask a candidate to describe atime he got carried away by his feelings anddid something he later regretted. Self-awarecandidates will be frank in admitting to failure—and will often tell their tales with a smile. Oneof the hallmarks of self-awareness is a self-deprecating sense of humor.

Self-awareness can also be identified duringperformance reviews. Self-aware people know—

Can Emotional Intelligence Be Learned?

For ages, people have debated if leaders are born or made. So too goes the debate about emotional intelligence. Are people born with certain levels of empathy, for example, or do they acquire empathy as a result of life’s expe-riences? The answer is both. Scientific inquiry strongly suggests that there is a genetic com-ponent to emotional intelligence. Psychological and developmental research indicates that nurture plays a role as well. How much of each perhaps will never be known, but research and practice clearly demonstrate that emotional intelligence can be learned.

One thing is certain: Emotional intelligence increases with age. There is an old-fashioned word for the phenomenon: maturity. Yet even with maturity, some people still need training to enhance their emotional intelligence. Un-fortunately, far too many training programs that intend to build leadership skills—includ-ing emotional intelligence—are a waste of time and money. The problem is simple: They focus on the wrong part of the brain.

Emotional intelligence is born largely in the neurotransmitters of the brain’s limbic system, which governs feelings, impulses, and drives. Research indicates that the limbic system learns best through motivation, extended practice, and feedback. Compare this with the kind of learning that goes on in the neocortex, which governs analytical and technical ability. The neocortex grasps concepts and logic. It is the part of the brain that figures out how to use a computer or make a sales call by reading a book. Not surprisingly—but mistakenly—it is also the part of the brain targeted by most training programs aimed at enhancing emo-tional intelligence. When such programs take, in effect, a neocortical approach, my research

with the Consortium for Research on Emo-tional Intelligence in Organizations has shown they can even have a

negative

impact on peo-ple’s job performance.

To enhance emotional intelligence, organi-zations must refocus their training to include the limbic system. They must help people break old behavioral habits and establish new ones. That not only takes much more time than conventional training programs, it also requires an individualized approach.

Imagine an executive who is thought to be low on empathy by her colleagues. Part of that deficit shows itself as an inability to listen; she interrupts people and doesn’t pay close atten-tion to what they’re saying. To fix the problem, the executive needs to be motivated to change, and then she needs practice and feed-back from others in the company. A colleague or coach could be tapped to let the executive know when she has been observed failing to listen. She would then have to replay the inci-dent and give a better response; that is, dem-onstrate her ability to absorb what others are saying. And the executive could be directed to observe certain executives who listen well and to mimic their behavior.

With persistence and practice, such a process can lead to lasting results. I know one Wall Street executive who sought to improve his empathy—specifically his ability to read peo-ple’s reactions and see their perspectives. Be-fore beginning his quest, the executive’s sub-ordinates were terrified of working with him. People even went so far as to hide bad news from him. Naturally, he was shocked when fi-nally confronted with these facts. He went home and told his family—but they only con-firmed what he had heard at work. When their

opinions on any given subject did not mesh with his, they, too, were frightened of him.

Enlisting the help of a coach, the executive went to work to heighten his empathy through practice and feedback. His first step was to take a vacation to a foreign country where he did not speak the language. While there, he monitored his reactions to the unfamiliar and his openness to people who were different from him. When he returned home, humbled by his week abroad, the executive asked his coach to shadow him for parts of the day, sev-eral times a week, to critique how he treated people with new or different perspectives. At the same time, he consciously used on-the-job interactions as opportunities to practice “hearing” ideas that differed from his. Finally, the executive had himself videotaped in meet-ings and asked those who worked for and with him to critique his ability to acknowledge and understand the feelings of others. It took sev-eral months, but the executive’s emotional in-telligence did ultimately rise, and the improve-ment was reflected in his overall performance on the job.

It’s important to emphasize that building one’s emotional intelligence cannot—will not—happen without sincere desire and con-certed effort. A brief seminar won’t help; nor can one buy a how-to manual. It is much harder to learn to empathize—to internalize empathy as a natural response to people—than it is to become adept at regression analy-sis. But it can be done. “Nothing great was ever achieved without enthusiasm,” wrote Ralph Waldo Emerson. If your goal is to be-come a real leader, these words can serve as a guidepost in your efforts to develop high emo-tional intelligence.

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and are comfortable talking about—their limi-tations and strengths, and they often demon-strate a thirst for constructive criticism. Bycontrast, people with low self-awareness inter-pret the message that they need to improve asa threat or a sign of failure.

Self-aware people can also be recognized bytheir self-confidence. They have a firm grasp oftheir capabilities and are less likely to set them-selves up to fail by, for example, overstretchingon assignments. They know, too, when to askfor help. And the risks they take on the job arecalculated. They won’t ask for a challenge thatthey know they can’t handle alone. They’ll playto their strengths.

Consider the actions of a midlevel employeewho was invited to sit in on a strategy meetingwith her company’s top executives. Althoughshe was the most junior person in the room,she did not sit there quietly, listening in awe-struck or fearful silence. She knew she had ahead for clear logic and the skill to presentideas persuasively, and she offered cogent sug-gestions about the company’s strategy. At thesame time, her self-awareness stopped herfrom wandering into territory where she knewshe was weak.

Despite the value of having self-aware peo-ple in the workplace, my research indicatesthat senior executives don’t often give self-awareness the credit it deserves when theylook for potential leaders. Many executivesmistake candor about feelings for “wimpiness”and fail to give due respect to employees whoopenly acknowledge their shortcomings. Suchpeople are too readily dismissed as “not toughenough” to lead others.

In fact, the opposite is true. In the first place,people generally admire and respect candor.Furthermore, leaders are constantly requiredto make judgment calls that require a candidassessment of capabilities—their own and thoseof others. Do we have the management exper-tise to acquire a competitor? Can we launch anew product within six months? People whoassess themselves honestly—that is, self-awarepeople—are well suited to do the same for theorganizations they run.

Self-Regulation

Biological impulses drive our emotions. Wecannot do away with them—but we can domuch to manage them. Self-regulation, whichis like an ongoing inner conversation, is the

component of emotional intelligence that freesus from being prisoners of our feelings. Peopleengaged in such a conversation feel bad moodsand emotional impulses just as everyone elsedoes, but they find ways to control them andeven to channel them in useful ways.

Imagine an executive who has just watcheda team of his employees present a botched analy-sis to the company’s board of directors. In thegloom that follows, the executive might findhimself tempted to pound on the table in angeror kick over a chair. He could leap up and screamat the group. Or he might maintain a grim si-lence, glaring at everyone before stalking off.

But if he had a gift for self-regulation, hewould choose a different approach. He wouldpick his words carefully, acknowledging theteam’s poor performance without rushing toany hasty judgment. He would then step backto consider the reasons for the failure. Are theypersonal—a lack of effort? Are there any miti-gating factors? What was his role in the debacle?After considering these questions, he would callthe team together, lay out the incident’s con-sequences, and offer his feelings about it. Hewould then present his analysis of the problemand a well-considered solution.

Why does self-regulation matter so much forleaders? First of all, people who are in controlof their feelings and impulses—that is, peoplewho are reasonable—are able to create an en-vironment of trust and fairness. In such an en-vironment, politics and infighting are sharplyreduced and productivity is high. Talentedpeople flock to the organization and aren’ttempted to leave. And self-regulation has atrickle-down effect. No one wants to be knownas a hothead when the boss is known for hercalm approach. Fewer bad moods at the topmean fewer throughout the organization.

Second, self-regulation is important for com-petitive reasons. Everyone knows that businesstoday is rife with ambiguity and change. Com-panies merge and break apart regularly. Tech-nology transforms work at a dizzying pace. Peo-ple who have mastered their emotions are ableto roll with the changes. When a new programis announced, they don’t panic; instead, theyare able to suspend judgment, seek out infor-mation, and listen to the executives as they ex-plain the new program. As the initiative movesforward, these people are able to move with it.

Sometimes they even lead the way. Considerthe case of a manager at a large manufacturing

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company. Like her colleagues, she had used acertain software program for five years. Theprogram drove how she collected and reporteddata and how she thought about the com-pany’s strategy. One day, senior executivesannounced that a new program was to be in-stalled that would radically change how infor-mation was gathered and assessed within theorganization. While many people in the com-pany complained bitterly about how disrup-tive the change would be, the manager mulledover the reasons for the new program and wasconvinced of its potential to improve perfor-mance. She eagerly attended training sessions—some of her colleagues refused to do so—andwas eventually promoted to run several divi-sions, in part because she used the new tech-nology so effectively.

I want to push the importance of self-regulation to leadership even further andmake the case that it enhances integrity, whichis not only a personal virtue but also an orga-nizational strength. Many of the bad thingsthat happen in companies are a function of im-pulsive behavior. People rarely plan to exag-gerate profits, pad expense accounts, dip intothe till, or abuse power for selfish ends. Instead,an opportunity presents itself, and peoplewith low impulse control just say yes.

By contrast, consider the behavior of the se-nior executive at a large food company. Theexecutive was scrupulously honest in his nego-tiations with local distributors. He wouldroutinely lay out his cost structure in detail,thereby giving the distributors a realistic un-derstanding of the company’s pricing. This ap-proach meant the executive couldn’t alwaysdrive a hard bargain. Now, on occasion, hefelt the urge to increase profits by withhold-ing information about the company’s costs.But he challenged that impulse—he saw that itmade more sense in the long run to counter-act it. His emotional self-regulation paid off instrong, lasting relationships with distributorsthat benefited the company more than anyshort-term financial gains would have.

The signs of emotional self-regulation, there-fore, are easy to see: a propensity for reflectionand thoughtfulness; comfort with ambiguityand change; and integrity—an ability to say noto impulsive urges.

Like self-awareness, self-regulation often doesnot get its due. People who can master theiremotions are sometimes seen as cold fish—

their considered responses are taken as a lackof passion. People with fiery temperamentsare frequently thought of as “classic” leaders—their outbursts are considered hallmarks ofcharisma and power. But when such peoplemake it to the top, their impulsiveness oftenworks against them. In my research, extremedisplays of negative emotion have neveremerged as a driver of good leadership.

Motivation

If there is one trait that virtually all effectiveleaders have, it is motivation. They are drivento achieve beyond expectations—their ownand everyone else’s. The key word here is

achieve

. Plenty of people are motivated by ex-ternal factors, such as a big salary or the statusthat comes from having an impressive title orbeing part of a prestigious company. By con-trast, those with leadership potential are moti-vated by a deeply embedded desire to achievefor the sake of achievement.

If you are looking for leaders, how can youidentify people who are motivated by the driveto achieve rather than by external rewards? Thefirst sign is a passion for the work itself—suchpeople seek out creative challenges, love to learn,and take great pride in a job well done. Theyalso display an unflagging energy to do thingsbetter. People with such energy often seemrestless with the status quo. They are persistentwith their questions about why things are doneone way rather than another; they are eager toexplore new approaches to their work.

A cosmetics company manager, for example,was frustrated that he had to wait two weeksto get sales results from people in the field. Hefinally tracked down an automated phone sys-tem that would beep each of his salespeople at5 pm every day. An automated message thenprompted them to punch in their numbers—how many calls and sales they had made thatday. The system shortened the feedback timeon sales results from weeks to hours.

That story illustrates two other common traitsof people who are driven to achieve. They are for-ever raising the performance bar, and they liketo keep score. Take the performance bar first.During performance reviews, people with highlevels of motivation might ask to be “stretched”by their superiors. Of course, an employee whocombines self-awareness with internal motiva-tion will recognize her limits—but she won’tsettle for objectives that seem too easy to fulfill.

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And it follows naturally that people who aredriven to do better also want a way of trackingprogress—their own, their team’s, and theircompany’s. Whereas people with low achieve-ment motivation are often fuzzy about results,those with high achievement motivation oftenkeep score by tracking such hard measures asprofitability or market share. I know of a moneymanager who starts and ends his day on the In-ternet, gauging the performance of his stockfund against four industry-set benchmarks.

Interestingly, people with high motivationremain optimistic even when the score is againstthem. In such cases, self-regulation combineswith achievement motivation to overcome thefrustration and depression that come after asetback or failure. Take the case of an anotherportfolio manager at a large investment com-pany. After several successful years, her fundtumbled for three consecutive quarters, lead-ing three large institutional clients to shifttheir business elsewhere.

Some executives would have blamed thenosedive on circumstances outside their control;others might have seen the setback as evidenceof personal failure. This portfolio manager,however, saw an opportunity to prove shecould lead a turnaround. Two years later, whenshe was promoted to a very senior level in thecompany, she described the experience as “thebest thing that ever happened to me; I learnedso much from it.”

Executives trying to recognize high levels ofachievement motivation in their people canlook for one last piece of evidence: commit-ment to the organization. When people lovetheir jobs for the work itself, they often feelcommitted to the organizations that make thatwork possible. Committed employees are likelyto stay with an organization even when theyare pursued by headhunters waving money.

It’s not difficult to understand how and whya motivation to achieve translates into strongleadership. If you set the performance barhigh for yourself, you will do the same for theorganization when you are in a position to doso. Likewise, a drive to surpass goals and aninterest in keeping score can be contagious.Leaders with these traits can often build ateam of managers around them with thesame traits. And of course, optimism and or-ganizational commitment are fundamental toleadership—just try to imagine running acompany without them.

Empathy

Of all the dimensions of emotional intelligence,empathy is the most easily recognized. We haveall felt the empathy of a sensitive teacher orfriend; we have all been struck by its absence inan unfeeling coach or boss. But when it comesto business, we rarely hear people praised, letalone rewarded, for their empathy. The veryword seems unbusinesslike, out of place amidthe tough realities of the marketplace.

But empathy doesn’t mean a kind of “I’mOK, you’re OK” mushiness. For a leader, thatis, it doesn’t mean adopting other people’semotions as one’s own and trying to please ev-erybody. That would be a nightmare—itwould make action impossible. Rather, empa-thy means thoughtfully considering employees’feelings—along with other factors—in the pro-cess of making intelligent decisions.

For an example of empathy in action, con-sider what happened when two giant brokeragecompanies merged, creating redundant jobs inall their divisions. One division manager calledhis people together and gave a gloomy speechthat emphasized the number of people whowould soon be fired. The manager of anotherdivision gave his people a different kind ofspeech. He was up-front about his own worryand confusion, and he promised to keep peo-ple informed and to treat everyone fairly.

The difference between these two managerswas empathy. The first manager was too wor-ried about his own fate to consider the feelingsof his anxiety-stricken colleagues. The secondknew intuitively what his people were feeling,and he acknowledged their fears with hiswords. Is it any surprise that the first managersaw his division sink as many demoralized peo-ple, especially the most talented, departed? Bycontrast, the second manager continued to bea strong leader, his best people stayed, and hisdivision remained as productive as ever.

Empathy is particularly important today as acomponent of leadership for at least three rea-sons: the increasing use of teams; the rapidpace of globalization; and the growing need toretain talent.

Consider the challenge of leading a team. Asanyone who has ever been a part of one can at-test, teams are cauldrons of bubbling emo-tions. They are often charged with reaching aconsensus—which is hard enough with twopeople and much more difficult as the num-bers increase. Even in groups with as few as

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four or five members, alliances form and clash-ing agendas get set. A team’s leader must beable to sense and understand the viewpoints ofeveryone around the table.

That’s exactly what a marketing manager ata large information technology company wasable to do when she was appointed to lead atroubled team. The group was in turmoil, over-loaded by work and missing deadlines. Ten-sions were high among the members. Tinker-ing with procedures was not enough to bringthe group together and make it an effectivepart of the company.

So the manager took several steps. In a se-ries of one-on-one sessions, she took the timeto listen to everyone in the group—what wasfrustrating them, how they rated their col-leagues, whether they felt they had been ig-nored. And then she directed the team in away that brought it together: She encouragedpeople to speak more openly about their frus-trations, and she helped people raise construc-tive complaints during meetings. In short, herempathy allowed her to understand her team’semotional makeup. The result was not justheightened collaboration among members butalso added business, as the team was called onfor help by a wider range of internal clients.

Globalization is another reason for the risingimportance of empathy for business leaders.Cross-cultural dialogue can easily lead to mis-cues and misunderstandings. Empathy is anantidote. People who have it are attuned tosubtleties in body language; they can hear themessage beneath the words being spoken. Be-yond that, they have a deep understandingof both the existence and the importance ofcultural and ethnic differences.

Consider the case of an American consultantwhose team had just pitched a project to a po-tential Japanese client. In its dealings withAmericans, the team was accustomed to beingbombarded with questions after such a pro-posal, but this time it was greeted with a longsilence. Other members of the team, taking thesilence as disapproval, were ready to packand leave. The lead consultant gestured themto stop. Although he was not particularly fa-miliar with Japanese culture, he read the cli-ent’s face and posture and sensed not rejectionbut interest—even deep consideration. Hewas right: When the client finally spoke, it wasto give the consulting firm the job.

Finally, empathy plays a key role in the re-

tention of talent, particularly in today’s infor-mation economy. Leaders have always neededempathy to develop and keep good people,but today the stakes are higher. When goodpeople leave, they take the company’s knowl-edge with them.

That’s where coaching and mentoring comein. It has repeatedly been shown that coachingand mentoring pay off not just in better per-formance but also in increased job satisfac-tion and decreased turnover. But what makescoaching and mentoring work best is the na-ture of the relationship. Outstanding coachesand mentors get inside the heads of the peoplethey are helping. They sense how to give effec-tive feedback. They know when to push forbetter performance and when to hold back.In the way they motivate their protégés, theydemonstrate empathy in action.

In what is probably sounding like a refrain,let me repeat that empathy doesn’t get muchrespect in business. People wonder how leaderscan make hard decisions if they are “feeling”for all the people who will be affected. Butleaders with empathy do more than sympa-thize with people around them: They use theirknowledge to improve their companies in sub-tle but important ways.

Social Skill

The first three components of emotional in-telligence are self-management skills. The lasttwo, empathy and social skill, concern a per-son’s ability to manage relationships withothers. As a component of emotional intelli-gence, social skill is not as simple as it sounds.It’s not just a matter of friendliness, althoughpeople with high levels of social skill are rarelymean-spirited. Social skill, rather, is friendli-ness with a purpose: moving people in the di-rection you desire, whether that’s agreementon a new marketing strategy or enthusiasmabout a new product.

Socially skilled people tend to have a widecircle of acquaintances, and they have a knackfor finding common ground with people of allkinds—a knack for building rapport. Thatdoesn’t mean they socialize continually; itmeans they work according to the assumptionthat nothing important gets done alone. Suchpeople have a network in place when the timefor action comes.

Social skill is the culmination of the otherdimensions of emotional intelligence. People

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tend to be very effective at managing relation-ships when they can understand and controltheir own emotions and can empathize withthe feelings of others. Even motivation con-tributes to social skill. Remember that peoplewho are driven to achieve tend to be optimistic,even in the face of setbacks or failure. Whenpeople are upbeat, their “glow” is cast uponconversations and other social encounters. Theyare popular, and for good reason.

Because it is the outcome of the other di-mensions of emotional intelligence, socialskill is recognizable on the job in many waysthat will by now sound familiar. Sociallyskilled people, for instance, are adept at man-aging teams—that’s their empathy at work.Likewise, they are expert persuaders—a mani-festation of self-awareness, self-regulation,and empathy combined. Given those skills,good persuaders know when to make anemotional plea, for instance, and when anappeal to reason will work better. And moti-vation, when publicly visible, makes suchpeople excellent collaborators; their passionfor the work spreads to others, and they aredriven to find solutions.

But sometimes social skill shows itself inways the other emotional intelligence com-ponents do not. For instance, socially skilledpeople may at times appear not to beworking while at work. They seem to be idlyschmoozing—chatting in the hallways withcolleagues or joking around with people whoare not even connected to their “real” jobs. So-cially skilled people, however, don’t think itmakes sense to arbitrarily limit the scope oftheir relationships. They build bonds widelybecause they know that in these fluid times,they may need help someday from people theyare just getting to know today.

For example, consider the case of an execu-tive in the strategy department of a globalcomputer manufacturer. By 1993, he was con-vinced that the company’s future lay with theInternet. Over the course of the next year, hefound kindred spirits and used his social skill tostitch together a virtual community that cutacross levels, divisions, and nations. He thenused this de facto team to put up a corporateWeb site, among the first by a major company.And, on his own initiative, with no budget or

formal status, he signed up the company to par-ticipate in an annual Internet industry conven-tion. Calling on his allies and persuading variousdivisions to donate funds, he recruited morethan 50 people from a dozen different units torepresent the company at the convention.

Management took notice: Within a year ofthe conference, the executive’s team formedthe basis for the company’s first Internet divi-sion, and he was formally put in charge of it.To get there, the executive had ignored con-ventional boundaries, forging and maintain-ing connections with people in every corner ofthe organization.

Is social skill considered a key leadership ca-pability in most companies? The answer is yes,especially when compared with the other com-ponents of emotional intelligence. Peopleseem to know intuitively that leaders need tomanage relationships effectively; no leader isan island. After all, the leader’s task is to getwork done through other people, and socialskill makes that possible. A leader who cannotexpress her empathy may as well not have it atall. And a leader’s motivation will be useless ifhe cannot communicate his passion to the or-ganization. Social skill allows leaders to puttheir emotional intelligence to work.

It would be foolish to assert that good-old-fashioned IQ and technical ability are not im-portant ingredients in strong leadership. Butthe recipe would not be complete withoutemotional intelligence. It was once thoughtthat the components of emotional intelli-gence were “nice to have” in business leaders.But now we know that, for the sake of perfor-mance, these are ingredients that leaders“need to have.”

It is fortunate, then, that emotional intelli-gence can be learned. The process is not easy.It takes time and, most of all, commitment.But the benefits that come from having a well-developed emotional intelligence, both for theindividual and for the organization, make itworth the effort.

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Further Reading

A R T I C L E S

The Manager’s Job: Folklore and Fact

by Henry Mintzberg


March–April 1990Product no. 90210

Whereas Goleman emphasizes emotional in-telligence, Mintzberg focuses on specific skills. In this HBR Classic, Mintzberg uses his and other research to debunk myths about the manager’s role. Managerial work involves in-terpersonal roles, informational roles, and de-cisional roles, he notes. These in turn require the ability to develop peer relationships, carry out negotiations, motivate subordinates, re-solve conflicts, establish information networks and disseminate information, make decisions with little or ambiguous information, and allo-cate resources. Good self-management skills are characteristic of most leaders; outstanding leaders also have the ability to empathize with others and to use social skills to advance an agenda.

The Work of Leadership



January–February 1997Product no. 97106

Successfully leading an organization through an adaptive challenge calls for leaders with a high degree of emotional intelligence. But Heifetz and Laurie focus on the requirements of adaptive work, not on emotional maturity. The principles for leading adaptive work in-clude: “getting on the balcony,” forming a picture of the entire pattern of activity; identi-fying the key challenge; regulating distress; maintaining disciplined attention; giving the work back to the people; and protecting voices of leadership from below.

The Ways Chief Executive Officers Lead

by Charles M. Farkas and Suzy Wetlaufer


May–June 1996Product no. 96303

CEOs inspire a variety of sentiments ranging from awe to wrath, but there’s little debate over CEOs’ importance in the business world. The authors conducted 160 interviews with executives around the world. Instead of find-ing 160 different approaches, they found five, each with a singular focus: strategy, people, expertise, controls, or change. The five com-ponents of emotional intelligence, singly or in combination, have a great effect on how each focus is expressed in an organization.

B O O K

John P. Kotter on What Leaders Really Do

by John P. KotterHarvard Business School Press1999Product no. 8974

In this collection of six articles, Kotter shares his observations on the nature of leadership gained over the past 30 years. Without leader-ship that can deal successfully with today’s in-creasingly fast-moving and competitive busi-ness environment, he warns, organizations will slow down, stagnate, and lose their way. He presents his views on the current state of leadership through ten observations and re-visits his now famous eight-step process for organizational transformation. In contrast to Goleman’s article on emotional intelligence, which is about leadership qualities, Kotter’s work focuses on action: What does a leader do to lead? And how will leadership need to be different in the future?

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What Makes an Effective Executive

by Peter F. Drucker

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article:



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Article Summary

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22

Further Reading

Great managers may be

charismatic or dull, generous

or tightfisted, visionary or

numbers oriented. But every

effective executive follows

eight simple practices.

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Worried that you’re not a born leader? That you lack charisma, the right talents, or some other secret ingredient? No need: leader-ship isn’t about personality or talent. In fact, the best leaders exhibit wildly different per-sonalities, attitudes, values, and strengths—they’re extroverted or reclusive, easygoing or controlling, generous or parsimonious, numbers or vision oriented.

So what do effective leaders have in com-mon? They get the right things done, in the right ways—by following eight simple rules:

• Ask what needs to be done.

• Ask what’s right for the enterprise.

• Develop action plans.

• Take responsibility for decisions.

• Take responsibility for communicating.

• Focus on opportunities, not problems.

• Run productive meetings.

• Think and say “We,” not “I.”

Using discipline to apply these rules, you gain the knowledge you need to make smart decisions, convert that knowledge into effective action, and ensure account-ability throughout your organization.

GET THE KNOWLEDGE YOU NEED

Ask what needs to be done.When Jack Welch asked this question while taking over as CEO at General Electric, he real-ized that dropping GE businesses that couldn’t be first or second in their industries was essential—not the overseas expansion he had wanted to launch. Once you know what must be done, identify tasks you’re best at, concentrating on one at a time. After com-pleting a task, reset priorities based on new realities.

Ask what’s right for the enterprise.Don’t agonize over what’s best for owners, in-vestors, employees, or customers. Decisions that are right for your enterprise are ultimately right for all stakeholders.

CONVERT YOUR KNOWLEDGE INTO ACTION

Develop action plans.

Devise plans that specify

desired results

and

constraints

(is the course of action legal and compatible with the company’s mission, val-ues, and policies?). Include check-in points and implications for how you’ll spend your time. And revise plans to reflect new opportunities.

Take responsibility for decisions.Ensure that each decision specifies who’s ac-countable for carrying it out, when it must be implemented, who’ll be affected by it, and who must be informed. Regularly review deci-sions, especially hires and promotions. This enables you to correct poor decisions before doing real damage.

Take responsibility for communicating.Get input from superiors, subordinates, and peers on your action plans. Let each know what information you need to get the job done. Pay equal attention to peers’ and supe-riors’ information needs.

Focus on opportunities, not problems.You get results by exploiting opportunities, not solving problems. Identify changes inside and outside your organization (new technolo-

gies, product innovations, new market struc-tures), asking “How can we exploit this change to benefit our enterprise?” Then match your best people with the best opportunities.

ENSURE COMPANYWIDE ACCOUNTABILITY

Run productive meetings.

Articulate each meeting’s purpose (Making an announcement? Delivering a report?). Termi-nate the meeting once the purpose is accom-plished. Follow up with short communica-tions summarizing the discussion, spelling out new work assignments and deadlines for completing them. General Motors CEO Alfred Sloan’s legendary mastery of meeting follow-up helped secure GM’s industry dominance in the mid-twentieth century.

Think and say “We,” not “I.”Your authority comes from your organization’s trust in you. To get the best results, always consider your organization’s needs and op-portunities before your own.

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by Peter F. Drucker

harvard business review • june 2004

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Great managers may be charismatic or dull, generous or tightfisted,

visionary or numbers oriented. But every effective executive follows

eight simple practices.

An effective executive does not need to be aleader in the sense that the term is now mostcommonly used. Harry Truman did not haveone ounce of charisma, for example, yet hewas among the most effective chief executivesin U.S. history. Similarly, some of the best busi-ness and nonprofit CEOs I’ve worked withover a 65-year consulting career were not ste-reotypical leaders. They were all over the mapin terms of their personalities, attitudes, val-ues, strengths, and weaknesses. They rangedfrom extroverted to nearly reclusive, fromeasygoing to controlling, from generous toparsimonious.

What made them all effective is that theyfollowed the same eight practices:

• They asked, “What needs to be done?”• They asked, “What is right for the enter-

prise?”• They developed action plans.• They took responsibility for decisions.• They took responsibility for communicating.• They were focused on opportunities rather

than problems.

• They ran productive meetings.• They thought and said “we” rather than “I.”The first two practices gave them the knowl-

edge they needed. The next four helped themconvert this knowledge into effective action.The last two ensured that the whole organiza-tion felt responsible and accountable.

Get the Knowledge You Need

The first practice is to ask what needs to bedone. Note that the question is not “What do Iwant to do?” Asking what has to be done, andtaking the question seriously, is crucial for man-agerial success. Failure to ask this question willrender even the ablest executive ineffectual.

When Truman became president in 1945, heknew exactly what he wanted to do: completethe economic and social reforms of Roosevelt’sNew Deal, which had been deferred by WorldWar II. As soon as he asked what needed to bedone, though, Truman realized that foreign af-fairs had absolute priority. He organized hisworking day so that it began with tutorials onforeign policy by the secretaries of state and

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defense. As a result, he became the most effec-tive president in foreign affairs the UnitedStates has ever known. He contained Commu-nism in both Europe and Asia and, with theMarshall Plan, triggered 50 years of worldwideeconomic growth.

Similarly, Jack Welch realized that whatneeded to be done at General Electric when hetook over as chief executive was not the over-seas expansion he wanted to launch. It was get-ting rid of GE businesses that, no matter howprofitable, could not be number one or num-ber two in their industries.

The answer to the question “What needs tobe done?” almost always contains more thanone urgent task. But effective executives donot splinter themselves. They concentrate onone task if at all possible. If they are amongthose people—a sizable minority—who workbest with a change of pace in their workingday, they pick two tasks. I have never encoun-tered an executive who remains effectivewhile tackling more than two tasks at a time.Hence, after asking what needs to be done,the effective executive sets priorities andsticks to them. For a CEO, the priority taskmight be redefining the company’s mission.For a unit head, it might be redefining theunit’s relationship with headquarters. Othertasks, no matter how important or appealing,are postponed. However, after completingthe original top-priority task, the executive re-sets priorities rather than moving on to num-ber two from the original list. He asks, “Whatmust be done now?” This generally results innew and different priorities.

To refer again to America’s best-knownCEO: Every five years, according to his autobi-ography, Jack Welch asked himself, “Whatneeds to be done now?” And every time, hecame up with a new and different priority.

But Welch also thought through anotherissue before deciding where to concentrate hisefforts for the next five years. He asked himselfwhich of the two or three tasks at the top ofthe list he himself was best suited to under-take. Then he concentrated on that task; theothers he delegated. Effective executives try tofocus on jobs they’ll do especially well. Theyknow that enterprises perform if top manage-ment performs—and don’t if it doesn’t.

Effective executives’ second practice—fullyas important as the first—is to ask, “Is this theright thing for the enterprise?” They do not ask

if it’s right for the owners, the stock price, theemployees, or the executives. Of course theyknow that shareholders, employees, and execu-tives are important constituencies who have tosupport a decision, or at least acquiesce in it, ifthe choice is to be effective. They know thatthe share price is important not only for theshareholders but also for the enterprise, sincethe price/earnings ratio sets the cost of capital.But they also know that a decision that isn’tright for the enterprise will ultimately not beright for any of the stakeholders.

This second practice is especially importantfor executives at family owned or family runbusinesses—the majority of businesses in everycountry—particularly when they’re makingdecisions about people. In the successful fam-ily company, a relative is promoted only if heor she is measurably superior to all nonrela-tives on the same level. At DuPont, for in-stance, all top managers (except the controllerand lawyer) were family members in the earlyyears when the firm was run as a family busi-ness. All male descendants of the founderswere entitled to entry-level jobs at the com-pany. Beyond the entrance level, a familymember got a promotion only if a panel com-posed primarily of nonfamily managers judgedthe person to be superior in ability and perfor-mance to all other employees at the samelevel. The same rule was observed for a cen-tury in the highly successful British familybusiness J. Lyons & Company (now part of amajor conglomerate) when it dominated theBritish food-service and hotel industries.

Asking “What is right for the enterprise?”does not guarantee that the right decision willbe made. Even the most brilliant executive ishuman and thus prone to mistakes and preju-dices. But failure to ask the question virtuallyguarantees the wrong decision.

Write an Action Plan

Executives are doers; they execute. Knowledgeis useless to executives until it has been trans-lated into deeds. But before springing into ac-tion, the executive needs to plan his course.He needs to think about desired results, prob-able restraints, future revisions, check-inpoints, and implications for how he’ll spendhis time.

First, the executive defines desired results byasking: “What contributions should the enter-prise expect from me over the next 18 months

Peter F. Drucker

is the Marie RankinClarke Professor of Social Science andManagement at the Peter F. Druckerand Masatoshi Ito Graduate School ofManagement at Claremont GraduateUniversity in Claremont, California. Hehas written nearly two dozen articlesfor HBR.

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to two years? What results will I commit to?With what deadlines?” Then he considers therestraints on action: “Is this course of actionethical? Is it acceptable within the organiza-tion? Is it legal? Is it compatible with the mis-sion, values, and policies of the organization?”Affirmative answers don’t guarantee that theaction will be effective. But violating these re-straints is certain to make it both wrong andineffectual.

The action plan is a statement of intentionsrather than a commitment. It must not be-come a straitjacket. It should be revised often,because every success creates new opportuni-ties. So does every failure. The same is true forchanges in the business environment, in themarket, and especially in people within the en-terprise—all these changes demand that theplan be revised. A written plan should antici-pate the need for flexibility.

In addition, the action plan needs to createa system for checking the results against theexpectations. Effective executives usually buildtwo such checks into their action plans. Thefirst check comes halfway through the plan’stime period; for example, at nine months. Thesecond occurs at the end, before the next ac-tion plan is drawn up.

Finally, the action plan has to become thebasis for the executive’s time management.Time is an executive’s scarcest and most pre-cious resource. And organizations—whethergovernment agencies, businesses, or nonprof-its—are inherently time wasters. The actionplan will prove useless unless it’s allowed to de-termine how the executive spends his or hertime.

Napoleon allegedly said that no successfulbattle ever followed its plan. Yet Napoleon alsoplanned every one of his battles, far more me-ticulously than any earlier general had done.Without an action plan, the executive becomesa prisoner of events. And without check-ins toreexamine the plan as events unfold, the exec-utive has no way of knowing which events re-ally matter and which are only noise.

Act

When they translate plans into action, execu-tives need to pay particular attention to deci-sion making, communication, opportunities(as opposed to problems), and meetings. I’llconsider these one at a time.

Take responsibility for decisions. A deci-

sion has not been made until people know:• the name of the person accountable for

carrying it out;• the deadline;• the names of the people who will be af-

fected by the decision and therefore have toknow about, understand, and approve it—or atleast not be strongly opposed to it—and

• the names of the people who have to beinformed of the decision, even if they are notdirectly affected by it.

An extraordinary number of organizationaldecisions run into trouble because these basesaren’t covered. One of my clients, 30 years ago,lost its leadership position in the fast-growingJapanese market because the company, afterdeciding to enter into a joint venture with anew Japanese partner, never made clear whowas to inform the purchasing agents that thepartner defined its specifications in meters andkilograms rather than feet and pounds—andnobody ever did relay that information.

It’s just as important to review decisions pe-riodically—at a time that’s been agreed on inadvance—as it is to make them carefully in thefirst place. That way, a poor decision can becorrected before it does real damage. These re-views can cover anything from the results tothe assumptions underlying the decision.

Such a review is especially important for themost crucial and most difficult of all decisions,the ones about hiring or promoting people.Studies of decisions about people show thatonly one-third of such choices turn out to betruly successful. One-third are likely to bedraws—neither successes nor outright failures.And one-third are failures, pure and simple. Ef-fective executives know this and check up (sixto nine months later) on the results of theirpeople decisions. If they find that a decisionhas not had the desired results, they don’t con-clude that the person has not performed. Theyconclude, instead, that they themselves made amistake. In a well-managed enterprise, it is un-derstood that people who fail in a new job, es-pecially after a promotion, may not be theones to blame.

Executives also owe it to the organizationand to their fellow workers not to tolerate non-performing individuals in important jobs. Itmay not be the employees’ fault that they areunderperforming, but even so, they have to beremoved. People who have failed in a new jobshould be given the choice to go back to a job

Asking what has to be

done, and taking the

question seriously, is

crucial for managerial

success.

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at their former level and salary. This option israrely exercised; such people, as a rule, leavevoluntarily, at least when their employers areU.S. firms. But the very existence of the optioncan have a powerful effect, encouraging peo-ple to leave safe, comfortable jobs and takerisky new assignments. The organization’s per-formance depends on employees’ willingnessto take such chances.

A systematic decision review can be a pow-erful tool for self-development, too. Checkingthe results of a decision against its expectationsshows executives what their strengths are,where they need to improve, and where theylack knowledge or information. It shows themtheir biases. Very often it shows them thattheir decisions didn’t produce results becausethey didn’t put the right people on the job. Al-locating the best people to the right positionsis a crucial, tough job that many executivesslight, in part because the best people are al-ready too busy. Systematic decision review alsoshows executives their own weaknesses, partic-ularly the areas in which they are simply in-competent. In these areas, smart executivesdon’t make decisions or take actions. They del-egate. Everyone has such areas; there’s no suchthing as a universal executive genius.

Most discussions of decision making assumethat only senior executives make decisions orthat only senior executives’ decisions matter.This is a dangerous mistake. Decisions aremade at every level of the organization, begin-ning with individual professional contributorsand frontline supervisors. These apparentlylow-level decisions are extremely important ina knowledge-based organization. Knowledgeworkers are supposed to know more abouttheir areas of specialization—for example, taxaccounting—than anybody else, so their deci-sions are likely to have an impact throughoutthe company. Making good decisions is a cru-cial skill at every level. It needs to be taught ex-plicitly to everyone in organizations that arebased on knowledge.

Take responsibility for communicating.Effective executives make sure that both theiraction plans and their information needs areunderstood. Specifically, this means that theyshare their plans with and ask for commentsfrom all their colleagues—superiors, subordi-nates, and peers. At the same time, they leteach person know what information they’llneed to get the job done. The information flow

from subordinate to boss is usually what getsthe most attention. But executives need to payequal attention to peers’ and superiors’ infor-mation needs.

We all know, thanks to Chester Barnard’s1938 classic The Functions of the Executive, thatorganizations are held together by informationrather than by ownership or command. Still,far too many executives behave as if informa-tion and its flow were the job of the informa-tion specialist—for example, the accountant.As a result, they get an enormous amount ofdata they do not need and cannot use, but littleof the information they do need. The best wayaround this problem is for each executive toidentify the information he needs, ask for it,and keep pushing until he gets it.

Focus on opportunities. Good executivesfocus on opportunities rather than problems.Problems have to be taken care of, of course;they must not be swept under the rug. Butproblem solving, however necessary, does notproduce results. It prevents damage. Exploit-ing opportunities produces results.

Above all, effective executives treat changeas an opportunity rather than a threat. Theysystematically look at changes, inside and out-side the corporation, and ask, “How can we ex-ploit this change as an opportunity for our en-terprise?” Specifically, executives scan theseseven situations for opportunities:

• an unexpected success or failure in theirown enterprise, in a competing enterprise, or inthe industry;

• a gap between what is and what could bein a market, process, product, or service (for ex-ample, in the nineteenth century, the paper in-dustry concentrated on the 10% of each treethat became wood pulp and totally neglectedthe possibilities in the remaining 90%, whichbecame waste);

• innovation in a process, product, or ser-vice, whether inside or outside the enterprise orits industry;

• changes in industry structure and marketstructure;

• demographics;• changes in mind-set, values, perception,

mood, or meaning; and• new knowledge or a new technology.Effective executives also make sure that

problems do not overwhelm opportunities. Inmost companies, the first page of the monthlymanagement report lists key problems. It’s far

Executives owe it to the

organization and their

fellow workers not to

tolerate nonperforming

people in important jobs.

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wiser to list opportunities on the first page andleave problems for the second page. Unlessthere is a true catastrophe, problems are notdiscussed in management meetings until op-portunities have been analyzed and properlydealt with.

Staffing is another important aspect ofbeing opportunity focused. Effective execu-tives put their best people on opportunitiesrather than on problems. One way to staff foropportunities is to ask each member of themanagement group to prepare two lists everysix months—a list of opportunities for the en-tire enterprise and a list of the best-performingpeople throughout the enterprise. These arediscussed, then melded into two master lists,and the best people are matched with the bestopportunities. In Japan, by the way, thismatchup is considered a major HR task in a bigcorporation or government department; thatpractice is one of the key strengths of Japanesebusiness.

Make meetings productive. The most visi-ble, powerful, and, arguably, effective non-governmental executive in the America ofWorld War II and the years thereafter was nota businessman. It was Francis Cardinal Spell-man, the head of the Roman Catholic Archdi-ocese of New York and adviser to several U.S.presidents. When Spellman took over, the di-ocese was bankrupt and totally demoralized.His successor inherited the leadership posi-tion in the American Catholic church. Spell-man often said that during his waking hourshe was alone only twice each day, for 25 min-utes each time: when he said Mass in his pri-vate chapel after getting up in the morningand when he said his evening prayers beforegoing to bed. Otherwise he was always withpeople in a meeting, starting at breakfastwith one Catholic organization and ending atdinner with another.

Top executives aren’t quite as imprisoned asthe archbishop of a major Catholic diocese.But every study of the executive workday hasfound that even junior executives and profes-sionals are with other people—that is, in ameeting of some sort—more than half of everybusiness day. The only exceptions are a few se-nior researchers. Even a conversation withonly one other person is a meeting. Hence, ifthey are to be effective, executives must makemeetings productive. They must make surethat meetings are work sessions rather than

bull sessions.The key to running an effective meeting is

to decide in advance what kind of meeting itwill be. Different kinds of meetings require dif-ferent forms of preparation and different re-sults:

A meeting to prepare a statement, an an-nouncement, or a press release. For this to beproductive, one member has to prepare a draftbeforehand. At the meeting’s end, a preap-pointed member has to take responsibility fordisseminating the final text.

A meeting to make an announcement—for ex-ample, an organizational change. This meetingshould be confined to the announcement anda discussion about it.

A meeting in which one member reports.Nothing but the report should be discussed.

A meeting in which several or all members re-port. Either there should be no discussion at allor the discussion should be limited to ques-tions for clarification. Alternatively, for eachreport there could be a short discussion inwhich all participants may ask questions. Ifthis is the format, the reports should be dis-tributed to all participants well before themeeting. At this kind of meeting, each reportshould be limited to a preset time—for exam-ple, 15 minutes.

A meeting to inform the convening executive.The executive should listen and ask questions.He or she should sum up but not make a pre-sentation.

A meeting whose only function is to allow theparticipants to be in the executive’s presence.Cardinal Spellman’s breakfast and dinnermeetings were of that kind. There is no way tomake these meetings productive. They are thepenalties of rank. Senior executives are effec-tive to the extent to which they can preventsuch meetings from encroaching on theirworkdays. Spellman, for instance, was effec-tive in large part because he confined suchmeetings to breakfast and dinner and kept therest of his working day free of them.

Making a meeting productive takes a gooddeal of self-discipline. It requires that execu-tives determine what kind of meeting is appro-priate and then stick to that format. It’s alsonecessary to terminate the meeting as soon asits specific purpose has been accomplished.Good executives don’t raise another matter fordiscussion. They sum up and adjourn.

Good follow-up is just as important as the

In areas where they are

simply incompetent,

smart executives don’t

make decisions or take

actions. They delegate.

Everyone has such areas.

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meeting itself. The great master of follow-upwas Alfred Sloan, the most effective businessexecutive I have ever known. Sloan, whoheaded General Motors from the 1920s untilthe 1950s, spent most of his six working days aweek in meetings—three days a week in for-mal committee meetings with a set member-ship, the other three days in ad hoc meetingswith individual GM executives or with a smallgroup of executives. At the beginning of a for-mal meeting, Sloan announced the meeting’spurpose. He then listened. He never took notesand he rarely spoke except to clarify a confus-ing point. At the end he summed up, thankedthe participants, and left. Then he immedi-ately wrote a short memo addressed to one at-tendee of the meeting. In that note, he summa-rized the discussion and its conclusions andspelled out any work assignment decided uponin the meeting (including a decision to holdanother meeting on the subject or to study anissue). He specified the deadline and the execu-tive who was to be accountable for the assign-ment. He sent a copy of the memo to everyonewho’d been present at the meeting. It wasthrough these memos—each a small master-piece—that Sloan made himself into an out-standingly effective executive.

Effective executives know that any givenmeeting is either productive or a total waste oftime.

Think and Say “We”

The final practice is this: Don’t think or say “I.”Think and say “we.” Effective executives knowthat they have ultimate responsibility, whichcan be neither shared nor delegated. But theyhave authority only because they have thetrust of the organization. This means that theythink of the needs and the opportunities ofthe organization before they think of theirown needs and opportunities. This one maysound simple; it isn’t, but it needs to be strictlyobserved.

We’ve just reviewed eight practices of effec-tive executives. I’m going to throw in one final,bonus practice. This one’s so important that I’llelevate it to the level of a rule: Listen first, speaklast.

Effective executives differ widely in theirpersonalities, strengths, weaknesses, values,and beliefs. All they have in common is thatthey get the right things done. Some are borneffective. But the demand is much too great tobe satisfied by extraordinary talent. Effective-ness is a discipline. And, like every discipline,effectiveness can be learned and must beearned.

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To Order

For






Further Reading

A R T I C L E S

Your Best Managers Lead and Manage


Article CollectionNovember 2003Product no. 5402

Drucker’s rules imply that effective executives know how to lead and manage. This Harvard Business Review Article collection reinforces the notion that leadership and management aren’t discrete jobs. Together, they form a tap-estry of interwoven roles—all of which are es-sential if executives are to boost their organi-zation’s performance.

How to embrace this multifaceted role? First, deeply understand each aspect of it. In the classic article “Managers and Leaders: Are They Different?,” Abraham Zaleznik shines the spotlight on the traits required for leader-ship—including passion, innovativeness, and a keen awareness of “the big picture.” Accord-ing to Zaleznik, the best leaders also have a talent for inspiring others, embracing chaos, captivating imaginations, and welcoming fresh approaches to problems. Zaleznik sug-gests ways companies can create the right conditions for individuals to develop these abilities.

In “The Manager’s Job: Folklore and Fact,” another Harvard Business Review classic, Henry Mintzberg shifts the focus to the managerial role. The manager’s job, he maintains, has al-ways been more complicated than the text-book mantra of “plan, organize, coordinate, and control.” In reality, managers play so many roles that it’s hard to excel at any one. Job overload can lead to superficial analysis and premature decisions that miss the big picture. To surmount these challenges, stop and think. Reflect on the roles you naturally prefer. Stretch beyond those you’re most comfort-able in, depending on what the situation de-mands. Reduce your impossible workload by delegating and taking advantage of in-house analysts. Most important, force yourself to do the things you believe are crucial.

In “The Five Minds of a Manager,” Jonathan Gosling and Henry Mintzberg update Mintz-berg’s emphasis on reflection and analysis with five mandatory mind-sets for executives: 1) reflective, 2) analytical, 3) worldly, 4) collab-orative, and 5) action. When you understand each and move flexibly among all five, you deepen your understanding of your organiza-tion’s challenges, boost innovation, strengthen collaboration, and take more pre-cise action. Interweave your mind-sets with your colleagues’, and you enhance the collec-tive impact on your company’s performance.

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What Leaders Really Do

by John P. Kotter

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Further Reading

They don’t make plans; they

don’t solve problems; they

don’t even organize people.

What leaders really do is

prepare organizations for

change and help them cope as

they struggle through it.

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The most pernicious half-truth about lead-ership is that it’s just a matter of charisma and vision—you either have it or you don’t. The fact of the matter is that leadership skills are not innate. They can be acquired, and honed. But first you have to appreciate how they differ from management skills.

Management is about coping with

com-plexity

; it brings order and predictability to a situation. But that’s no longer enough—to succeed, companies must be able to adapt to change. Leadership, then, is about learn-ing how to cope with rapid

change

.

How does this distinction play out?

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Management involves planning and budgeting. Leadership involves setting direction.

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Management involves organizing and staffing. Leadership involves aligning people.

•

Management provides control and solves problems. Leadership provides motivation.

Management and leadership both involve deciding what needs to be done, creating networks of people to accomplish the agenda, and ensuring that the work actually gets done. Their work is complementary, but each system of action goes about the tasks in different ways.

1. Planning and budgeting versus setting direction.

The aim of management is predict-ability—orderly results. Leadership’s function is to produce change. Setting the direction of that change, therefore, is essential work. There’s nothing mystical about this work, but it is more inductive than planning and budgeting. It involves the search for patterns and relation-ships. And it doesn’t produce detailed plans; instead, direction-setting results in visions and the overarching strategies for realizing them.

Example:

In mature industries, increased competition usually dampens growth. But at American Express, Lou Gerstner bucked this trend, successfully crafting a vision of a dynamic enterprise.

The new direction he set wasn’t a mere attention-grabbing scheme—it was the re-sult of asking fundamental questions about market and competitive forces.

2. Organizing and staffing versus aligning people.

Managers look for the right fit be-tween people and jobs. This is essentially a design problem: setting up systems to ensure that plans are implemented precisely and ef-ficiently. Leaders, however, look for the right fit between people and the vision. This is more of a communication problem. It in-volves getting a large number of people, in-side and outside the company, first to believe in an alternative future—and then to take initiative based on that shared vision.

3. Controlling activities and solving prob-lems versus motivating and inspiring.

Man-agement strives to make it easy for people to complete routine jobs day after day. But since

high energy is essential to overcoming the barriers to change, leaders attempt to touch people at their deepest levels—by stirring in them a sense of belonging, idealism, and self-esteem.

Example:

At Procter & Gamble’s paper products division, Richard Nicolosi underscored the message that “each of us is a leader” by pushing responsibility down to newly formed teams. An entrepreneurial attitude took root, and profits rebounded.

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by John P. Kotter

harvard business review • december 2001

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They don’t make plans; they don’t solve problems; they don’t even

organize people. What leaders really do is prepare organizations for

change and help them cope as they struggle through it.

The article reprinted here stands on its own, of course, but it can also be seen as a crucial contri-bution to a debate that began in 1977, when Harvard Business School professor Abraham Zaleznik published an HBR article with the de-ceptively mild title “Managers and Leaders: Are They Different?” The piece caused an uproar in business schools. It argued that the theoreticians of scientific management, with their organiza-tional diagrams and time-and-motion studies, were missing half the picture—the half filled with inspiration, vision, and the full spectrum of human drives and desires. The study of leader-ship hasn’t been the same since.

“What Leaders Really Do,” first published in 1990, deepens and extends the insights of the 1977 article. Introducing one of those brand-new ideas that seems obvious once it’s expressed, re-tired Harvard Business School professor John Kotter proposes that management and leader-ship are different but complementary, and that in a changing world, one cannot function without the other. He then enumerates and contrasts the primary tasks of the manager and the leader. His

key point bears repeating: Managers promote stability while leaders press for change, and only organizations that embrace both sides of that contradiction can thrive in turbulent times.

Leadership is different from management,but not for the reasons most people think.Leadership isn’t mystical and mysterious. Ithas nothing to do with having “charisma” orother exotic personality traits. It is not theprovince of a chosen few. Nor is leadershipnecessarily better than management or a re-placement for it.

Rather, leadership and management aretwo distinctive and complementary systemsof action. Each has its own function and char-acteristic activities. Both are necessary forsuccess in an increasingly complex and vola-tile business environment.

Most U.S. corporations today are over-managed and underled. They need to developtheir capacity to exercise leadership. Success-ful corporations don’t wait for leaders tocome along. They actively seek out people

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with leadership potential and expose them tocareer experiences designed to develop thatpotential. Indeed, with careful selection, nur-turing, and encouragement, dozens of peoplecan play important leadership roles in a busi-ness organization.

But while improving their ability to lead,companies should remember that strong lead-ership with weak management is no better,and is sometimes actually worse, than thereverse. The real challenge is to combinestrong leadership and strong managementand use each to balance the other.

Of course, not everyone can be good atboth leading and managing. Some peoplehave the capacity to become excellent manag-ers but not strong leaders. Others have greatleadership potential but, for a variety of rea-sons, have great difficulty becoming strongmanagers. Smart companies value both kindsof people and work hard to make them a partof the team.

But when it comes to preparing people forexecutive jobs, such companies rightly ignorethe recent literature that says people cannotmanage

and

lead. They try to develop leader-managers. Once companies understand thefundamental difference between leadershipand management, they can begin to groomtheir top people to provide both.

The Difference Between Management and Leadership

Management is about coping with complexity.Its practices and procedures are largely aresponse to one of the most significant devel-opments of the twentieth century: the emer-gence of large organizations. Without goodmanagement, complex enterprises tend to be-come chaotic in ways that threaten their veryexistence. Good management brings a degreeof order and consistency to key dimensionslike the quality and profitability of products.

Leadership, by contrast, is about copingwith change. Part of the reason it has becomeso important in recent years is that the busi-ness world has become more competitive andmore volatile. Faster technological change,greater international competition, the dereg-ulation of markets, overcapacity in capital-intensive industries, an unstable oil cartel,raiders with junk bonds, and the changingdemographics of the work-force are amongthe many factors that have contributed to this

shift. The net result is that doing what wasdone yesterday, or doing it 5% better, is nolonger a formula for success. Major changes aremore and more necessary to survive and com-pete effectively in this new environment. Morechange always demands more leadership.

Consider a simple military analogy: Apeacetime army can usually survive withgood administration and management upand down the hierarchy, coupled with goodleadership concentrated at the very top. Awartime army, however, needs competentleadership at all levels. No one yet has fig-ured out how to manage people effectivelyinto battle; they must be led.

These two different functions—coping withcomplexity and coping with change—shapethe characteristic activities of managementand leadership. Each system of action in-volves deciding what needs to be done, cre-ating networks of people and relationshipsthat can accomplish an agenda, and then try-ing to ensure that those people actually dothe job. But each accomplishes these threetasks in different ways.

Companies manage complexity first by

plan-ning and budgeting

—setting targets or goals forthe future (typically for the next month oryear), establishing detailed steps for achievingthose targets, and then allocating resources toaccomplish those plans. By contrast, leading anorganization to constructive change begins by

setting a direction

—developing a vision of thefuture (often the distant future) along withstrategies for producing the changes needed toachieve that vision.

Management develops the capacity toachieve its plan by

organizing and staffing

—creating an organizational structure and set ofjobs for accomplishing plan requirements,staffing the jobs with qualified individuals,communicating the plan to those people,delegating responsibility for carrying out theplan, and devising systems to monitor imple-mentation. The equivalent leadership activity,however, is

aligning people

. This means com-municating the new direction to those who cancreate coalitions that understand the visionand are committed to its achievement.

Finally, management ensures plan accom-plishment by

controlling and problem solving

—monitoring results versus the plan in somedetail, both formally and informally, bymeans of reports, meetings, and other tools;

Now retired,

John P. Kotter

was a professor of organizational behavior at Harvard Business School in Boston. He is the author of such books as

The General Managers

(Free Press, 1986),

The Leadership Factor

(Free Press, 1988), and

A Force for Change: How Leadership Differs from Management

(Free Press, 1990).

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identifying deviations; and then planning andorganizing to solve the problems. But forleadership, achieving a vision requires

moti-vating and inspiring

—keeping people movingin the right direction, despite major obstaclesto change, by appealing to basic but often un-tapped human needs, values, and emotions.

A closer examination of each of these activ-ities will help clarify the skills leaders need.

Setting a Direction Versus Planning and Budgeting

Since the function of leadership is to producechange, setting the direction of that change isfundamental to leadership. Setting direction isnever the same as planning or even long-termplanning, although people often confuse thetwo. Planning is a management process, de-ductive in nature and designed to produce or-derly results, not change. Setting a direction ismore inductive. Leaders gather a broad range

of data and look for patterns, relationships,and linkages that help explain things. What’smore, the direction-setting aspect of leader-ship does not produce plans; it creates visionand strategies. These describe a business, tech-nology, or corporate culture in terms of whatit should become over the long term and artic-ulate a feasible way of achieving this goal.

Most discussions of vision have a tendencyto degenerate into the mystical. The implica-tion is that a vision is something mysteriousthat mere mortals, even talented ones, couldnever hope to have. But developing goodbusiness direction isn’t magic. It is a tough,sometimes exhausting process of gatheringand analyzing information. People who artic-ulate such visions aren’t magicians but broad-based strategic thinkers who are willing totake risks.

Nor do visions and strategies have to bebrilliantly innovative; in fact, some of the best

Aligning People: Chuck Trowbridge and Bob Crandall at Eastman Kodak

Eastman Kodak entered the copy business in the early 1970s, concentrating on technically sophisticated machines that sold, on average, for about $60,000 each. Over the next decade, this business grew to nearly $1 billion in reve-nues. But costs were high, profits were hard to find, and problems were nearly everywhere. In 1984, Kodak had to write off $40 million in in-ventory. Most people at the company knew there were problems, but they couldn’t agree on how to solve them. So in his first two months as general manager of the new copy products group, established in 1984, Chuck Trowbridge met with nearly every key person inside his group, as well as with people else-where at Kodak who could be important to the copier business. An especially crucial area was the engineering and manufacturing orga-nization, headed by Bob Crandall.

Trowbridge and Crandall’s vision for engi-neering and manufacturing was simple: to become a world-class manufacturing opera-tion and to create a less bureaucratic and more decentralized organization. Still, this message was difficult to convey because it was such a radical departure from previous communications, not only in the copy prod-ucts group but throughout most of Kodak. So Crandall set up dozens of vehicles to empha-

size the new direction and align people to it: weekly meetings with his own 12 direct re-ports; monthly “copy product forums” in which a different employee from each of his departments would meet with him as a group; discussions of recent improvements and new projects to achieve still better results; and quarterly “State of the Department” meetings, where his managers met with everybody in their own departments.

Once a month, Crandall and all those who reported to him would also meet with 80 to 100 people from some area of his organization to discuss anything they wanted. To align his biggest supplier—the Kodak Apparatus Divi-sion, which supplied one-third of the parts used in design and manufacturing—he and his managers met with the top management of that group over lunch every Thursday. Later, he created a format called “business meetings,” where his managers meet with 12 to 20 people on a specific topic, such as in-ventory or master scheduling. The goal: to get all of his 1,500 employees in at least one of these focused business meetings each year.

Trowbridge and Crandall also enlisted writ-ten communication in their cause. A four- to eight-page “Copy Products Journal” was sent to employees once a month. A program

called “Dialog Letters” gave employees the opportunity to anonymously ask questions of Crandall and his top managers and be guar-anteed a reply. But the most visible and pow-erful written communications were the charts. In a main hallway near the cafeteria, these huge charts vividly reported the qual-ity, cost, and delivery results for each prod-uct, measured against difficult targets. A hundred smaller versions of these charts were scattered throughout the manufactur-ing area, reporting quality levels and costs for specific work groups.

Results of this intensive alignment process began to appear within six months, and still more surfaced after a year. These successes made the message more credible and helped get more people on board. Between 1984 and 1988, quality on one of the main product lines increased nearly 100-fold. Defects per unit went from 30 to 0.3. Over a three-year period, costs on another product line went down nearly 24%. Deliveries on schedule increased from 82% in 1985 to 95% in 1987. Inventory levels dropped by over 50% between 1984 and 1988, even though the volume of prod-ucts was increasing. And productivity, mea-sured in units per manufacturing employee, more than doubled between 1985 and 1988.

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are not. Effective business visions regularlyhave an almost mundane quality, usually con-sisting of ideas that are already well known.The particular combination or patterning ofthe ideas may be new, but sometimes eventhat is not the case.

For example, when CEO Jan Carlzon articu-lated his vision to make Scandinavian AirlinesSystem (SAS) the best airline in the world forthe frequent business traveler, he was not say-ing anything that everyone in the airline in-dustry didn’t already know. Business travelersfly more consistently than other marketsegments and are generally willing to payhigher fares. Thus, focusing on business cus-tomers offers an airline the possibility of highmargins, steady business, and considerable

growth. But in an industry known more forbureaucracy than vision, no company hadever put these simple ideas together and dedi-cated itself to implementing them. SAS did,and it worked.

What’s crucial about a vision is not itsoriginality but how well it serves the inter-ests of important constituencies—customers,stockholders, employees—and how easilyit can be translated into a realistic competi-tive strategy. Bad visions tend to ignorethe legitimate needs and rights of importantconstituencies—favoring, say, employees overcustomers or stockholders. Or they are stra-tegically unsound. When a company that hasnever been better than a weak competitorin an industry suddenly starts talking about

Setting a Direction: Lou Gerstner at American Express

When Lou Gerstner became president of the Travel Related Services (TRS) arm at American Express in 1979, the unit was facing one of its biggest challenges in AmEx’s 130-year history. Hundreds of banks offering or planning to introduce credit cards through Visa and Mas-terCard that would compete with the Ameri-can Express card. And more than two dozen financial service firms were coming into the traveler’s checks business. In a mature market-place, this increase in competition usually re-duces margins and prohibits growth.

But that was not how Gerstner saw the business. Before joining American Express, he had spent five years as a consultant to TRS, analyzing the money-losing travel divi-sion and the increasingly competitive card operation. Gerstner and his team asked fun-damental questions about the economics, market, and competition and developed a deep understanding of the business. In the process, he began to craft a vision of TRS that looked nothing like a 130-year-old company in a mature industry.

Gerstner thought TRS had the potential to become a dynamic and growing enterprise, despite the onslaught of Visa and MasterCard competition from thousands of banks. The key was to focus on the global marketplace and, specifically, on the relatively affluent customer American Express had been tradi-tionally serving with top-of-the-line products. By further segmenting this market, aggres-

sively developing a broad range of new prod-ucts and services, and investing to increase productivity and to lower costs, TRS could provide the best service possible to custom-ers who had enough discretionary income to buy many more services from TRS than they had in the past.

Within a week of his appointment, Gerst-ner brought together the people running the card organization and questioned all the principles by which they conducted their business. In particular, he challenged two widely shared beliefs—that the division should have only one product, the green card, and that this product was limited in potential for growth and innovation.

Gerstner also moved quickly to develop a more entrepreneurial culture, to hire and train people who would thrive in it, and to clearly communicate to them the overall di-rection. He and other top managers rewarded intelligent risk taking. To make entrepreneur-ship easier, they discouraged unnecessary bureaucracy. They also upgraded hiring stan-dards and created the TRS Graduate Manage-ment Program, which offered high-potential young people special training, an enriched set of experiences, and an unusual degree of exposure to people in top management. To encourage risk taking among all TRS em-ployees, Gerstner also established something called the Great Performers program to recognize and reward truly exceptional cus-

tomer service, a central tenet in the organiza-tion’s vision.

These incentives led quickly to new markets, products, and services. TRS expanded its overseas presence dramatically. By 1988, AmEx cards were issued in 29 currencies (as opposed to only 11 a decade earlier). The unit also focused aggressively on two market seg-ments that had historically received little at-tention: college students and women. In 1981, TRS combined its card and travel-service ca-pabilities to offer corporate clients a unified system to monitor and control travel expenses. And by 1988, AmEx had grown to become the fifth largest direct-mail merchant in the United States.

Other new products and services included 90-day insurance on all purchases made with the AmEx card, a Platinum American Express card, and a revolving credit card known as Optima. In 1988, the company also switched to image-processing technology for billing, producing a more convenient monthly state-ment for customers and reducing billing costs by 25%.

As a result of these innovations, TRS’s net income increased a phenomenal 500% be-tween 1978 and 1987—a compounded annual rate of about 18%. The business outperformed many so-called high-tech/high-growth compa-nies. With a 1988 return on equity of 28%, it also outperformed most low-growth but high-profit businesses.

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becoming number one, that is a pipe dream,not a vision.

One of the most frequent mistakes thatovermanaged and underled corporationsmake is to embrace long-term planning as apanacea for their lack of direction and inabil-ity to adapt to an increasingly competitiveand dynamic business environment. But suchan approach misinterprets the nature of di-rection setting and can never work.

Long-term planning is always time consum-ing. Whenever something unexpected hap-pens, plans have to be redone. In a dynamicbusiness environment, the unexpected oftenbecomes the norm, and long-term planningcan become an extraordinarily burdensomeactivity. That is why most successful corpora-tions limit the time frame of their planningactivities. Indeed, some even consider “long-term planning” a contradiction in terms.

In a company without direction, evenshort-term planning can become a black holecapable of absorbing an infinite amount oftime and energy. With no vision and strategyto provide constraints around the planningprocess or to guide it, every eventuality deservesa plan. Under these circumstances, contin-gency planning can go on forever, drainingtime and attention from far more essentialactivities, yet without ever providing the clearsense of direction that a company desper-ately needs. After awhile, managers inevita-bly become cynical, and the planning processcan degenerate into a highly politicized game.

Planning works best not as a substitute fordirection setting but as a complement to it. Acompetent planning process serves as a usefulreality check on direction-setting activities.Likewise, a competent direction-setting pro-cess provides a focus in which planning canthen be realistically carried out. It helps clar-ify what kind of planning is essential andwhat kind is irrelevant.

Aligning People Versus Organizing and Staffing

A central feature of modern organizations isinterdependence, where no one has completeautonomy, where most employees are tied tomany others by their work, technology,management systems, and hierarchy. Theselinkages present a special challenge when or-ganizations attempt to change. Unless manyindividuals line up and move together in the

same direction, people will tend to fall allover one another. To executives who are over-educated in management and undereducatedin leadership, the idea of getting people mov-ing in the same direction appears to be an or-ganizational problem. What executives needto do, however, is not organize people butalign them.

Managers “organize” to create human sys-tems that can implement plans as preciselyand efficiently as possible. Typically, thisrequires a number of potentially complex de-cisions. A company must choose a structureof jobs and reporting relationships, staff itwith individuals suited to the jobs, providetraining for those who need it, communicateplans to the workforce, and decide how muchauthority to delegate and to whom. Eco-nomic incentives also need to be constructedto accomplish the plan, as well as systems tomonitor its implementation. These organiza-tional judgments are much like architecturaldecisions. It’s a question of fit within a partic-ular context.

Aligning is different. It is more of a commu-nications challenge than a design problem.Aligning invariably involves talking to manymore individuals than organizing does. Thetarget population can involve not only a man-ager’s subordinates but also bosses, peers,staff in other parts of the organization, as wellas suppliers, government officials, and evencustomers. Anyone who can help implementthe vision and strategies or who can block im-plementation is relevant.

Trying to get people to comprehend a vi-sion of an alternative future is also a commu-nications challenge of a completely differentmagnitude from organizing them to fulfill ashort-term plan. It’s much like the differencebetween a football quarterback attempting todescribe to his team the next two or threeplays versus his trying to explain to them a to-tally new approach to the game to be used inthe second half of the season.

Whether delivered with many words or afew carefully chosen symbols, such messagesare not necessarily accepted just because theyare understood. An-other big challenge inleadership efforts is credibility—getting peo-ple to believe the message. Many things con-tribute to credibility: the track record of theperson delivering the message, the content ofthe message itself, the communicator’s repu-

The idea of getting people

moving in the same

direction appears to be

an organizational

problem. But what

executives need to do is

not organize people but

align them.

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tation for integrity and trustworthiness, andthe consistency between words and deeds.

Finally, aligning leads to empowerment ina way that organizing rarely does. One of thereasons some organizations have difficultyadjusting to rapid changes in markets or tech-nology is that so many people in those com-panies feel relatively powerless. They havelearned from experience that even if theycorrectly perceive important external changesand then initiate appropriate actions, they arevulnerable to someone higher up who doesnot like what they have done. Reprimandscan take many different forms: “That’s againstpolicy,” or “We can’t afford it,” or “Shut up anddo as you’re told.”

Alignment helps overcome this problem byempowering people in at least two ways. First,when a clear sense of direction has been com-municated throughout an organization, lower-level employees can initiate actions withoutthe same degree of vulnerability. As long astheir behavior is consistent with the vision, su-periors will have more difficulty reprimandingthem. Second, because everyone is aiming atthe same target, the probability is less thatone person’s initiative will be stalled when itcomes into conflict with someone else’s.

Motivating People Versus Controlling and Problem Solving

Since change is the function of leadership,being able to generate highly energized be-havior is important for coping with the inevi-table barriers to change. Just as directionsetting identifies an appropriate path formovement and just as effective alignment getspeople moving down that path, successful mo-tivation ensures that they will have the energyto overcome obstacles.

According to the logic of management, con-trol mechanisms compare system behaviorwith the plan and take action when a devia-tion is detected. In a well-managed factory,for example, this means the planning processestablishes sensible quality targets, the orga-nizing process builds an organization that canachieve those targets, and a control processmakes sure that quality lapses are spotted im-mediately, not in 30 or 60 days, and corrected.

For some of the same reasons that controlis so central to management, highly motivatedor inspired behavior is almost irrelevant. Man-agerial processes must be as close as possible

to fail-safe and risk free. That means they can-not be dependent on the unusual or hard toobtain. The whole purpose of systems andstructures is to help normal people who be-have in normal ways to complete routine jobssuccessfully, day after day. It’s not exciting orglamorous. But that’s management.

Leadership is different. Achieving grand vi-sions always requires a burst of energy. Moti-vation and inspiration energize people, not bypushing them in the right direction as controlmechanisms do but by satisfying basic humanneeds for achievement, a sense of belonging,recognition, self-esteem, a feeling of controlover one’s life, and the ability to live up toone’s ideals. Such feelings touch us deeplyand elicit a powerful response.

Good leaders motivate people in a varietyof ways. First, they always articulate the orga-nization’s vision in a manner that stresses thevalues of the audience they are addressing.This makes the work important to those indi-viduals. Leaders also regularly involve peoplein deciding how to achieve the organization’svision (or the part most relevant to a particularindividual). This gives people a sense of con-trol. Another important motivational techniqueis to support employee efforts to realize thevision by providing coaching, feedback, androle modeling, thereby helping people growprofessionally and enhancing their self-esteem.Finally, good leaders recognize and rewardsuccess, which not only gives people a senseof accomplishment but also makes them feellike they belong to an organization that caresabout them. When all this is done, the workitself becomes intrinsically motivating.

The more that change characterizes thebusiness environment, the more that leadersmust motivate people to provide leadershipas well. When this works, it tends to reproduceleadership across the entire organization,with people occupying multiple leadershiproles throughout the hierarchy. This is highlyvaluable, because coping with change in anycomplex business demands initiatives from amultitude of people. Nothing less will work.

Of course, leadership from many sourcesdoes not necessarily converge. To the contrary,it can easily conflict. For multiple leadershiproles to work together, people’s actions mustbe carefully coordinated by mechanisms thatdiffer from those coordinating traditionalmanagement roles.

Management is about

coping with complexity.

Leadership, by contrast,

is about coping with

change.

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Motivating People: Richard Nicolosi at Procter and Gamble

For about 20 years after its founding in 1956, Procter & Gamble’s paper prod-ucts division had experienced little competition for its high-quality, rea-sonably priced, and well-marketed consumer goods. By the late 1970s, however, the market position of the di-vision had changed. New competitive thrusts hurt P&G badly. For example, industry analysts estimate that the company’s market share for disposable diapers fell from 75% in the mid-1970s to 52% in 1984.

That year, Richard Nicolosi came to paper products as the associate general manager, after three years in P&G’s smaller and faster moving soft-drink business. He found a heavily bureau-cratic and centralized organization that was overly preoccupied with inter-nal functional goals and projects. Al-most all information about customers came through highly quantitative mar-ket research. The technical people were rewarded for cost savings, the commercial people focused on volume and share, and the two groups were nearly at war with each other.

During the late summer of 1984, top management announced that Nicolosi would become the head of paper prod-ucts in October, and by August he was unofficially running the division. Imme-diately he began to stress the need for the division to become more creative and market driven, instead of just trying to be a low-cost producer. “I had to make it very clear,” Nicolosi later reported, “that the rules of the game had changed.”

The new direction included a much greater stress on teamwork and multi-ple leadership roles. Nicolosi pushed a strategy of using groups to manage the division and its specific products. In October, he and his team designated themselves as the paper division “board” and began meeting first monthly and then weekly. In November, they established “category teams” to manage their major brand groups (like diapers, tissues, towels) and started pushing responsibility down to these teams. “Shun the incremental,” Nico-losi stressed, “and go for the leap.”

In December, Nicolosi selectively involved himself in more detail in certain activities. He met with the ad-vertising agency and got to know key creative people. He asked the market-ing manager of diapers to report di-rectly to him, eliminating a layer in the hierarchy. He talked more to the peo-ple who were working on new product development projects.

In January 1985, the board an-nounced a new organizational structure that included not only category teams but also new-brand business teams. By the spring, the board was ready to plan an important motivational event to communicate the new paper products vision to as many people as possible. On June 4, 1985, all the Cincinnati-based personnel in paper plus sales district managers and paper plant managers—several thousand people in all—met in the local Masonic Temple. Nicolosi and other board members de-

scribed their vision of an organization where “each of us is a leader.” The event was videotaped, and an edited version was sent to all sales offices and plants for everyone to see.

All these activities helped create an entrepreneurial environment where large numbers of people were moti-vated to realize the new vision. Most innovations came from people dealing with new products. Ultra Pampers, first introduced in February 1985, took the market share of the entire Pampers product line from 40% to 58% and profitability from break-even to posi-tive. And within only a few months of the introduction of Luvs Delux in May 1987, market share for the overall brand grew by 150%.

Other employee initiatives were ori-ented more toward a functional area, and some came from the bottom of the hierarchy. In the spring of 1986, a few of the division’s secretaries, feeling em-powered by the new culture, developed a secretaries network. This association established subcommittees on train-ing, on rewards and recognition, and on the “secretary of the future.” Echo-ing the sentiments of many of her peers, one paper products secretary said: “I don’t see why we, too, can’t contribute to the division’s new direction.”

By the end of 1988, revenues at the paper products division were up 40% over a four-year period. Profits were up 68%. And this happened despite the fact that the competition contin-ued to get tougher.

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Strong networks of informal relationships—the kind found in companies with healthycultures—help coordinate leadership activi-ties in much the same way that formal struc-ture coordinates managerial activities. Thekey difference is that informal networks candeal with the greater demands for coordina-tion associated with nonroutine activities andchange. The multitude of communicationchannels and the trust among the individualsconnected by those channels allow for anongoing process of accommodation and adap-tation. When conflicts arise among roles,those same relationships help resolve the con-flicts. Perhaps most important, this process ofdialogue and accommodation can producevisions that are linked and compatible insteadof remote and competitive. All this requires agreat deal more communication than isneeded to coordinate managerial roles, butunlike formal structure, strong informal net-works can handle it.

Informal relations of some sort exist in allcorporations. But too often these networksare either very weak—some people are wellconnected but most are not—or they arehighly fragmented—a strong network existsinside the marketing group and inside R&Dbut not across the two departments. Suchnetworks do not support multiple leadershipinitiatives well. In fact, extensive informalnetworks are so important that if they do notexist, creating them has to be the focus of ac-tivity early in a major leadership initiative.

Creating a Culture of Leadership

Despite the increasing importance of leadershipto business success, the on-the-job experi-ences of most people actually seem to under-mine the development of the attributesneeded for leadership. Nevertheless, somecompanies have consistently demonstrated anability to develop people into outstandingleader-managers. Recruiting people withleadership potential is only the first step.Equally important is managing their careerpatterns. Individuals who are effective inlarge leadership roles often share a number ofcareer experiences.

Perhaps the most typical and most impor-tant is significant challenge early in a career.Leaders almost always have had opportuni-ties during their twenties and thirties to actu-ally try to lead, to take a risk, and to learn from

both triumphs and failures. Such learningseems essential in developing a wide range ofleadership skills and perspectives. These op-portunities also teach people somethingabout both the difficulty of leadership and itspotential for producing change.

Later in their careers, something equallyimportant happens that has to do with broad-ening. People who provide effective leader-ship in important jobs always have a chance,before they get into those jobs, to grow be-yond the narrow base that characterizes mostmanagerial careers. This is usually the resultof lateral career moves or of early promotionsto unusually broad job assignments. Some-times other vehicles help, like special task-forceassignments or a lengthy general manage-ment course. Whatever the case, the breadthof knowledge developed in this way seems tobe helpful in all aspects of leadership. So doesthe network of relationships that is often ac-quired both inside and outside the company.When enough people get opportunities likethis, the relationships that are built also helpcreate the strong informal networks neededto support multiple leadership initiatives.

Corporations that do a better-than-averagejob of developing leaders put an emphasis oncreating challenging opportunities for rela-tively young employees. In many businesses,decentralization is the key. By definition, itpushes responsibility lower in an organizationand in the process creates more challengingjobs at lower levels. Johnson & Johnson,3M, Hewlett-Packard, General Electric, andmany other well-known companies have usedthat approach quite successfully. Some ofthose same companies also create as manysmall units as possible so there are a lot ofchallenging lower-level general managementjobs available.

Sometimes these businesses develop addi-tional challenging opportunities by stressinggrowth through new products or services. Overthe years, 3M has had a policy that at least 25%of its revenue should come from products in-troduced within the last five years. That en-courages small new ventures, which in turnoffer hundreds of opportunities to test andstretch young people with leadership potential.

Such practices can, almost by themselves,prepare people for small- and medium-sizedleadership jobs. But developing people for im-portant leadership positions requires more

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work on the part of senior executives, oftenover a long period of time. That work beginswith efforts to spot people with great leader-ship potential early in their careers and toidentify what will be needed to stretch anddevelop them.

Again, there is nothing magic about thisprocess. The methods successful companiesuse are surprisingly straightforward. They goout of their way to make young employeesand people at lower levels in their organiza-tions visible to senior management. Seniormanagers then judge for themselves who haspotential and what the development needs ofthose people are. Executives also discuss theirtentative conclusions among themselves todraw more accurate judgments.

Armed with a clear sense of who has con-siderable leadership potential and whatskills they need to develop, executives inthese companies then spend time planningfor that development. Sometimes that isdone as part of a formal succession planningor high-potential development process; oftenit is more informal. In either case, the keyingredient appears to be an intelligent as-sessment of what feasible development op-portunities fit each candidate’s needs.

To encourage managers to participate inthese activities, well-led businesses tend torecognize and reward people who successfullydevelop leaders. This is rarely done as part ofa formal compensation or bonus formula,simply because it is so difficult to measuresuch achievements with precision. But it doesbecome a factor in decisions about promo-tion, especially to the most senior levels, andthat seems to make a big difference. Whentold that future promotions will depend tosome degree on their ability to nurture lead-ers, even people who say that leadership can-not be developed somehow find ways to do it.

Such strategies help create a corporate cul-ture where people value strong leadershipand strive to create it. Just as we need morepeople to provide leadership in the complexorganizations that dominate our world today,we also need more people to develop the cul-tures that will create that leadership. Institu-tionalizing a leadership-centered culture isthe ultimate act of leadership.

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Well-led businesses tend

to recognize and reward

people who successfully

develop leaders.

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Further Reading

A R T I C L E S

The Manager’s Job: Folklore and Fact

by Henry Mintzberg


March–April 1990Product no. 90210

In this HBR Classic, Mintzberg uses his and other research to debunk myths of the manager’s role. Managerial work involves in-terpersonal roles, informational roles, and decisional roles, he notes. These in turn re-quire specific skills—for example, developing peer relationships, carrying out negotiations, motivating subordinates, resolving conflicts, establishing information networks and dis-seminating information, making decisions with little or ambiguous information, and allocating resources. These skills are different from, but complementary to, the more con-crete ones required of leaders.





Like Kotter, Heifetz and Laurie see leadership as a unique set of tasks rather than a set of character traits. Many efforts to transform an organization through mergers and acquisi-tions, restructuring, reengineering, and strat-egy fail because leaders don’t understand the requirements of adaptive work. The principles for leading adaptive work include: “getting on the balcony” so that the entire organization is visible; identifying the key challenge; regulat-ing distress; maintaining disciplined atten-tion; giving the work back to the people; and protecting voices of leadership from below.




May–June 1996Product no. 96303

CEOs inspire a variety of sentiments ranging from awe to wrath, but there’s little debate over their importance in the business world. The authors conducted 160 interviews with executives around the world. Instead of find-ing 160 different approaches, they found five, each with a singular focus: strategy, people, expertise, controls, or change. Although ap-proaches may vary, all leaders have three major functions to fulfill in an organization: setting direction, alignment, and motivation.

B O O K

Leading Change

by John P. KotterHarvard Business School Press1996Product no. 7471

Leadership is primarily about coping with change, and this book describes what a change initiative looks like. Kotter identifies eight errors common to transformation efforts and offers an eight-step process for overcom-ing them and successfully completing the transformation: establishing a greater sense of urgency; creating the guiding coalition; devel-oping a vision and strategy; communicating the change vision; empowering others to act; creating short-term wins; consolidating gains and producing even more change; and insti-tutionalizing new approaches in the future.

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36

Article Summary

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48

Further Reading

Followers want comfort,

stability, and solutions from

their leaders. But that’s

babysitting. Real leaders ask

hard questions and knock

people out of their comfort

zones. Then they manage the

resulting distress.

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What presents your company with its toughest challenges? Shifting markets? Stiffening competition? Emerging tech-nologies? When such challenges intensify, you may need to reclarify corporate values, redesign strategies, merge or dissolve busi-nesses, or manage cross-functional strife.

These

adaptive challenges

are murky, systemic problems with no easy answers. Perhaps even more vexing, the solutions to adaptive challenges

don’t

reside in the executive suite. Solving them requires the involvement of people

throughout

your organization.

Adaptive work is tough on everyone. For

leaders

, it’s counterintuitive. Rather than providing solutions, you must ask tough questions and leverage employees’ collec-tive intelligence. Instead of maintaining norms, you must challenge the “way we do business.” And rather than quelling conflict, you need to draw issues out and let people feel the sting of reality.

For your

employees

, adaptive work is painful—requiring unfamiliar roles, responsibilities, values, and ways of working. No wonder employees often try to lob adaptive work back to their leaders.

How to ensure that you

and

your employees embrace the challenges of adaptive work? Applying the following six principles will help.

1. Get on the balcony.

Don’t get swept up in the field of play. Instead, move back and forth between the “action” and the “balcony.” You’ll spot emerging patterns, such as power strug-gles or work avoidance. This high-level per-spective helps you mobilize people to do adaptive work.

2. Identify your adaptive challenge.

Example:

When British Airways’ passengers nick-named it “Bloody Awful,” CEO Colin Marshall knew he had to infuse the company with a dedication to customers. He identified the adaptive challenge as “creating trust throughout British Airways.” To diagnose the challenge further, Marshall’s team min-gled with employees and customers in baggage areas, reservation centers, and planes, asking which beliefs, values, and be-haviors needed overhauling. They exposed value-based conflicts underlying surface-level disputes, and resolved the team’s own dysfunctional conflicts which impaired companywide collaboration. By under-standing themselves, their people, and the company’s conflicts, the team strength-ened British Airways’ bid to become “the World’s Favourite Airline.”

3. Regulate distress.

To inspire change—without disabling people—pace adaptive work:

•

First, let employees debate issues and clarify assumptions behind competing views—safely.

•

Then provide direction. Define

key

issues and values. Control the rate of change: Don’t start too many initiatives simulta-neously without stopping others.

•

Maintain just enough tension, resisting pressure to restore the status quo. Raise tough questions without succumbing to anxiety yourself. Communicate presence and poise.

4. Maintain disciplined attention.

Encour-age managers to grapple with divisive issues, rather than indulging in scapegoating or de-nial. Deepen the debate to unlock polarized, superficial conflict. Demonstrate collaboration to solve problems.

5. Give the work back to employees.

To instill collective self-confidence—versus de-pendence on you—support rather than control people. Encourage risk-taking and responsibility—then back people up if they err. Help them recognize they contain the solutions.

6. Protect leadership voices from below.

Don’t silence whistle-blowers, creative deviants, and others exposing contradictions within your company. Their perspectives can provoke fresh thinking. Ask, “What is this guy

really

talk-ing about? Have we missed something?”

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Followers want comfort, stability, and solutions from their leaders. But

that’s babysitting. Real leaders ask hard questions and knock people out

of their comfort zones. Then they manage the resulting distress.

Sometimes an article comes along and turns the conventional thinking on a subject not upside down but inside out. So it is with this landmark piece by Ronald Heifetz and Donald Laurie, pub-lished in January 1997. Not only do the authors introduce the breakthrough concept of adaptive change—the sort of change that occurs when people and organizations are forced to adjust to a radically altered environment—they chal-lenge the traditional understanding of the leader-follower relationship.

Leaders are shepherds, goes the conventional thinking, protecting their flock from harsh sur-roundings. Not so, say the authors. Leaders who truly care for their followers expose them to the painful reality of their condition and demand that they fashion a response. Instead of giving people false assurance that their best is good enough, leaders insist that people surpass them-selves. And rather than smoothing over conflicts, leaders force disputes to the surface.

Modeling the candor they encourage leaders to display, the authors don’t disguise adaptive change’s emotional costs. Few people are likely to

thank the leader for stirring anxiety and uncover-ing conflict. But leaders who cultivate emotional fortitude soon learn what they can achieve when they maximize their followers’ well-being instead of their comfort.

To stay alive, Jack Pritchard had to change hislife. Triple bypass surgery and medicationcould help, the heart surgeon told him, but notechnical fix could release Pritchard from hisown responsibility for changing the habits of alifetime. He had to stop smoking, improve hisdiet, get some exercise, and take time to relax,remembering to breathe more deeply eachday. Pritchard’s doctor could provide sustain-ing technical expertise and take supportiveaction, but only Pritchard could adapt his in-grained habits to improve his long-termhealth. The doctor faced the leadership task ofmobilizing the patient to make critical be-havioral changes; Jack Pritchard faced theadaptive work of figuring out which specificchanges to make and how to incorporate theminto his daily life.

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Companies today face challenges similar tothe ones that confronted Pritchard and his doc-tor. They face adaptive challenges. Changes insocieties, markets, customers, competition,and technology around the globe are forcingorganizations to clarify their values, developnew strategies, and learn new ways of operat-ing. Often the toughest task for leaders ineffecting change is mobilizing people through-out the organization to do adaptive work.

Adaptive work is required when our deeplyheld beliefs are challenged, when the valuesthat made us successful become less relevant,and when legitimate yet competing perspec-tives emerge. We see adaptive challenges everyday at every level of the workplace—whencompanies restructure or reengineer, developor implement strategy, or merge businesses.We see adaptive challenges when marketinghas difficulty working with operations, whencross-functional teams don’t work well, orwhen senior executives complain, “We don’tseem to be able to execute effectively.” Adap-tive problems are often systemic problemswith no ready answers.

Mobilizing an organization to adapt its be-haviors in order to thrive in new business envi-ronments is critical. Without such change, anycompany today would falter. Indeed, gettingpeople to do adaptive work is the mark ofleadership in a competitive world. Yet for mostsenior executives, providing leadership and notjust authoritative expertise is extremely diffi-cult. Why? We see two reasons. First, in orderto make change happen, executives have tobreak a longstanding behavior pattern of theirown: providing leadership in the form of solu-tions. This tendency is quite natural becausemany executives reach their positions of au-thority by virtue of their competence in takingresponsibility and solving problems. But thelocus of responsibility for problem solvingwhen a company faces an adaptive challengemust shift to its people. Solutions to adaptivechallenges reside not in the executive suite butin the collective intelligence of employees atall levels, who need to use one another as re-sources, often across boundaries, and learntheir way to those solutions.

Second, adaptive change is distressing forthe people going through it. They need to takeon new roles, new relationships, new values,new behaviors, and new approaches to work.Many employees are ambivalent about the ef-

forts and sacrifices required of them. Theyoften look to the senior executive to take prob-lems off their shoulders. But those expecta-tions have to be unlearned. Rather than fulfill-ing the expectation that they will provideanswers, leaders have to ask tough questions.Rather than protecting people from outsidethreats, leaders should allow them to feel thepinch of reality in order to stimulate them toadapt. Instead of orienting people to theircurrent roles, leaders must disorient them sothat new relationships can develop. Instead ofquelling conflict, leaders have to draw the is-sues out. Instead of maintaining norms, leadershave to challenge “the way we do business”and help others distinguish immutable valuesfrom historical practices that must go.

Drawing on our experience with managersfrom around the world, we offer six principlesfor leading adaptive work: “getting on thebalcony,” identifying the adaptive challenge,regulating distress, maintaining disciplinedattention, giving the work back to people, andprotecting voices of leadership from below.We illustrate those principles with an exampleof adaptive change at KPMG Netherlands, aprofessional-services firm.

Get on the Balcony

Earvin “Magic” Johnson’s greatness in leadinghis basketball team came in part from his abilityto play hard while keeping the whole game situ-ation in mind, as if he stood in a press box oron a balcony above the field of play. Bobby Orrplayed hockey in the same way. Other playersmight fail to recognize the larger patterns ofplay that performers like Johnson and Orrquickly understand, because they are so en-gaged in the game that they get carried awayby it. Their attention is captured by the rapidmotion, the physical contact, the roar of thecrowd, and the pressure to execute. In sports,most players simply may not see who is openfor a pass, who is missing a block, or how theoffense and defense work together. Players likeJohnson and Orr watch these things and allowtheir observations to guide their actions.

Business leaders have to be able to view pat-terns as if they were on a balcony. It does themno good to be swept up in the field of action.Leaders have to see a context for change or cre-ate one. They should give employees a strongsense of the history of the enterprise andwhat’s good about its past, as well as an idea of

Ronald A. Heifetz

is codirector of the Center for Public Leadership at Harvard University’s John F. Kennedy School of Government in Cambridge, Massachu-setts.

Donald L. Laurie

is founder and managing director of Laurie Interna-tional, a Boston-based management consulting firm. He is also a founder and partner at Oyster International, an-other Boston-based management con-sulting firm. He is the author of

Venture Catalyst

(Perseus Books, 2001). This article is based in part on Heifetz’s

Leadership Without Easy Answers

(Belknap Press of Harvard University Press, 1994).

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the market forces at work today and the re-sponsibility people must take in shaping thefuture. Leaders must be able to identify strug-gles over values and power, recognize patternsof work avoidance, and watch for the manyother functional and dysfunctional reactionsto change.

Without the capacity to move back andforth between the field of action and the bal-cony, to reflect day to day, moment to mo-ment, on the many ways in which an organi-zation’s habits can sabotage adaptive work, aleader easily and unwittingly becomes a pris-oner of the system. The dynamics of adaptivechange are far too complex to keep track of,let alone influence, if leaders stay only on thefield of play.

We have encountered several leaders, someof whom we discuss in this article, who man-age to spend much of their precious time onthe balcony as they guide their organizationsthrough change. Without that perspective,they probably would have been unable to mo-bilize people to do adaptive work. Getting onthe balcony is thus a prerequisite for followingthe next five principles.

Identify the Adaptive Challenge

When a leopard threatens a band of chimpan-zees, the leopard rarely succeeds in picking offa stray. Chimps know how to respond to thiskind of threat. But when a man with an auto-matic rifle comes near, the routine responsesfail. Chimps risk extinction in a world ofpoachers unless they figure out how to disarmthe new threat. Similarly, when businessescannot learn quickly to adapt to new chal-lenges, they are likely to face their own formof extinction.

Consider the well-known case of BritishAirways. Having observed the revolutionarychanges in the airline industry during the1980s, then chief executive Colin Marshallclearly recognized the need to transform anairline nicknamed Bloody Awful by its ownpassengers into an exemplar of customer ser-vice. He also understood that this ambitionwould require more than anything else changesin values, practices, and relationships through-out the company. An organization whosepeople clung to functional silos and valuedpleasing their bosses more than pleasing cus-tomers could not become “the world’s favoriteairline.” Marshall needed an organization dedi-

cated to serving people, acting on trust, re-specting the individual, and making team-work happen across boundaries. Values had tochange throughout British Airways. Peoplehad to learn to collaborate and to develop acollective sense of responsibility for the direc-tion and performance of the airline. Marshallidentified the essential adaptive challenge:creating trust throughout the organization. Heis one of the first executives we have known tomake “creating trust” a priority.

To lead British Airways, Marshall had to gethis executive team to understand the nature ofthe threat created by dissatisfied customers:Did it represent a technical challenge or anadaptive challenge? Would expert advice andtechnical adjustments within basic routinessuffice, or would people throughout the com-pany have to learn different ways of doingbusiness, develop new competencies, andbegin to work collectively?

Marshall and his team set out to diagnose inmore detail the organization’s challenges. Theylooked in three places. First, they listened tothe ideas and concerns of people inside andoutside the organization—meeting with crewson flights, showing up in the 350-person reser-vations center in New York, wanderingaround the baggage-handling area in Tokyo, orvisiting the passenger lounge in whatever air-port they happened to be in. Their primaryquestions were, Whose values, beliefs, atti-tudes, or behaviors would have to change inorder for progress to take place? What shifts inpriorities, resources, and power were neces-sary? What sacrifices would have to be madeand by whom?

Second, Marshall and his team saw conflictsas clues—symptoms of adaptive challenges.The way conflicts across functions were beingexpressed were mere surface phenomena; theunderlying conflicts had to be diagnosed. Dis-putes over seemingly technical issues such asprocedures, schedules, and lines of authoritywere in fact proxies for underlying conflictsabout values and norms.

Third, Marshall and his team held a mirrorup to themselves, recognizing that they em-bodied the adaptive challenges facing the orga-nization. Early in the transformation of BritishAirways, competing values and norms wereplayed out on the executive team in dysfunc-tional ways that impaired the capacity of therest of the company to collaborate across func-

Solutions to adaptive

challenges reside not in

the executive suite but in

the collective intelligence

of employees at all levels.

The Work of Leadership • BEST OF HBR

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tions and units and make the necessary trade-offs. No executive can hide from the fact thathis or her team reflects the best and the worstof the company’s values and norms, and there-fore provides a case in point for insight into thenature of the adaptive work ahead.

Thus, identifying its adaptive challengewas crucial in British Airways’ bid to becomethe world’s favorite airline. For the strategy tosucceed, the company’s leaders needed to un-derstand themselves, their people, and thepotential sources of conflict. Marshall recog-nized that strategy development itself requiresadaptive work.

Regulate Distress

Adaptive work generates distress. Before put-ting people to work on challenges for whichthere are no ready solutions, a leader must re-alize that people can learn only so much sofast. At the same time, they must feel the needto change as reality brings new challenges.They cannot learn new ways when they areoverwhelmed, but eliminating stress altogetherremoves the impetus for doing adaptive work.Because a leader must strike a delicate balancebetween having people feel the need tochange and having them feel overwhelmed bychange, leadership is a razor’s edge.

A leader must attend to three fundamentaltasks in order to help maintain a productivelevel of tension. Adhering to these tasks willallow him or her to motivate people withoutdisabling them. First, a leader must createwhat can be called a

holding environment.

Touse the analogy of a pressure cooker, a leaderneeds to regulate the pressure by turning upthe heat while also allowing some steam to es-cape. If the pressure exceeds the cooker’s ca-pacity, the cooker can blow up. However, noth-ing cooks without some heat.

In the early stages of a corporate change, theholding environment can be a temporary“place” in which a leader creates the condi-tions for diverse groups to talk to one anotherabout the challenges facing them, to frameand debate issues, and to clarify the assump-tions behind competing perspectives and values.Over time, more issues can be phased in asthey become ripe. At British Airways, for exam-ple, the shift from an internal focus to a cus-tomer focus took place over four or five yearsand dealt with important issues in succession:building a credible executive team, communi-

cating with a highly fragmented organization,defining new measures of performance andcompensation, and developing sophisticatedinformation systems. During that time, em-ployees at all levels learned to identify whatand how they needed to change.

Thus, a leader must sequence and pace thework. Too often, senior managers convey thateverything is important. They start new initia-tives without stopping other activities, or theystart too many initiatives at the same time.They overwhelm and disorient the very peoplewho need to take responsibility for the work.

Second, a leader is responsible for direction,protection, orientation, managing conflict, andshaping norms. (See the exhibit “AdaptiveWork Calls for Leadership.”) Fulfilling these re-sponsibilities is also important for a managerin technical or routine situations. But a leaderengaged in adaptive work uses his authority tofulfill them differently. A leader provides direc-tion by identifying the organization’s adaptivechallenge and framing the key questions andissues. A leader protects people by managingthe rate of change. A leader orients people tonew roles and responsibilities by clarifying busi-ness realities and key values. A leader helps ex-pose conflict, viewing it as the engine of cre-ativity and learning. Finally, a leader helps theorganization maintain those norms that mustendure and challenge those that need to change.

Third, a leader must have presence andpoise; regulating distress is perhaps a leader’smost difficult job. The pressures to restoreequilibrium are enormous. Just as moleculesbang hard against the walls of a pressurecooker, people bang up against leaders whoare trying to sustain the pressures of tough,conflict-filled work. Although leadership de-mands a deep understanding of the pain ofchange—the fears and sacrifices associatedwith major readjustment—it also requires theability to hold steady and maintain the ten-sion. Otherwise, the pressure escapes and thestimulus for learning and change is lost.

A leader has to have the emotional capacityto tolerate uncertainty, frustration, and pain.He has to be able to raise tough questionswithout getting too anxious himself. Employeesas well as colleagues and customers will care-fully observe verbal and nonverbal cues to aleader’s ability to hold steady. He needs tocommunicate confidence that he and they cantackle the tasks ahead.

A leader must sequence

and pace the work. Too

often, senior managers

convey that everything is

important. They

overwhelm and disorient

the very people who need

to take responsibility for

the work.


page 40




Maintain Disciplined Attention

Different people within the same organiza-tion bring different experiences, assumptions,values, beliefs, and habits to their work. Thisdiversity is valuable because innovation andlearning are the products of differences. Noone learns anything without being open tocontrasting points of view. Yet managers at alllevels are often unwilling—or unable—to ad-dress their competing perspectives collec-tively. They frequently avoid paying attentionto issues that disturb them. They restore equi-librium quickly, often with work avoidancemaneuvers. A leader must get employees toconfront tough trade-offs in values, proce-dures, operating styles, and power.

That is as true at the top of the organizationas it is in the middle or on the front line. In-deed, if the executive team cannot modeladaptive work, the organization will languish.If senior managers can’t draw out and deal

with divisive issues, how will people elsewherein the organization change their behaviors andrework their relationships? As Jan Carlzon, thelegendary CEO of Scandinavian Airlines Sys-tem (SAS), told us, “One of the most interest-ing missions of leadership is getting people onthe executive team to listen to and learn fromone another. Held in debate, people can learntheir way to collective solutions when they un-derstand one another’s assumptions. The workof the leader is to get conflict out into theopen and use it as a source of creativity.”

Because work avoidance is rampant in orga-nizations, a leader has to counteract distrac-tions that prevent people from dealing withadaptive issues. Scapegoating, denial, focusingonly on today’s technical issues, or attacking in-dividuals rather than the perspectives they rep-resent—all forms of work avoidance—are tobe expected when an organization under-takes adaptive work. Distractions have to be

Direction

Protection

Orientation

Managing Conflict

Shaping Norms

Adaptive Work Calls for Leadership

Technical or Routine Adaptive

Define problems and provide solutions

Shield the organizationfrom external threats

Clarify roles and responsibilities

Restore order

Maintain norms

Identify the adaptive challenge and frame keyquestions and issues

Let the organization feel external pressures within a range it can stand

Challenge current roles and resist pressure to define new roles quickly

Expose conflict or let it emerge

Challenge unproductivenorms

Leader’s Type ofResponsibilities Situation

In the course of regulating people’s distress, a leader faces several key

responsibilities and may have to use his or her authority differently

depending on the type of work situation.


page 41




identified when they occur so that peoplewill regain focus.

When sterile conflict takes the place of dia-logue, a leader has to step in and put the teamto work on reframing the issues. She has todeepen the debate with questions, unbundlingthe issues into their parts rather than lettingconflict remain polarized and superficial. Whenpeople preoccupy themselves with blamingexternal forces, higher management, or a heavyworkload, a leader has to sharpen the team’ssense of responsibility for carving out the timeto press forward. When the team fragmentsand individuals resort to protecting their ownturf, leaders have to demonstrate the need forcollaboration. People have to discover thevalue of consulting with one another and usingone another as resources in the problem-solving process. For example, one CEO weknow uses executive meetings, even those thatfocus on operational and technical issues, asopportunities to teach the team how to workcollectively on adaptive problems.

Of course, only the rare manager intends toavoid adaptive work. In general, people feelambivalent about it. Although they want tomake progress on hard problems or live up totheir renewed and clarified values, peoplealso want to avoid the associated distress. Justas millions of U.S. citizens want to reduce thefederal budget deficit, but not by giving uptheir tax dollars or benefits or jobs, so, too,managers may consider adaptive work a pri-ority but have difficulty sacrificing their famil-iar ways of doing business. People need lead-ership to help them maintain their focus onthe tough questions. Disciplined attention isthe currency of leadership.

Give the Work Back to People

Everyone in the organization has special ac-cess to information that comes from his or herparticular vantage point. Everyone may seedifferent needs and opportunities. People whosense early changes in the marketplace areoften at the periphery, but the organizationwill thrive if it can bring that information tobear on tactical and strategic decisions. Whenpeople do not act on their special knowledge,businesses fail to adapt.

All too often, people look up the chain ofcommand, expecting senior management tomeet market challenges for which they them-selves are responsible. Indeed, the greater and

more persistent distresses that accompany adap-tive work make such dependence worse. Peopletend to become passive, and senior managerswho pride themselves on being problem solv-ers take decisive action. That behavior restoresequilibrium in the short term but ultimatelyleads to complacency and habits of work avoid-ance that shield people from responsibility,pain, and the need to change.

Getting people to assume greater responsi-bility is not easy. Not only are many lower-levelemployees comfortable being told what to do,but many managers are accustomed to treat-ing subordinates like machinery that requirescontrol. Letting people take the initiative in de-fining and solving problems means that man-agement needs to learn to support rather thancontrol. Workers, for their part, need to learnto take responsibility.

Jan Carlzon encouraged responsibility takingat SAS by trusting others and decentralizingauthority. A leader has to let people bear theweight of responsibility. “The key is to let themdiscover the problem,” he said. “You won’t besuccessful if people aren’t carrying the recogni-tion of the problem and the solution withinthemselves.” To that end, Carlzon sought wide-spread engagement.

For example, in his first two years at SAS,Carlzon spent up to 50% of his time communi-cating directly in large meetings and indirectlyin a host of innovative ways: through work-shops, brainstorming sessions, learning exer-cises, newsletters, brochures, and exposure inthe public media. He demonstrated through avariety of symbolic acts—for example, by elim-inating the pretentious executive dining roomand burning thousands of pages of manualsand handbooks—the extent to which ruleshad come to dominate the company. He madehimself a pervasive presence, meeting withand listening to people both inside and out-side the organization. He even wrote a book,

Moments of Truth

(HarperCollins, 1989), to ex-plain his values, philosophy, and strategy. AsCarlzon noted, “If no one else read it, at leastmy people would.”

A leader also must develop collective self-confidence. Again, Carlzon said it well: “Peoplearen’t born with self-confidence. Even themost self-confident people can be broken.Self-confidence comes from success, experi-ence, and the organization’s environment. Theleader’s most important role is to instill confi-

Management needs to

learn to support rather

than control. Workers,

for their part, need to

learn to take

responsibility.


page 42




dence in people. They must dare to take risksand responsibility. You must back them up ifthey make mistakes.”

Protect Voices of Leadership from Below

Giving a voice to all people is the foundationof an organization that is willing to experi-ment and learn. But, in fact, whistle-blowers,creative deviants, and other such originalvoices routinely get smashed and silenced inorganizational life. They generate disequilib-rium, and the easiest way for an organizationto restore equilibrium is to neutralize thosevoices, sometimes in the name of teamworkand “alignment.”

The voices from below are usually not asarticulate as one would wish. People speakingbeyond their authority usually feel self-conscious and sometimes have to generate“too much” passion to get themselves gearedup for speaking out. Of course, that oftenmakes it harder for them to communicateeffectively. They pick the wrong time andplace, and often bypass proper channels ofcommunication and lines of authority. Butburied inside a poorly packaged interjectionmay lie an important intuition that needs tobe teased out and considered. To toss it out forits bad timing, lack of clarity, or seeming un-reasonableness is to lose potentially valu-able information and discourage a potentialleader in the organization.

That is what happened to David, a managerin a large manufacturing company. He had lis-tened when his superiors encouraged peopleto look for problems, speak openly, and takeresponsibility. So he raised an issue about oneof the CEO’s pet projects—an issue that wasdeemed “too hot to handle” and had beenswept under the carpet for years. Everyone un-derstood that it was not open to discussion,but David knew that proceeding with theproject could damage or derail key elements ofthe company’s overall strategy. He raised theissue directly in a meeting with his boss andthe CEO. He provided a clear description of theproblem, a rundown of competing perspec-tives, and a summary of the consequences ofcontinuing to pursue the project.

The CEO angrily squelched the discussionand reinforced the positive aspects of his petproject. When David and his boss left theroom, his boss exploded: “Who do you think

you are, with your holier-than-thou attitude?”He insinuated that David had never likedthe CEO’s pet project because David hadn’tcome up with the idea himself. The subjectwas closed.

David had greater expertise in the area ofthe project than either his boss or the CEO. Buthis two superiors demonstrated no curiosity, noeffort to investigate David’s reasoning, noawareness that he was behaving responsiblywith the interests of the company at heart. Itrapidly became clear to David that it was moreimportant to understand what mattered to theboss than to focus on real issues. The CEO andDavid’s boss together squashed the viewpointof a leader from below and thereby killed hispotential for leadership in the organization.He would either leave the company or nevergo against the grain again.

Leaders must rely on others within the busi-ness to raise questions that may indicate an im-pending adaptive challenge. They have to pro-vide cover to people who point to the internalcontradictions of the enterprise. Those indi-viduals often have the perspective to provokerethinking that people in authority do not.Thus, as a rule of thumb, when authority fig-ures feel the reflexive urge to glare at or other-wise silence someone, they should resist. Theurge to restore social equilibrium is quite power-ful, and it comes on fast. One has to get accus-tomed to getting on the balcony, delaying theimpulse, and asking, What is this guy really talk-ing about? Is there something we’re missing?

Doing Adaptive Work at KPMG Netherlands

The highly successful KPMG Netherlands pro-vides a good example of how a company canengage in adaptive work. In 1994, Ruud Koedijk,the firm’s chairman, recognized a strategicchallenge. Although the auditing, consulting,and tax-preparation partnership was the in-dustry leader in the Netherlands and washighly profitable, growth opportunities in thesegments it served were limited. Margins inthe auditing business were being squeezed asthe market became more saturated, and com-petition in the consulting business was in-creasing as well. Koedijk knew that the firmneeded to move into more profitable growthareas, but he didn’t know what they were orhow KPMG might identify them.

Koedijk and his board were confident that


page 43




they had the tools to do the analytical strategywork: analyze trends and discontinuities, un-derstand core competencies, assess their com-petitive position, and map potential opportu-nities. They were considerably less certain thatthey could commit to implementing the strategythat would emerge from their work. Histori-cally, the partnership had resisted attempts tochange, basically because the partners werecontent with the way things were. They hadbeen successful for a long time, so they saw noreason to learn new ways of doing business,either from their fellow partners or from any-one lower down in the organization. Overturn-ing the partners’ attitude and its deep impacton the organization’s culture posed an enor-mous adaptive challenge for KPMG.

Koedijk could see from the balcony that thevery structure of KPMG inhibited change. Intruth, KPMG was less a partnership than a collec-tion of small fiefdoms in which each partnerwas a lord. The firm’s success was the cumula-tive accomplishment of each of the individualpartners, not the unified result of 300 colleaguespulling together toward a shared ambition.Success was measured solely in terms of theprofitability of individual units. As one partnerdescribed it, “If the bottom line was correct,you were a ‘good fellow.’” As a result, one part-ner would not trespass on another’s turf, andlearning from others was a rare event. Becauseindependence was so highly valued, confronta-tions were rare and conflict was camouflaged.If partners wanted to resist firmwide change,they did not kill the issue directly. “Say yes, dono” was the operative phrase.

Koedijk also knew that this sense of auton-omy got in the way of developing new talent atKPMG. Directors rewarded their subordinatesfor two things: not making mistakes and deliver-ing a high number of billable hours per week.The emphasis was not on creativity or innova-tion. Partners were looking for errors whenthey reviewed their subordinates’ work, not fornew understanding or fresh insight. AlthoughKoedijk could see the broad outlines of theadaptive challenges facing his organization, heknew that he could not mandate behavioralchange. What he could do was create the con-ditions for people to discover for themselveshow they needed to change. He set a process inmotion to make that happen.

To start, Koedijk held a meeting of all 300partners and focused their attention on the

history of KPMG, the current business reality,and the business issues they could expect toface. He then raised the question of how theywould go about changing as a firm and askedfor their perspectives on the issues. By launch-ing the strategic initiative through dialoguerather than edict, he built trust within thepartner ranks. Based on this emerging trustand his own credibility, Koedijk persuaded thepartners to release 100 partners and nonpart-ners from their day-to-day responsibilities towork on the strategic challenges. They woulddevote 60% of their time for nearly four monthsto that work.

Koedijk and his colleagues established a stra-tegic integration team of 12 senior partners towork with the 100 professionals (called “the100”) from different levels and disciplines. En-gaging people below the rank of partner in amajor strategic initiative was unheard of andsignaled a new approach from the start: Manyof these people’s opinions had never beforebeen valued or sought by authority figures inthe firm. Divided into 14 task forces, the 100were to work in three areas: gauging futuretrends and discontinuities, defining core com-petencies, and grappling with the adaptivechallenges facing the organization. They werehoused on a separate floor with their own sup-port staff, and they were unfettered by tradi-tional rules and regulations. Hennie Both,KPMG’s director of marketing and communi-cations, signed on as project manager.

As the strategy work got under way, thetask forces had to confront the existing KPMGculture. Why? Because they literally could notdo their new work within the old rules. Theycould not work when strong respect for theindividual came at the expense of effectiveteamwork, when deeply held individual be-liefs got in the way of genuine discussion, andwhen unit loyalties formed a barrier to cross-functional problem solving. Worst of all, taskforce members found themselves avoiding con-flict and unable to discuss those problems. Anumber of the task forces became dysfunc-tional and unable to do their strategy work.

To focus their attention on what needed tochange, Both helped the task forces map theculture they desired against the current cul-ture. They discovered very little overlap. Thetop descriptors of the current culture were: de-velop opposing views, demand perfection, andavoid conflict. The top characteristics of the


page 44




desired culture were: create the opportunityfor self-fulfillment, develop a caring environ-ment, and maintain trusting relations withcolleagues. Articulating this gap made tangiblefor the group the adaptive challenge thatKoedijk saw facing KPMG. In other words, thepeople who needed to do the changing hadfinally framed the adaptive challenge forthemselves: How could KPMG succeed at acompetence-based strategy that depended oncooperation across multiple units and layers ifits people couldn’t succeed in these task forces?Armed with that understanding, the task forcemembers could become emissaries to the restof the firm.

On a more personal level, each member wasasked to identify his or her individual adaptivechallenge. What attitudes, behaviors, or habitsdid each one need to change, and what spe-cific actions would he or she take? Who elseneeded to be involved for individual changeto take root? Acting as coaches and consult-ants, the task force members gave one anothersupportive feedback and suggestions. They hadlearned to confide, to listen, and to advise withgenuine care.

Progress on these issues raised the level oftrust dramatically, and task force membersbegan to understand what adapting their be-havior meant in everyday terms. They under-stood how to identify an adaptive issue and de-veloped a language with which to discuss whatthey needed to do to improve their collectiveability to solve problems. They talked about di-alogue, work avoidance, and using the collec-tive intelligence of the group. They knew howto call one another on dysfunctional behavior.They had begun to develop the culture re-quired to implement the new business strategy.

Despite the critical breakthroughs towarddeveloping a collective understanding of theadaptive challenge, regulating the level ofdistress was a constant preoccupation forKoedijk, the board, and Both. The nature ofthe work was distressing. Strategy work meansbroad assignments with limited instructions;at KPMG, people were accustomed to highlystructured assignments. Strategy work alsomeans being creative. At one breakfast meet-ing, a board member stood on a table to chal-lenge the group to be more creative and tossaside old rules. This radical and unexpectedbehavior further raised the distress level: Noone had ever seen a partner behave this way

before. People realized that their work experi-ence had prepared them only for performingroutine tasks with people “like them” fromtheir own units.

The process allowed for conflict and fo-cused people’s attention on the hot issues inorder to help them learn how to work withconflict in a constructive manner. But theheat was kept within a tolerable range insome of the following ways:

• On one occasion when tensions were un-usually high, the 100 were brought together tovoice their concerns to the board in an OprahWinfrey–style meeting. The board sat in thecenter of an auditorium and took pointed ques-tions from the surrounding group.

• The group devised sanctions to discourageunwanted behavior. In the soccer-crazy Nether-lands, all participants in the process were issuedthe yellow cards that soccer referees use toindicate “foul” to offending players. They usedthe cards to stop the action when someonestarted arguing his or her point without listen-ing to or understanding the assumptions andcompeting perspectives of other participants.

• The group created symbols. They com-pared the old KPMG to a hippopotamus thatwas large and cumbersome, liked to sleep a lot,and became aggressive when its normal habitswere disturbed. They aspired to be dolphins,which they characterized as playful, eager tolearn, and happily willing to go the extra milefor the team. They even paid attention to thestatement that clothes make: It surprised someclients to see managers wandering through theKPMG offices that summer in Bermuda shortsand T-shirts.

• The group made a deliberate point of hav-ing fun. “Playtime” could mean long bicyclerides or laser-gun games at a local amusementcenter. In one spontaneous moment at theKPMG offices, a discussion of the power of peo-ple mobilized toward a common goal led thegroup to go outside and use their collective le-verage to move a seemingly immovable con-crete block.

• The group attended frequent two- andthree-day off-site meetings to help bring clo-sure to parts of the work.

These actions, taken as a whole, altered atti-tudes and behaviors. Curiosity became morevalued than obedience to rules. People nolonger deferred to the senior authority figurein the room; genuine dialogue neutralized hi-


page 45




erarchical power in the battle over ideas. Thetendency for each individual to promote hisor her pet solution gave way to understandingother perspectives. A confidence in the abilityof people in different units to work togetherand work things out emerged. The people withthe most curious minds and interesting ques-tions soon became the most respected.

As a result of confronting strategic and adap-tive challenges, KPMG as a whole will movefrom auditing to assurance, from operationsconsulting to shaping corporate vision, frombusiness-process reengineering to developingorganizational capabilities, and from teachingtraditional skills to its own clients to creatinglearning organizations. The task forces identi-fied $50 million to $60 million worth of newbusiness opportunities.

Many senior partners who had believed thata firm dominated by the auditing mentalitycould not contain creative people were sur-prised when the process unlocked creativity,passion, imagination, and a willingness to takerisks. Two stories illustrate the fundamentalchanges that took place in the firm’s mind-set.

We saw one middle manager develop theconfidence to create a new business. He spot-ted the opportunity to provide KPMG servicesto virtual organizations and strategic alliances.He traveled the world, visiting the leaders of 65virtual organizations. The results of his innova-tive research served as a resource to KPMG inentering this growing market. Moreover, herepresented the new KPMG by giving a key-note address discussing his findings at a worldforum. We also saw a 28-year-old female audi-tor skillfully guide a group of older, male se-nior partners through a complex day of look-ing at opportunities associated withimplementing the firm’s new strategies. Thatcould not have occurred the year before. Thesenior partners never would have listened tosuch a voice from below.

Leadership as LearningMany efforts to transform organizationsthrough mergers and acquisitions, restructur-ing, reengineering, and strategy work falterbecause managers fail to grasp the require-ments of adaptive work. They make the classicerror of treating adaptive challenges like tech-nical problems that can be solved by tough-minded senior executives.

The implications of that error go to the

heart of the work of leaders in organizationstoday. Leaders crafting strategy have access tothe technical expertise and the tools they needto calculate the benefits of a merger or restruc-turing, understand future trends and disconti-nuities, identify opportunities, map existingcompetencies, and identify the steering mecha-nisms to support their strategic direction. Thesetools and techniques are readily available bothwithin organizations and from a variety of con-sulting firms, and they are very useful. In manycases, however, seemingly good strategies failto be implemented. And often the failure ismisdiagnosed: “We had a good strategy, but wecouldn’t execute it effectively.”

In fact, the strategy itself is often deficientbecause too many perspectives were ignoredduring its formulation. The failure to do thenecessary adaptive work during the strategydevelopment process is a symptom of seniormanagers’ technical orientation. Managers fre-quently derive their solution to a problem andthen try to sell it to some colleagues and bypassor sandbag others in the commitment-build-ing process. Too often, leaders, their team, andconsultants fail to identify and tackle the adap-tive dimensions of the challenge and to askthemselves, Who needs to learn what in orderto develop, understand, commit to, and imple-ment the strategy?

The same technical orientation entrapsbusiness-process-reengineering and restructur-ing initiatives, in which consultants and man-agers have the know-how to do the technicalwork of framing the objectives, designing anew work flow, documenting and communicat-ing results, and identifying the activities to beperformed by people in the organization. Inmany instances, reengineering falls short ofthe mark because it treats process redesign as atechnical problem: Managers neglect to iden-tify the adaptive work and involve the peoplewho have to do the changing. Senior execu-tives fail to invest their time and their souls inunderstanding these issues and guiding peoplethrough the transition. Indeed, engineering isitself the wrong metaphor.

In short, the prevailing notion that leader-ship consists of having a vision and aligningpeople with that vision is bankrupt becauseit continues to treat adaptive situations as ifthey were technical: The authority figure issupposed to divine where the company isgoing, and people are supposed to follow.

As a result of confronting

strategic and adaptive

challenges, KPMG task

forces identified $50

million to $60 million

worth of new business

opportunities.


page 46




Leadership is reduced to a combination ofgrand knowing and salesmanship. Such aperspective reveals a basic misconception aboutthe way businesses succeed in addressingadaptive challenges. Adaptive situations arehard to define and resolve precisely becausethey demand the work and responsibility ofmanagers and people throughout the organi-zation. They are not amenable to solutionsprovided by leaders; adaptive solutions re-quire members of the organization to takeresponsibility for the problematic situationsthat face them.

Leadership has to take place every day. Itcannot be the responsibility of the few, arare event, or a once-in-a-lifetime opportu-nity. In our world, in our businesses, we faceadaptive challenges all the time. When anexecutive is asked to square conflicting aspi-rations, he and his people face an adaptivechallenge. When a manager sees a solution toa problem—technical in many respects exceptthat it requires a change in the attitudes andhabits of subordinates—he faces an adaptivechallenge. When an employee close to thefront line sees a gap between the organiza-tion’s purpose and the objectives he is asked

to achieve, he faces both an adaptive chal-lenge and the risks and opportunity of lead-ing from below.

Leadership, as seen in this light, requires alearning strategy. A leader, from above or be-low, with or without authority, has to engagepeople in confronting the challenge, adjust-ing their values, changing perspectives, andlearning new habits. To an authoritative per-son who prides himself on his ability totackle hard problems, this shift may come asa rude awakening. But it also should ease theburden of having to know all the answers andbear all the load. To the person who waits toreceive either the coach’s call or “the vision”to lead, this change may also seem a mixtureof good news and bad news. The adaptive de-mands of our time require leaders who takeresponsibility without waiting for revelationor request. One can lead with no more thana question in hand.

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Further Reading

A R T I C L E

Whatever Happened to the Take-Charge Manager?

by Nitin Nohria and James D. Berkley



This article shares with Heifetz and Laurie the conviction that the fundamental responsibility of leadership cannot be outsourced. In the 1980s, U.S. business experienced an explosion of new managerial concepts unparalleled in previous decades—all claiming to have un-locked the secret to staying competitive in in-creasingly challenging marketplaces. Many managers felt that the emergence of these new managerial ideas signaled a rejuvenation of U.S. business. By readily adopting innova-tions such as total quality programs and self-managed teams, managers believed that they were demonstrating the kind of decisive leader-ship that would keep their companies com-petitive. But their thinking didn’t correspond to the facts. American managers didn’t take charge in the 1980s; they abdicated their re-sponsibility to a burgeoning industry of man-agement consultants. If business leaders want to reverse this trend, they must reclaim mana-gerial responsibility—and pragmatism is the place to start. Pragmatic managers, like leaders of adaptive work, are sensitive to their com-pany’s context and open to uncertainty.

B O O K

The Will to Lead: Running a Business with a Network of Leaders

by Marvin BowerHarvard Business School Press1997Product no. 7587

This book provides another perspective on the negative aspects of command-and-control leadership, and the positive aspects of a “network of leaders.” Such networks effec-tively respond to adaptive challenges that re-quire the involvement of people throughout an organization. Bower, longtime leader of McKinsey & Company, emphasizes that while command-and-control leadership once con-tributed to building America’s might, it is no longer the best system for today’s intensely competitive global market. Command-and-control management breeds rigidity and ex-cessive reliance on authority. In contrast, Bower sets forth his vision of a leadership model that replaces hierarchy with a network of leaders and leadership groups placed stra-tegically throughout a company. The goal? Helping individual workers learn to lead, work more efficiently, have more ideas, and exercise more creativity and initiative.

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www.hbr.org

Why Should Anyone Be Led by You?




article:



50

Article Summary

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59

Further Reading

We all know that leaders

need vision and energy. But

to be inspirational, leaders

need four other qualities.

Probably not what you’d

expect, these qualities can be

honed by almost anyone

willing to dig deeply into their

true selves.

Reprint R00506



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http://www.hbr.org



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The question “Why should anyone be led by you?” strikes fear in the hearts of most executives. With good reason. You can’t get anything done without followers, and in these “empowered” times, followers are hard to find—

except

by leaders who excel at capturing people’s hearts, minds, and spirits.

How do you do that? Of course, you need vision, energy, authority, and strategic di-rection—

and

these four additional quali-ties:

•

Show you’re human, selectively revealing weaknesses.

•

Be a “sensor,” collecting soft people data that lets you rely on intuition.

•

Manage employees with “tough empa-thy.” Care passionately about them and their work, while giving them only what they

need

to achieve their best.

•

Dare to be different, capitalizing on your uniqueness.

Mix and match these qualities to find the right style for the right moment.

Without all four qualities, you might climb to the top. But few people will want to fol-low you, and your company won’t achieve its best results.

REVEAL YOUR WEAKNESSES

Nobody wants to work with a perfect leader—he doesn’t appear to need help. So show you’re human—warts and all. You’ll build collaboration and solidarity between you and your followers, and underscore your approachability.

Tips:

•

Don’t expose a weakness that others see as fatal. (A new finance director shouldn’t re-veal his ignorance of discounted cash flow!) Choose a tangential weakness instead.

•

Pick a flaw that others consider a strength, e.g., workaholism.

BECOME A SENSOR

Hone your ability to collect and interpret sub-tle interpersonal cues, detecting what’s going on without others’ spelling it out.

Example:

Franz Humer, highly successful CEO of Roche, a health-care research company, senses underlying currents of opinion, gauges unexpressed feelings, and accu-rately judges relationships’ quality.

Tip:

•

Test your perceptions: Validate them with a trusted advisor or inner-team member.

PRACTICE TOUGH EMPATHY

Real leaders empathize fiercely with their fol-lowers and care intensely about their people’s work. They’re also empathetically “tough.” This means giving people not necessarily what they

want

, but what they

need

to achieve their best.

Example:

BBC CEO Greg Dyke knew that to survive in a digital world, the company had to spend more on programs and less on people. He restructured the organization, but only after explaining this openly and directly to the

staff. Though many employees lost jobs, Dyke kept people’s commitment.

DARE TO BE DIFFERENT

Capitalizing on what’s unique about yourself lets you signal your separateness as a leader, and motivates others to perform better. Fol-lowers push themselves more if their leader is just a little aloof.

Tips:

•

Don’t

over

differentiate yourself—you could lose contact with followers. Robert Horton, former CEO of British Petroleum, conspicu-ously displayed his formidable intelligence. Followers saw him as arrogant, and de-tached themselves from him. He was dis-missed after three years.

•

Distinguish yourself through qualities like imagination, expertise, and adventure-someness.

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harvard business review • september–october 2000

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We all know that leaders need vision and energy. But to be

inspirational, leaders need four other qualities. Probably not what

you’d expect, these qualities can be honed by almost anyone willing to

dig deeply into their true selves.

If you want to silence a room of executives, trythis small trick. Ask them, “Why would any-one want to be led by you?” We’ve asked justthat question for the past ten years while con-sulting for dozens of companies in Europe andthe United States. Without fail, the response isa sudden, stunned hush. All you can hear areknees knocking.

Executives have good reason to be scared.You can’t do anything in business without fol-lowers, and followers in these “empowered”times are hard to find. So executives had betterknow what it takes to lead effectively—theymust find ways to engage people and rousetheir commitment to company goals. But mostdon’t know how, and who can blame them?There’s simply too much advice out there. Lastyear alone, more than 2,000 books on leader-ship were published, some of them even re-packaging Moses and Shakespeare as leader-ship gurus.

We’ve yet to hear advice that tells thewhole truth about leadership. Yes, everyoneagrees that leaders need vision, energy, author-

ity, and strategic direction. That goes withoutsaying. But we’ve discovered that inspirationalleaders also share four unexpected qualities:

•

They selectively show their weaknesses.

By exposing some vulnerability, they revealtheir approachability and humanity.

•

They rely heavily on intuition to gaugethe appropriate timing and course of their ac-tions.

Their ability to collect and interpret softdata helps them know just when and how toact.

•

They manage employees with somethingwe call tough empathy.

Inspirational leadersempathize passionately—and realistically—with people, and they care intensely about thework employees do.

•

They reveal their differences.

They capi-talize on what’s unique about themselves.You may find yourself in a top position with-out these qualities, but few people will wantto be led by you.

Our theory about the four essential quali-ties of leadership, it should be noted, is notabout results per se. While many of the leaders

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we have studied and use as examples do in factpost superior financial returns, the focus of ourresearch has been on leaders who excel at in-spiring people—in capturing hearts, minds,and souls. This ability is not everything in busi-ness, but any experienced leader will tell you itis worth quite a lot. Indeed, great results maybe impossible without it.

Our research into leadership began some 25years ago and has followed three streams sincethen. First, as academics, we ransacked theprominent leadership theories of the past cen-tury to develop our own working model of ef-fective leadership. (For more on the history ofleadership thinking, see the sidebar “Leader-ship: A Small History of a Big Topic.”) Second,as consultants, we have tested our theory withthousands of executives in workshops world-wide and through observations with dozens ofclients. And third, as executives ourselves, wehave vetted our theories in our own organiza-tions.

Reveal Your Weaknesses

When leaders reveal their weaknesses, theyshow us who they are—warts and all. Thismay mean admitting that they’re irritable onMonday mornings, that they are somewhatdisorganized, or even rather shy. Such admis-sions work because people need to see leadersown up to some flaw before they participatewillingly in an endeavor. Exposing a weaknessestablishes trust and thus helps get folks onboard. Indeed, if executives try to communi-cate that they’re perfect at everything, therewill be no need for anyone to help them withanything. They won’t need followers. They’llsignal that they can do it all themselves.

Beyond creating trust and a collaborativeatmosphere, communicating a weakness alsobuilds solidarity between followers and lead-ers. Consider a senior executive we know at aglobal management consultancy. He agreed togive a major presentation despite being badlyafflicted by physical shaking caused by a medi-cal condition. The otherwise highly critical au-dience greeted this courageous display ofweakness with a standing ovation. By givingthe talk, he had dared to say, “I am just likeyou—imperfect.” Sharing an imperfection isso effective because it underscores a humanbeing’s authenticity. Richard Branson, thefounder of Virgin, is a brilliant businessmanand a hero in the United Kingdom. (Indeed,

the Virgin brand is so linked to him personallythat succession is a significant issue.) Bransonis particularly effective at communicating hisvulnerability. He is ill at ease and fumbles in-cessantly when interviewed in public. It’s aweakness, but it’s Richard Branson. That’swhat revealing a weakness is all about: show-ing your followers that you are genuine andapproachable—human and humane.

Another advantage to exposing a weaknessis that it offers a leader valuable protection.Human nature being what it is, if you don’tshow some weakness, then observers may in-vent one for you. Celebrities and politicianshave always known this. Often, they deliber-ately give the public something to talk about,knowing full well that if they don’t, the news-papers will invent something even worse. Prin-cess Diana may have aired her eating disorderin public, but she died with her reputation in-tact, indeed even enhanced.

That said, the most effective leaders knowthat exposing a weakness must be done care-fully. They own up to

selective

weaknesses.Knowing which weakness to disclose is ahighly honed art. The golden rule is never toexpose a weakness that will be seen as a fatalflaw—by which we mean a flaw that jeopar-dizes central aspects of your professional role.Consider the new finance director of a majorcorporation. He can’t suddenly confess thathe’s never understood discounted cash flow. Aleader should reveal only a tangential flaw—and perhaps even several of them. Paradoxi-cally, this admission will help divert attentionaway from major weaknesses.

Another well-known strategy is to pick aweakness that can in some ways be considereda strength, such as being a workaholic. Whenleaders expose these limited flaws, peoplewon’t see much of anything and little harmwill come to them. There is an important ca-veat, however: if the leader’s vulnerability isnot perceived to be genuine, he won’t gainanyone’s support. Instead he will open himselfup to derision and scorn. One scenario we sawrepeatedly in our research was one in which aCEO feigns absentmindedness to conceal hisinconsistency or even dishonesty. This is a sureway to alienate followers who will rememberaccurately what happened or what was said.

Become a Sensor

Inspirational leaders rely heavily on their in-

Robert Goffee

is a professor of organi-zational behavior at London BusinessSchool.

Gareth Jones

is the directorof human resources and internal com-munications at the British BroadcastingCorporation and a former professor oforganizational development at HenleyManagement College in Oxfordshire,England. Goffee and Jones are thefounding partners of Creative Manage-ment Associates, an organizationalconsulting firm in London.

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Leadership: A Small History of a Big Topic

People have been talking about leader-ship since the time of Plato. But in or-ganizations all over the world—in dino-saur conglomerates and new-economy startups alike—the same complaint emerges: we don’t have enough leader-ship. We have to ask ourselves, Why are we so obsessed with leadership?

One answer is that there is a crisis of belief in the modern world that has its roots in the rationalist revolution of the eighteenth century. During the Enlight-enment, philosophers such as Voltaire claimed that through the application of reason alone, people could control their destiny. This marked an incredibly opti-mistic turn in world history. In the nine-teenth century, two beliefs stemmed from this rationalist notion: a belief in progress and a belief in the perfectibil-ity of man. This produced an even ros-ier world view than before. It wasn’t until the end of the nineteenth century, with the writings first of Sigmund Freud and later of Max Weber, that the chinks in the armor appeared. These two thinkers destroyed Western man’s belief in rationality and progress. The current quest for leadership is a direct consequence of their work.

The founder of psychoanalysis, Freud theorized that beneath the sur-face of the rational mind was the un-conscious. He supposed that the un-conscious was responsible for a fair proportion of human behavior. Weber, the leading critic of Marx and a bril-liant sociologist, also explored the lim-its of reason. Indeed, for him, the most destructive force operating in institu-tions was something he called techni-cal rationality—that is, rationality without morality.

For Weber, technical rationality was embodied in one particular organiza-tional form—the bureaucracy. Bureau-cracies, he said, were frightening not for their inefficiencies but for their effi-ciencies and their capacity to dehuman-ize people. The tragic novels of Franz Kafka bear stark testimony to the debili-tating effects of bureaucracy. Even more chilling was the testimony of Hit-ler’s lieutenant Adolf Eichmann that “I was just a good bureaucrat.” Weber be-lieved that the only power that could re-sist bureaucratization was charismatic leadership. But even this has a very mixed record in the twentieth century. Although there have been inspirational and transformational wartime leaders, there have also been charismatic lead-ers like Hitler, Stalin, and Mao Tse-tung who committed horrendous atrocities.

By the twentieth century, there was much skepticism about the power of reason and man’s ability to progress continuously. Thus, for both pragmatic and philosophic reasons, an intense in-terest in the concept of leadership began to develop. And indeed, in the 1920s, the first serious research started. The first leadership theory—trait the-ory—attempted to identify the com-mon characteristics of effective lead-ers. To that end, leaders were weighed and measured and subjected to a bat-tery of psychological tests. But no one could identify what effective leaders had in common. Trait theory fell into disfavor soon after expensive studies concluded that effective leaders were either above-average height or below.

Trait theory was replaced by style theory in the 1940s, primarily in the United States. One particular style of

leadership was singled out as having the most potential. It was a hail-fellow-well-met democratic style of leadership, and thousands of American executives were sent to training courses to learn how to behave this way. There was only one drawback. The theory was essen-tially capturing the spirit of FDR’s America—open, democratic, and meri-tocratic. And so when McCarthyism and the Cold War surpassed the New Deal, a completely new style was re-quired. Suddenly, everyone was encour-aged to behave like a Cold War warrior! The poor executive was completely con-fused.

Recent leadership thinking is domi-nated by contingency theory, which says that leadership is dependent on a particular situation. That’s fundamen-tally true, but given that there are end-less contingencies in life, there are end-less varieties of leadership. Once again, the beleaguered executive looking for a model to help him is hopelessly lost.

For this article, we ransacked all the leadership theories to come up with the four essential leadership qualities. Like Weber, we look at leadership that is pri-marily antibureaucratic and charis-matic. From trait theory, we derived the qualities of weaknesses and differ-ences. Unlike the original trait theo-rists, however, we do not believe that all leaders have the same weaknesses; our research only showed that all leaders expose some flaws. Tough empathy grew out of style theory, which looked at different kinds of relationships be-tween leaders and their followers. Fi-nally, context theory set the stage for needing to know what skills to use in various circumstances.

Rationalist Revolution

18th century

19th century

20th century

Enlightenment

Belief in progress and in the perfectibility of man

Max WeberSigmund Freud

StyleTheory

Trait Theory19

20s

Contingency Theory

1940

s

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stincts to know when to reveal a weakness or adifference. We call them good situation sen-sors, and by that we mean that they can col-lect and interpret soft data. They can sniff outthe signals in the environment and sensewhat’s going on without having anythingspelled out for them.

Franz Humer, the CEO of Roche, is a classicsensor. He is highly accomplished in detectingshifts in climate and ambience; he can readsubtle cues and sense underlying currents ofopinion that elude less perceptive people.Humer says he developed this skill as a tourguide in his mid-twenties when he was respon-sible for groups of 100 or more. “There was nosalary, only tips,” he explains. “Pretty soon, Iknew how to hone in on particular groups.Eventually, I could predict within 10% howmuch I could earn from any particular group.”Indeed, great sensors can easily gauge unex-pressed feelings; they can very accuratelyjudge whether relationships are working ornot. The process is complex, and as anyonewho has ever encountered it knows, the resultsare impressive.

Consider a human resources executive weworked with in a multinational entertainmentcompany. One day he got news of a distribu-tion problem in Italy that had the potential toaffect the company’s worldwide operations. Ashe was thinking about how to hide the infor-mation temporarily from the Paris-based CEOwhile he worked on a solution, the phonerang. It was the CEO saying, “Tell me, Roberto,what the hell’s going on in Milan?” The CEOwas already aware that something was wrong.How? He had his networks, of course. But inlarge part, he was gifted at detecting informa-tion that wasn’t aimed at him. He could readthe silences and pick up on nonverbal cues inthe organization.

Not surprisingly, the most impressive busi-ness leaders we have worked with are all veryrefined sensors. Ray van Schaik, the chairmanof Heineken in the early 1990s, is a good exam-ple. Conservative and urbane, van Schaik’s ge-nius lay in his ability to read signals he re-ceived from colleagues and from FreddieHeineken, the third-generation family mem-ber who was “always there without beingthere.” While some senior managers spent alot of time second-guessing the major share-holder, van Schaik developed an ability to“just know” what Heineken wanted. This abil-

ity was based on many years of working withhim on the Heineken board, but it was morethan that—van Schaik could read Heinekeneven though they had very different personali-ties and didn’t work together directly.

Success stories like van Schaik’s come witha word of warning. While leaders must begreat sensors, sensing can create problems.That’s because in making fine judgmentsabout how far they can go, leaders risk losingtheir followers. The political situation inNorthern Ireland is a powerful example. Overthe past two years, several leaders—DavidTrimble, Gerry Adams, and Tony Blair, to-gether with George Mitchell—have taken un-precedented initiatives toward peace. At everystep of the way, these leaders had to sense howfar they could go without losing their elector-ates. In business, think of mergers and acquisi-tions. Unless organizational leaders and nego-tiators can convince their followers in a timelyway that the move is positive, value and good-will quickly erode. This is the situation re-cently faced by Vodafone and France Telecomin the sale and purchase of Orange.

There is another danger associated withsensing skills. By definition, sensing a situationinvolves projection—that state of mindwhereby you attribute your own ideas to otherpeople and things. When a person “projects,”his thoughts may interfere with the truth.Imagine a radio that picks up any number ofsignals, many of which are weak and distorted.Situation sensing is like that; you can’t alwaysbe sure what you’re hearing because of all thestatic. The employee who sees her boss dis-tracted and leaps to the conclusion that she isgoing to be fired is a classic example. Mostskills become heightened under threat, butparticularly during situation sensing. Suchoversensitivity in a leader can be a recipe fordisaster. For this reason, sensing capabilitymust always be framed by reality testing. Eventhe most gifted sensor may need to validate hisperceptions with a trusted adviser or a mem-ber of his inner team.

Practice Tough Empathy

Unfortunately, there’s altogether too muchhype nowadays about the idea that leaders

must

show concern for their teams. There’snothing worse than seeing a manager returnfrom the latest interpersonal-skills trainingprogram with “concern” for others. Real lead-

Sensing can create

problems. In making

fine judgments about

how far they can go,

leaders risk losing their

followers.

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ers don’t need a training program to convincetheir employees that they care. Real leadersempathize fiercely with the people they lead.They also care intensely about the work theiremployees do.

Consider Alain Levy, the former CEO ofPolygram. Although he often comes across as arather aloof intellectual, Levy is well able toclose the distance between himself and his fol-lowers. On one occasion, he helped some jun-ior record executives in Australia choose sin-gles off albums. Picking singles is a critical taskin the music business: the selection of a songcan make or break the album. Levy sat downwith the young people and took on the workwith passion. “You bloody idiots,” he added hisvoice to the melee, “you don’t know what thehell you’re talking about; we always have adance track first!” Within 24 hours, the storyspread throughout the company; it was thebest PR Levy ever got. “Levy really knows howto pick singles,” people said. In fact, he knewhow to identify with the work, and he knewhow to enter his followers’ world—one wherestrong, colorful language is the norm—to showthem that he cared.

Clearly, as the above example illustrates, wedo not believe that the empathy of inspira-

tional leaders is the soft kind described in somuch of the management literature. On thecontrary, we feel that real leaders managethrough a unique approach we call tough em-pathy. Tough empathy means giving peoplewhat they need, not what they want. Organiza-tions like the Marine Corps and consultingfirms specialize in tough empathy. Recruits arepushed to be the best that they can be; “growor go” is the motto. Chris Satterwaite, the CEOof Bell Pottinger Communications and aformer chief executive of several ad agencies,understands what tough empathy is all about.He adeptly handles the challenges of manag-ing creative people while making tough deci-sions. “If I have to, I can be ruthless,” he says.“But while they’re with me, I promise my peo-ple that they’ll learn.”

At its best, tough empathy balances respectfor the individual and for the task at hand. At-tending to both, however, isn’t easy, especiallywhen the business is in survival mode. At suchtimes, caring leaders have to give selflessly tothe people around them and know when topull back. Consider a situation at Unilever at atime when it was developing Persil Power, adetergent that eventually had to be removedfrom the market because it destroyed clothes

Four Popular Myths About Leadership

In both our research and consulting work, we have seen executives who profoundly misunderstand what makes an inspirational leader. Here are four of the most common myths:

Everyone can be a leader.

Not true.

Many executives don’t have the self-knowledge or the authenticity necessary for leadership. And self-knowledge and au-thenticity are only part of the equation. Indi-viduals must also want to be leaders, and many talented employees are not interested in shouldering that responsibility. Others prefer to devote more time to their private lives than to their work. After all, there is more to life than work, and more to work than being the boss.

Leaders deliver business results.

Not always.

If results were always a matter of good leadership, picking leaders would be easy. In every case, the best strategy would be to go after people in companies with the best results. But clearly, things are not that

simple. Businesses in quasi-monopolistic in-dustries can often do very well with compe-tent management rather than great leader-ship. Equally, some well-led businesses do not necessarily produce results, particularly in the short term.

People who get to the top are leaders.

Not necessarily.

One of the most persistent misperceptions is that people in leadership positions are leaders. But people who make it to the top may have done so because of political acumen, not necessarily because of true leadership quality. What’s more, real leaders are found all over the organization, from the executive suite to the shop floor. By definition, leaders are simply people who have followers, and rank doesn’t have much

to do with that. Effective military organiza-tions like the U.S. Navy have long realized the importance of developing leaders throughout the organization.

Leaders are great coaches.

Rarely.

A whole cottage industry has grown up around the teaching that good leaders ought to be good coaches. But that thinking assumes that a single person can both in-spire the troops and impart technical skills. Of course, it’s possible that great leaders may also be great coaches, but we see that only occasionally. More typical are leaders like Steve Jobs whose distinctive strengths lie in their ability to excite others through their vision rather than through their coach-ing talents.

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that were laundered in it. Even though theproduct was showing early signs of trouble,CEO Niall FitzGerald stood by his troops.“That was the popular place to be, but I shouldnot have been there,” he says now. “I shouldhave stood back, cool and detached, looked atthe whole field, watched out for the cus-tomer.” But caring with detachment is noteasy, especially since, when done right, toughempathy is harder on you than on your em-ployees. “Some theories of leadership makecaring look effortless. It isn’t,” says PaulanneMancuso, president and CEO of Calvin KleinCosmetics. “You have to do things you don’twant to do, and that’s hard.” It’s tough to betough.

Tough empathy also has the benefit of im-pelling leaders to take risks. When Greg Dyketook over at the BBC, his commercial competi-tors were able to spend substantially more onprograms than the BBC could. Dyke quicklyrealized that in order to thrive in a digitalworld, the BBC needed to increase its expendi-tures. He explained this openly and directly tothe staff. Once he had secured their buy-in, he

began thoroughly restructuring the organiza-tion. Although many employees were let go,he was able to maintain people’s commitment.Dyke attributed his success to his tough empa-thy with employees: “Once you have the peo-ple with you, you can make the difficult deci-sions that need to be made.”

One final point about tough empathy: thosemore apt to use it are people who really careabout something. And when people caredeeply about something—anything—they’remore likely to show their true selves. They willnot only communicate authenticity, which isthe precondition for leadership, but they willshow that they are doing more than just play-ing a role. People do not commit to executiveswho merely live up to the obligations of theirjobs. They want more. They want someonewho cares passionately about the people andthe work—just as they do.

Dare to Be Different

Another quality of inspirational leaders is thatthey capitalize on what’s unique about them-selves. In fact, using these differences to greatadvantage is the most important quality of thefour we’ve mentioned. The most effectiveleaders deliberately use differences to keep asocial distance. Even as they are drawing theirfollowers close to them, inspirational leaderssignal their separateness.

Often, a leader will show his differences byhaving a distinctly different dress style or phys-ical appearance, but typically he will move onto distinguish himself through qualities likeimagination, loyalty, expertise, or even a hand-shake. Anything can be a difference, but it isimportant to communicate it. Most people,however, are hesitant to communicate what’sunique about themselves, and it can take yearsfor them to be fully aware of what sets themapart. This is a serious disadvantage in a worldwhere networking is so critical and whereteams need to be formed overnight.

Some leaders know exactly how to take ad-vantage of their differences. Take Sir JohnHarvey-Jones, the former CEO of ICI—whatwas once the largest manufacturing companyin the United Kingdom. When he wrote his au-tobiography a few years ago, a British newspa-per advertised the book with a sketch of Har-vey-Jones. The profile had a moustache, longhair, and a loud tie. The drawing was in blackand white, but everyone knew who it was. Of

Can Female Leaders Be True to Themselves?

Gender differences can be used to either positive or negative effect. Women, in particular, are prone to being stereo-typed according to differences—albeit usually not the ones that they would choose. Partly this is because there are fewer women than men in management positions. According to research in so-cial psychology, if a group’s representa-tion falls below 20% in a given society, then it’s going to be subjected to stereo-typing whether it likes it or not. For women, this may mean being typecast as a “helper,” “nurturer,” or “seduc-tress”—labels that may prevent them from defining their own differences.

In earlier research, we discovered that many women—particularly women in their fifties—try to avoid this dynamic by disappearing. They try to make them-selves invisible. They wear clothes that disguise their bodies; they try to blend in with men by talking tough. That’s cer-tainly one way to avoid negative stereo-typing, but the problem is that it re-

duces a woman’s chances of being seen as a potential leader. She’s not promot-ing her real self and differences.

Another response to negative stereo-typing is to collectively resist it—for ex-ample, by mounting a campaign that promotes the rights, opportunities, and even the number of women in the work-place. But on a day-to-day basis, survival is often all women have time for, there-fore making it impossible for them to or-ganize themselves formally.

A third response that emerged in our research was that women play into ste-reotyping to personal advantage. Some women, for example, knowingly play the role of “nurturer” at work, but they do it with such wit and skill that they are able to benefit from it. The cost of such a strategy?

It furthers harmful stereotypes and continues to limit opportunities for other women to communicate their gen-uine personal differences.

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course, John Harvey-Jones didn’t get to the topof ICI because of eye-catching ties and longhair. But he was very clever in developing dif-ferences that he exploited to show that he wasadventurous, entrepreneurial, and unique—hewas John Harvey-Jones.

There are other people who aren’t as awareof their differences but still use them to greateffect. For instance, Richard Surface, formermanaging director of the UK-based Pearl In-surance, always walked the floor and overtookpeople, using his own pace as a means of com-municating urgency. Still other leaders are for-tunate enough to have colleagues point outtheir differences for them. As the BBC’s GregDyke puts it, “My partner tells me, ‘You dothings instinctively that you don’t understand.What I worry about is that in the process of un-derstanding them you could lose them!’” In-deed, what emerged in our interviews is thatmost leaders start off not knowing what theirdifferences are but eventually come to know—and use—them more effectively over time.Franz Humer at Roche, for instance, now real-izes that he uses his emotions to evoke reac-tions in others.

Most of the differences we’ve described arethose that tend to be apparent, either to theleader himself or to the colleagues aroundhim. But there are differences that are moresubtle but still have very powerful effects. Forinstance, David Prosser, the CEO of Legal andGeneral, one of Europe’s largest and most suc-cessful insurance companies, is an outsider. Heis not a smooth city type; in fact, he comesfrom industrial South Wales. And though gen-erally approachable, Prosser has a hard edge,which he uses in an understated but highly ef-fective way. At a recent cocktail party, a ratherexcitable sales manager had been claiminghow good the company was at cross-sellingproducts. In a low voice, Prosser intervened:“We may be good, but we’re not goodenough.” A chill swept through the room.What was Prosser’s point? Don’t feel so closeyou can relax! I’m the leader, and I make thatcall. Don’t you forget it. He even uses this edgeto good effect with the top team—it keeps ev-eryone on their toes.

Inspirational leaders use separateness tomotivate others to perform better. It is notthat they are being Machiavellian but thatthey recognize instinctively that followers willpush themselves if their leader is just a little

aloof. Leadership, after all, is not a popularitycontest.

One danger, of course, is that executives canoverdifferentiate themselves in their determi-nation to express their separateness. Indeed,some leaders lose contact with their followers,and doing so is fatal. Once they create toomuch distance, they stop being good sensors,and they lose the ability to identify and care.That’s what appeared to happen during Rob-ert Horton’s tenure as chairman and CEO ofBP during the early 1990s. Horton’s conspicu-ous display of his considerable—indeed, daunt-ing—intelligence sometimes led others to seehim as arrogant and self-aggrandizing. That re-sulted in overdifferentiation, and it eventuallycontributed to Horton’s dismissal just threeyears after he was appointed to the position.

Leadership in Action

All four of the qualities described here are nec-essary for inspirational leadership, but theycannot be used mechanically. They must be-come or must already be part of an executive’spersonality. That’s why the “recipe” businessbooks—those that prescribe to the LeeIaccoca or Bill Gates way—often fail. No onecan just ape another leader. So the challengefacing prospective leaders is for them to bethemselves, but with more skill. That can bedone by making yourself increasingly aware ofthe four leadership qualities we describe andby manipulating these qualities to come upwith a personal style that works for you. Re-member, there is no universal formula, andwhat’s needed will vary from context to con-text. What’s more, the results are often subtle,as the following story about Sir Richard Sykes,the highly successful chairman and CEO ofGlaxo Wellcome, one of the world’s leadingpharmaceutical companies, illustrates.

When he was running the R&D division atGlaxo, Sykes gave a year-end review to thecompany’s top scientists. At the end of the pre-sentation, a researcher asked him about one ofthe company’s new compounds, and the twomen engaged in a short heated debate. Thequestion-answer session continued for another20 minutes, at the end of which the researcherbroached the subject again. “Dr. Sykes,” hebegan in a loud voice, “you have still failed tounderstand the structure of the new com-pound.” You could feel Sykes’s temper risethrough the soles of his feet. He marched to

Executives can

overdifferentiate

themselves in their

determination to express

their separateness.

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the back of the room and displayed his angerbefore the intellectual brainpower of the en-tire company. “All right, lad,” he yelled, “let ushave a look at your notes!”

The Sykes story provides the ideal frame-work for discussing the four leadership quali-ties. To some people, Sykes’s irritability couldhave seemed like inappropriate weakness. Butin this context, his show of temper demon-strated Sykes’s deep belief in the discussionabout basic science—a company value. There-fore, his willingness to get angry actually ce-mented his credibility as a leader. He alsoshowed that he was a very good sensor. IfSykes had exploded earlier in the meeting, hewould have quashed the debate. Instead, hisanger was perceived as defending the faith.The story also reveals Sykes’s ability to identifywith his colleagues and their work. By talkingto the researcher as a fellow scientist, he wasable to create an empathic bond with his audi-ence. He really cared, though his caring wasclearly tough empathy. Finally, the story indi-cates Sykes’s own willingness to show his dif-ferences. Despite being one of the UnitedKingdom’s most successful businessmen, hehas not conformed to “standard” English. Onthe contrary, Sykes proudly retains his distinc-

tive northern accent. He also doesn’t show thetypical British reserve and decorum; he radi-ates passion. Like other real leaders, he actsand communicates naturally. Indeed, if wewere to sum up the entire year-end review atGlaxo Wellcome, we’d say that Sykes wasbeing himself—with great skill.

Unraveling the Mystery

As long as business is around, we will continueto pick apart the underlying ingredients oftrue leadership. And there will always be asmany theories as there are questions. But ofall the facets of leadership that one might in-vestigate, there are few so difficult as under-standing what it takes to develop leaders. Thefour leadership qualities are a necessary firststep. Taken together, they tell executives to beauthentic. As we counsel the executives wecoach: “Be yourselves—more—with skill.”There can be no advice more difficult to fol-low than that.

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To Order

For






Further Reading

A R T I C L E S

Choosing the Right Leadership Style: No Single Approach Fits All Situations


Article CollectionAugust 2000Product no. 4479

Followers want leaders who can not only cap-ture their hearts, minds, and spirits, but who also can change the way things get done—for the better. This


Article Collection explores the connections between leadership and performance improvement. Like Goffee and Jones, these authors avoid a “one-size-fits-all” prescription. Instead, they offer guidelines to adapt to particular situa-tions. In “Demand Better Results—And Get Them,” Robert H. Schaffer advises leaders to carve a problem into manageable, clearly artic-ulated tasks, and then relentlessly focus on im-plementation. In “What Makes a Leader?” Daniel Goleman identifies emotional intelli-gence (EI) as the bedrock of successful leader-ship. EI, he explains, comprises five core com-petencies: self-awareness, self-regulation, motivation, empathy, and social skill. The best leaders, he writes, mix and match these com-petencies, applying styles that best suit partic-ular challenges. In “Leadership That Gets Re-sults,” Goleman builds on his EI theory by identifying six basic leadership styles: coercive, authoritative, affiliative, democratic, paceset-ting, and coaching—all of which entail combi-nations of the five EI competencies. The best leaders, he maintains, don’t use just one style of leadership—they’re skilled at several, and they switch easily among styles as circum-stances dictate.




May–June 1996Product no. R0101G

Goffee and Jones highlight the importance of executives’ demonstrating their humanity and imperfections. Farkas and Wetlaufer add more features to the human face of leadership. They interviewed 160 chief executives from around the world and in a diverse array of industries. Their goal? To discover the attitudes, activities, and behaviors that characterized how these leaders managed their organizations. The au-thors hypothesized that they would see 160 different approaches to leadership. Instead, they discovered only five, each of which had a singular focus: strategy, people, expertise, con-trols, and change. This research also supports Goffee and Jones’s claim that the best leader-ship rests on much more than just personality, further dispelling the myth that “You’re either born to lead, or you’re not.”

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Further Reading

Everyone is tested by life, but

only a few extract strength

and wisdom from their most

trying experiences. They’re

the ones we call leaders.

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What enables one leader to inspire confi-dence, loyalty, and hard work, while others— with equal vision and intelligence—stumble? How individuals deal with adversity pro-vides a clue.

Extraordinary leaders find meaning in—and learn from—the most negative events. Like phoenixes rising from the ashes, they emerge from adversity stronger, more con-fident in themselves and their purpose, and more committed to their work.

Such transformative events are called

crucibles

—a severe test or trial. Crucibles are intense, often traumatic—and always unplanned.

THE CRUCIBLE EXPERIENCE

Crucibles force leaders into deep self-reflection, where they examine their values, question their assumptions, and hone their judgment.

Example:

Sidney Harman—co-founder of audio com-ponents company Harman Kardon and president of an experimental college en-couraging student-driven education—encountered his crucible when “all hell broke loose” in one of his factories. After managers postponed a scheduled break because the buzzer didn’t sound, workers rebelled. “I don’t work for no buzzer,” one proclaimed.

To Harman, this refusal to bow to manage-ment’s senseless rule suggested a surpris-ing link between student-driven education and business. Pioneering participative man-agement, Harman transformed his plant into a kind of campus, offering classes and encouraging dissent. He considers the re-bellion the formative event in his career—the moment he became a true leader.

THE MANY SHAPES OF CRUCIBLES

Some crucibles are violent and life-threatening (encounters with prejudice, illness); others are more positive, yet profoundly challenging (such as demanding bosses or mentors). Whatever the shape, leaders create a narrative telling how they met the challenge and be-came better for it.

Example:

While working for former Atlanta mayor Robert F. Maddox, Vernon Jordan endured repeated racial heckling from Maddox. Rather than letting Maddox’s sadism de-stroy him, Jordan interpreted the behavior as a desperate lashing out by someone who knew the era of the Old South was ending. Jordan’s response empowered him to become an esteemed lawyer and presi-dential advisor.

ESSENTIAL LEADERSHIP SKILLS

Four skills enable leaders to learn from adversity:

1. Engage others in shared meaning.

For example, Sidney Harman mobilized employees around a radical new management approach—amid a factory crisis.

2. A distinctive, compelling voice.

With words alone, college president Jack Coleman preempted a violent clash between the foot-ball team and anti-Vietnam War demonstra-tors threatening to burn the American flag. Coleman’s suggestion to the protestors? Lower the flag, wash it, then put it back up.

3. Integrity.

Coleman’s values prevailed dur-ing the emotionally charged face-off between antiwar demonstrators and irate football players.

4. Adaptive capacity.

This most critical skill includes the

ability to grasp context

, and

hardi-ness

. Grasping context requires weighing many factors (e.g., how different people will interpret a gesture). Without this quality, leaders can’t connect with constituents.

Hardiness provides the perseverance and toughness needed to remain hopeful despite disaster. For instance, Michael Klein made mil-lions in real estate during his teens, lost it all by age 20—then built several more busi-nesses, including transforming a tiny software company into a Hewlett-Packard acquisition.

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Everyone is tested by life, but only a few extract strength and wisdom

from their most trying experiences. They’re the ones we call leaders.

As lifelong students of leadership, we are fasci-nated with the notion of what makes a leader.Why is it that certain people seem to naturallyinspire confidence, loyalty, and hard work,while others (who may have just as much vi-sion and smarts) stumble, again and again? It’sa timeless question, and there’s no simple an-swer. But we have come to believe it has some-thing to do with the different ways that peopledeal with adversity. Indeed, our recent re-search has led us to conclude that one of themost reliable indicators and predictors of trueleadership is an individual’s ability to findmeaning in negative events and to learn fromeven the most trying circumstances. Put anotherway, the skills required to conquer adversityand emerge stronger and more committedthan ever are the same ones that make forextraordinary leaders.

Take Sidney Harman. Thirty-four years ago,the then-48-year-old businessman was hold-ing down two executive positions. He was thechief executive of Harman Kardon (now Har-man International), the audio components

company he had cofounded, and he wasserving as president of Friends World College,now Friends World Program, an experimentalQuaker school on Long Island whose essentialphilosophy is that students, not their teachers,are responsible for their education. Jugglingthe two jobs, Harman was living what he callsa “bifurcated life,” changing clothes in his carand eating lunch as he drove between HarmanKardon offices and plants and the FriendsWorld campus. One day while at the college,he was told his company’s factory in Bolivar,Tennessee, was having a crisis.

He immediately rushed to the Bolivar fac-tory, a facility that was, as Harman now recalls,“raw, ugly, and, in many ways, demeaning.”The problem, he found, had erupted in thepolish and buff department, where a crew of adozen workers, mostly African-Americans, didthe dull, hard work of polishing mirrors andother parts, often under unhealthy conditions.The men on the night shift were supposed toget a coffee break at 10

PM

. When the buzzerthat announced the workers’ break went on

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the fritz, management arbitrarily decided topostpone the break for ten minutes, when an-other buzzer was scheduled to sound. But oneworker, “an old black man with an almost bibli-cal name, Noah B. Cross,” had “an epiphany,” asHarman describes it. “He said, literally, to hisfellow workers, ‘I don’t work for no buzzer. Thebuzzer works for me. It’s my job to tell mewhen it’s ten o’clock. I got me a watch. I’m notwaiting another ten minutes. I’m going on mycoffee break.’ And all 12 guys took their coffeebreak, and, of course, all hell broke loose.”

The worker’s principled rebellion—his re-fusal to be cowed by management’s senselessrule—was, in turn, a revelation to Harman:“The technology is there to serve the men, notthe reverse,” he remembers realizing. “I sud-denly had this awakening that everything I wasdoing at the college had appropriate applica-tions in business.” In the ensuing years, Har-man revamped the factory and its workings,turning it into a kind of campus—offeringclasses on the premises, including piano lessons,and encouraging the workers to take most ofthe responsibility for running their workplace.Further, he created an environment wheredissent was not only tolerated but also encour-aged. The plant’s lively independent newspa-per, the

Bolivar Mirror,

gave workers a creativeand emotional outlet—and they enthusiasti-cally skewered Harman in its pages.

Harman had, unexpectedly, become a pio-neer of participative management, a movementthat continues to influence the shape of work-places around the world. The concept wasn’t agrand idea conceived in the CEO’s office andimposed on the plant, Harman says. It grew or-ganically out of his going down to Bolivar to, inhis words, “put out this fire.” Harman’s trans-formation was, above all, a creative one. Hehad connected two seemingly unrelated ideasand created a radically different approach tomanagement that recognized both the eco-nomic and humane benefits of a more collegialworkplace. Harman went on to accomplishfar more during his career. In addition tofounding Harman International, he served asthe deputy secretary of commerce under JimmyCarter. But he always looked back on the inci-dent in Bolivar as the formative event in hisprofessional life, the moment he came into hisown as a leader.

The details of Harman’s story are unique,but their significance is not. In interviewing

more than 40 top leaders in business and thepublic sector over the past three years, we weresurprised to find that all of them—young andold—were able to point to intense, often trau-matic, always unplanned experiences that hadtransformed them and had become the sourcesof their distinctive leadership abilities.

We came to call the experiences that shapeleaders “crucibles,” after the vessels medievalalchemists used in their attempts to turn basemetals into gold. For the leaders we inter-viewed, the crucible experience was a trial anda test, a point of deep self-reflection that forcedthem to question who they were and whatmattered to them. It required them to examinetheir values, question their assumptions, honetheir judgment. And, invariably, they emergedfrom the crucible stronger and more sure ofthemselves and their purpose—changed insome fundamental way.

Leadership crucibles can take many forms.Some are violent, life-threatening events. Othersare more prosaic episodes of self-doubt. Butwhatever the crucible’s nature, the people wespoke with were able, like Harman, to create anarrative around it, a story of how they werechallenged, met the challenge, and becamebetter leaders. As we studied these stories, wefound that they not only told us how indi-vidual leaders are shaped but also pointed tosome characteristics that seem common to allleaders—characteristics that were formed, orat least exposed, in the crucible.

Learning From Difference

A crucible is, by definition, a transformativeexperience through which an individual comesto a new or an altered sense of identity. It isperhaps not surprising then that one of themost common types of crucibles we docu-mented involves the experience of prejudice.Being a victim of prejudice is particularly trau-matic because it forces an individual to con-front a distorted picture of him- or herself, andit often unleashes profound feelings of anger,bewilderment, and even withdrawal. For all itstrauma, however, the experience of prejudiceis for some a clarifying event. Through it, theygain a clearer vision of who they are, the rolethey play, and their place in the world.

Consider, for example, Liz Altman, now aMotorola vice president, who was transformedby the year she spent at a Sony camcorder fac-tory in rural Japan, where she faced both es-

Warren G. Bennis

is a Distinguished Professor of Business Administration and the founding chairman of the Leadership Institute at the University of Southern California in Los Angeles. He is also the author of more than 25 books on leadership.

Robert J. Thomas

is an associate partner and senior fellow with the Accenture Institute for Strategic Change and the author of

What Ma-chines Can’t Do

(University of California Press, 1994). Bennis and Thomas’s book

Geeks and Geezers

will be published by Harvard Business School Press this month. They are also at work on an upcoming book,

Crucibles for Leaders

.

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trangement and sexism. It was, says Altman,“by far, the hardest thing I’ve ever done.” Theforeign culture—particularly its emphasis ongroups over individuals—was both a shock anda challenge to a young American woman. Itwasn’t just that she felt lonely in an alienworld. She had to face the daunting prospectof carving out a place for herself as the onlywoman engineer in a plant, and nation, wherewomen usually serve as low-level assistantsand clerks known as “office ladies.”

Another woman who had come to Japanunder similar circumstances had warned Alt-man that the only way to win the men’s respectwas to avoid becoming allied with the officeladies. But on her very first morning, when thebell rang for a coffee break, the men headed inone direction and the women in another—andthe women saved her a place at their table,while the men ignored her. Instinct told Alt-man to ignore the warning rather than insultthe women by rebuffing their invitation.

Over the next few days, she continued tojoin the women during breaks, a choice thatgave her a comfortable haven from which toobserve the unfamiliar office culture. But itdidn’t take her long to notice that some of themen spent the break at their desks readingmagazines, and Altman determined that shecould do the same on occasion. Finally, afterpaying close attention to the conversationsaround her, she learned that several of themen were interested in mountain biking. Be-cause Altman wanted to buy a mountain bike,she approached them for advice. Thus, overtime, she established herself as something of afree agent, sometimes sitting with the womenand other times engaging with the men.

And as it happened, one of the women she’dsat with on her very first day, the departmentsecretary, was married to one of the engineers.The secretary took it upon herself to includeAltman in social gatherings, a turn of eventsthat probably wouldn’t have occurred if Alt-man had alienated her female coworkers onthat first day. “Had I just gone to try to break inwith [the men] and not had her as an ally, itwould never have happened,” she says.

Looking back, Altman believes the experi-ence greatly helped her gain a clearer sense ofher personal strengths and capabilities, prepar-ing her for other difficult situations. Her ten-ure in Japan taught her to observe closely andto avoid jumping to conclusions based on cul-

tural assumptions—invaluable skills in hercurrent position at Motorola, where she leadsefforts to smooth alliances with other corpo-rate cultures, including those of Motorola’sdifferent regional operations.

Altman has come to believe that she wouldn’thave been as able to do the Motorola job if shehadn’t lived in a foreign country and experi-enced the dissonance of cultures:”...even ifyou’re sitting in the same room, ostensiblyagreeing...unless you understand the frame ofreference, you’re probably missing a bunch ofwhat’s going on.” Altman also credits her cruci-ble with building her confidence—she feelsthat she can cope with just about anything thatcomes her way.

People can feel the stigma of cultural differ-ences much closer to home, as well. Muriel(“Mickie”) Siebert, the first woman to own aseat on the New York Stock Exchange, foundher crucible on the Wall Street of the 1950sand 1960s, an arena so sexist that she couldn’tget a job as a stockbroker until she took herfirst name off her résumé and substituted agenderless initial. Other than the secretariesand the occasional analyst, women were fewand far between. That she was Jewish was an-other strike against her at a time, she pointsout, when most of big business was “not nice”to either women or Jews. But Siebert wasn’tbroken or defeated. Instead, she emergedstronger, more focused, and more determinedto change the status quo that excluded her.

When we interviewed Siebert, she describedher way of addressing anti-Semitism—a tech-nique that quieted the offensive comments ofher peers without destroying the relationshipsshe needed to do her job effectively. Accordingto Siebert, at the time it was part of doing busi-ness to have a few drinks at lunch. She remem-bers, “Give somebody a couple of drinks, andthey would talk about the Jews.” She had agreeting card she used for those occasions thatwent like this:

Roses are reddish,Violets are bluish,In case you don’t know,I am Jewish.Siebert would have the card hand-delivered

to the person who had made the anti-Semiticremarks, and on the card she had written, “En-joyed lunch.” As she recounts, “They got thatcard in the afternoon, and I never had to takeany of that nonsense again. And I never em-

The skills required to

conquer adversity and

emerge stronger and

more committed than

ever are the same ones

that make for

extraordinary leaders.

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barrassed anyone, either.” It was because shewas unable to get credit for the business she wasbringing in at any of the large Wall Street firmsthat she bought a seat on the New York StockExchange and started working for herself.

In subsequent years, she went on to foundMuriel Siebert & Company (now Siebert Fi-nancial Corporation) and has dedicated herselfto helping other people avoid some of the diffi-culties she faced as a young professional. Aprominent advocate for women in businessand a leader in developing financial productsdirected at women, she’s also devoted to edu-cating children about financial opportunitiesand responsibility.

We didn’t interview lawyer and presidentialadviser Vernon Jordan for this article, but he,too, offers a powerful reminder of how preju-dice can prove transformational rather thandebilitating. In

Vernon Can Read! A Memoir

(Public Affairs, 2001), Jordan describes the vi-cious baiting he was subjected to as a youngman. The man who treated him in this offen-sive way was his employer, Robert F. Maddox.Jordan served the racist former mayor of At-lanta at dinner, in a white jacket, with a napkinover his arm. He also functioned as Maddox’schauffeur. Whenever Maddox could, he wouldderisively announce, “Vernon can read!” as ifthe literacy of a young African-American werea source of wonderment.

Subjected to this type of abuse, a lesser man

might have allowed Maddox to destroy him.But in his memoir, Jordan gives his own inter-pretation of Maddox’s sadistic heckling, a talethat empowered Jordan instead of embitter-ing him. When he looked at Maddox throughthe rearview mirror, Jordan did not see a power-ful member of Georgia’s ruling class. He saw adesperate anachronism, a person who lashedout because he knew his time was up. As Jor-dan writes about Maddox, “His half-mocking,half-serious comments about my educationwere the death rattle of his culture. When hesaw that I was...crafting a life for myself thatwould make me a man in...ways he thought ofas being a man, he was deeply unnerved.”

Maddox’s cruelty was the crucible that, con-sciously or not, Jordan imbued with redemp-tive meaning. Instead of lashing out or beingparalyzed with hatred, Jordan saw the fall ofthe Old South and imagined his own futurefreed of the historical shackles of racism. Hisability to organize meaning around a potentialcrisis turned it into the crucible around whichhis leadership was forged.

Prevailing over Darkness

Some crucible experiences illuminate a hid-den and suppressed area of the soul. These areoften among the harshest of crucibles, involv-ing, for instance, episodes of illness or violence.In the case of Sidney Rittenberg, now 79, thecrucible took the form of 16 years of unjust im-prisonment, in solitary confinement, in Com-munist China. In 1949 Rittenberg was initiallyjailed, without explanation, by former friendsin Chairman Mao Zedong’s government andspent his first year in total darkness when hewasn’t being interrogated. (Rittenberg laterlearned that his arrest came at the behest ofCommunist Party officials in Moscow, whohad wrongly identified him as a CIA agent.)Thrown into jail, confined to a tiny, pitch-darkcell, Rittenberg did not rail or panic. Instead,within minutes, he remembered a stanza ofverse, four lines recited to him when he was asmall child:

They drew a circle that shut me out,Heretic, rebel, a thing to flout.But love and I had the wit to win,We drew a circle that took them in!

That bit of verse (adapted from “Outwitted,”a poem by Edwin Markham) was the key toRittenberg’s survival. “My God,” he thought,“there’s my strategy.” He drew the prison

Geeks and Geezers

We didn’t set out to learn about cruci-bles. Our research for this article and for our new book,

Geeks and Geezers,

was ac-tually designed to uncover the ways that

era

influences a leader’s motivation and aspirations. We interviewed 43 of to-day’s top leaders in business and the public sector, limiting our subjects to people born in or before 1925, or in or after 1970. To our delight, we learned a lot about how age and era affect leader-ship style.

Our geeks and geezers (the affection-ate shorthand we eventually used to de-scribe the two groups) had very different ideas about paying your dues, work-life balance, the role of heroes, and more.

But they also shared some striking similarities—among them a love of learning and strong sense of values. Most intriguing, though, both our geeks and our geezers told us again and again how certain experiences inspired them, shaped them, and, indeed, taught them to lead. And so, as the best research often does, our work turned out to be even more interesting than we thought it would be. We continued to explore the influences of era—our findings are de-scribed in our book—but at the same time we probed for stories of these cru-cible experiences. These are the stories we share with you here.

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guards into his circle, developing relationshipsthat would help him adapt to his confinement.Fluent in Chinese, he persuaded the guards todeliver him books and, eventually, provide acandle so that he could read. He also decided,after his first year, to devote himself to improv-ing his mind—making it more scientific, morepure, and more dedicated to socialism. He be-lieved that if he raised his consciousness, hiscaptors would understand him better. Andwhen, over time, the years in the dark began totake an intellectual toll on him and he foundhis reason faltering, he could still summonfairy tales and childhood stories such as

TheLittle Engine That Could

and take comfort fromtheir simple messages.

By contrast, many of Rittenberg’s fellow pris-oners either lashed out in anger or withdrew.“They tended to go up the wall...They couldn’t

make it. And I think the reason was that theydidn’t understand...that happiness...is not afunction of your circumstances; it’s a functionof your outlook on life.”

Rittenberg’s commitment to his ideals con-tinued upon his release. His cell door openedsuddenly in 1955, after his first six-year term inprison. He recounts, “Here was a representa-tive of the central government telling me that Ihad been wronged, that the government wasmaking a formal apology to me...and that theywould do everything possible to make restitu-tion.” When his captors offered him money tostart a new life in the United States or to travelin Europe, Rittenberg declined, choosing in-stead to stay in China and continue his workfor the Communist Party.

And even after a second arrest, which puthim into solitary confinement for ten years as

Reinvention in the Extreme: The Power of Neoteny

All of our interview subjects described their crucibles as opportunities for reinvention—for taking stock of their lives and finding meaning in circumstances many people would see as daunting and potentially inca-pacitating. In the extreme, this capacity for reinvention comes to resemble eternal youth—a kind of vigor, openness, and an en-during capacity for wonder that is the antith-esis of stereotyped old age.

We borrowed a term from biology—“neoteny,” which, according to the

American

Heritage Dictionary,

means “retention of juve-nile characteristics in the adults of a species”—to describe this quality, this delight in life-long learning, which every leader we inter-viewed displayed, regardless of age. To a per-son, they were full of energy, curiosity, and confidence that the world is a place of won-ders spread before them like an endless feast.

Robert Galvin, former Motorola chairman now in his late 70s, spends his weekends windsurfing. Arthur Levitt, Jr., former SEC chairman who turned 71 this year, is an avid Outward Bound trekker. And architect Frank Gehry is now a 72-year-old ice hockey player. But it’s not only an affinity for physical activ-ity that characterizes neoteny—it’s an appe-tite for learning and self-development, a curi-osity and passion for life.

To understand why this quality is so power-

ful in a leader, it might help to take a quick look at the scientific principle behind it—neoteny as an evolutionary engine. It is the winning, puppyish quality of certain ancient wolves that allowed them to evolve into dogs. Over thousands of years, humans favored wolves that were the friendliest, most ap-proachable, and most curious. Naturally, peo-ple were most drawn to the wolves least likely to attack without warning, that readily locked eyes with them, and that seemed almost human in their eager response to people; the ones, in short, that stayed the most like pup-pies. Like human infants, they have certain physical qualities that elicit a nurturing re-sponse in human adults.

When infants see an adult, they often re-spond with a smile that begins small and slowly grows into a radiant grin that makes the adult feel at center of the universe. Re-cent studies of bonding indicate that nursing and other intimate interactions with an in-fant cause the mother’s system to be flooded with oxytocin, a calming, feel-good hormone that is a powerful antidote to cortisol, the hormone produced by stress. Oxytocin ap-pears to be the glue that produces bonding. And the baby’s distinctive look and behaviors cause oxytocin to be released in the fortunate adult. That appearance—the one that pulls an involuntary “aaah” out of us whenever we

see a baby—and those oxytocin-inducing behaviors allow infants to recruit adults to be their nurturers, essential if such vulnera-ble and incompletely developed creatures are to survive.

The power of neoteny to recruit protectors and nurturers was vividly illustrated in the former Soviet Union. Forty years ago, a So-viet scientist decided to start breeding silver foxes for neoteny at a Siberian fur farm. The goal was to create a tamer fox that would go with less fuss to slaughter than the typical sil-ver fox. Only the least aggressive, most ap-proachable animals were bred.

The experiment continued for 40 years, and today, after 35 generations, the farm is home to a breed of tame foxes that look and act more like juvenile foxes and even dogs than like their wild forebears. The physical changes in the animals are remarkable (some have floppy, dog-like ears), but what is truly stunning is the change neoteny has wrought in the human response to them. Instead of taking advantage of the fact that these neo-tenic animals don’t snap and snarl on the way to their deaths, their human keepers ap-pear to have been recruited by their newly cute and endearing charges. The keepers and the foxes appear to have formed close bonds, so close that the keepers are trying to find ways to save the animals from slaughter.

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retaliation for his support of open democracyduring the Cultural Revolution, Rittenberg didnot allow his spirit to be broken. Instead, heused his time in prison as an opportunity toquestion his belief system—in particular, hiscommitment to Marxism and Chairman Mao.“In that sense, prison emancipated me,” he says.

Rittenberg studied, read, wrote, and thought,and he learned something about himself in theprocess: “I realized I had this great fear ofbeing a turncoat, which...was so powerful thatit prevented me from even looking at [my as-sumptions]...Even to question was an act of be-trayal. After I got out...the scales fell away frommy eyes and I understood that...the basic doc-trine of arriving at democracy through dicta-torship was wrong.”

What’s more, Rittenberg emerged fromprison certain that absolutely nothing in hisprofessional life could break him and went onto start a company with his wife. RittenbergAssociates is a consulting firm dedicated to de-veloping business ties between the UnitedStates and China. Today, Rittenberg is as com-mitted to his ideals—if not to his view of thebest way to get there—as he was 50 years ago,when he was so severely tested.

Meeting Great Expectations

Fortunately, not all crucible experiences aretraumatic. In fact, they can involve a positive,if deeply challenging, experience such as havinga demanding boss or mentor. Judge NathanielR. Jones of the U.S. Court of Appeals for theSixth Circuit, for instance, attributes much ofhis success to his interaction with a splendidmentor. That mentor was J. Maynard Dickerson,a successful attorney—the first black city prose-cutor in the United States—and editor of alocal African-American newspaper.

Dickerson influenced Jones at many levels.For instance, the older man brought Jonesbehind the scenes to witness firsthand thegreat civil rights struggle of the 1950s, invit-ing him to sit in on conversations with activ-ists like Thurgood Marshall, Walter White,Roy Wilkins, and Robert C. Weaver. SaysJones, “I was struck by their resolve, their hu-mor...and their determination not to let thesystem define them. Rather than just feelbeaten down, they turned it around.” The ex-perience no doubt influenced the many im-portant opinions Judge Jones has written inregard to civil rights.

Dickerson was both model and coach. Hislessons covered every aspect of Jones’s intellec-tual growth and presentation of self, includingschooling in what we now call “emotional in-telligence.” Dickerson set the highest standardsfor Jones, especially in the area of communica-tion skills—a facility we’ve found essential toleadership. Dickerson edited Jones’s early at-tempts at writing a sports column with respect-ful ruthlessness, in red ink, as Jones remembersto this day—marking up the copy so that itlooked, as Jones says, “like something chickenshad a fight over.” But Dickerson also took thetime to explain every single mistake and why itmattered.

His mentor also expected the teenage Jonesto speak correctly at all times and would hissdiscreetly in his direction if he stumbled. Greatexpectations are evidence of great respect, andas Jones learned all the complex, often subtlelessons of how to succeed, he was motivated inno small measure by his desire not to disap-point the man he still calls “Mr. Dickerson.”Dickerson gave Jones the kind of intensive men-toring that was tantamount to grooming himfor a kind of professional and moral succession—and Jones has indeed become an instrumentfor the profound societal change for whichDickerson fought so courageously as well. Jonesfound life-changing meaning in the attentionDickerson paid to him—attention fueled by aconviction that he, too, though only a teen-ager, had a vital role to play in society and animportant destiny.

Another story of a powerful mentor cameto us from Michael Klein, a young man whomade millions in Southern California real es-tate while still in his teens, only to lose it by thetime he turned 20 and then go on to startseveral other businesses. His mentor was hisgrandfather Max S. Klein, who created thepaint-by-numbers fad that swept the UnitedStates in the 1950s and 1960s. Klein was onlyfour or five years old when his grandfather ap-proached him and offered to share his businessexpertise. Over the years, Michael Klein’sgrandfather taught him to learn from and tocope with change, and the two spoke by phonefor an hour every day until shortly before MaxKlein’s death.

The Essentials of Leadership

In our interviews, we heard many other storiesof crucible experiences. Take Jack Coleman,

Fortunately, not all

crucible experiences are

traumatic. In fact, they

can involve a positive, if

deeply challenging,

experience such as

having a demanding boss

or mentor.

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78-year-old former president of HaverfordCollege in Pennsylvania. He told us of one day,during the Vietnam War, when he heard that agroup of students was planning to pull downthe American flag and burn it—and thatformer members of the school’s football teamwere going to make sure the students didn’tsucceed. Seemingly out of nowhere, Colemanhad the idea to preempt the violence by sug-gesting that the protesting students take downthe flag, wash it, and then put it back up—acrucible moment that even now elicits tre-mendous emotion in Coleman as he describesthat day.

There’s also Common Cause founder JohnW. Gardner, who died earlier this year at 89.He identified his arduous training as a Marineduring World War II as the crucible in whichhis leadership abilities emerged. Architect FrankGehry spoke of the biases he experienced as aJew in college. Jeff Wilke, a general manager ata major manufacturer, told us of the day helearned that an employee had been killed inhis plant—an experience that taught him thatleadership was about much more than makingquarterly numbers.

So, what allowed these people to not onlycope with these difficult situations but alsolearn from them? We believe that great leaderspossess four essential skills, and, we were sur-prised to learn, these happen to be the sameskills that allow a person to find meaning inwhat could be a debilitating experience. First isthe ability to engage others in shared meaning.Consider Sidney Harman, who dived into achaotic work environment to mobilize employ-ees around an entirely new approach to man-agement. Second is a distinctive and compel-ling voice. Look at Jack Coleman’s ability todefuse a potentially violent situation with onlyhis words. Third is a sense of integrity (includinga strong set of values). Here, we point again toColeman, whose values prevailed even duringthe emotionally charged clash between peacedemonstrators and the angry (and strong)former football team members.

But by far the most critical skill of the four iswhat we call “adaptive capacity.” This is, in es-sence, applied creativity—an almost magicalability to transcend adversity, with all its atten-dant stresses, and to emerge stronger than be-fore. It’s composed of two primary qualities:

the ability to grasp context, and hardiness. Theability to grasp context implies an ability toweigh a welter of factors, ranging from howvery different groups of people will interpret agesture to being able to put a situation inperspective. Without this, leaders are utterlylost, because they cannot connect with theirconstituents. M. Douglas Ivester, who succeededRoberto Goizueta at Coca-Cola, exhibited awoeful inability to grasp context, lasting just28 months on the job. For example, he de-moted his highest-ranked African-Americanemployee even as the company was losing a$200 million class-action suit brought by blackemployees—and this in Atlanta, a city with apowerful African-American majority. ContrastIvester with Vernon Jordan. Jordan realized hisboss’s time was up—not just his time in power,but the era that formed him. And so Jordanwas able to see past the insults and recognizehis boss’s bitterness for what it was—desperatelashing out.

Hardiness is just what it sounds like—theperseverance and toughness that enable peo-ple to emerge from devastating circumstanceswithout losing hope. Look at Michael Klein,who experienced failure but didn’t let it defeathim. He found himself with a single asset—atiny software company he’d acquired. Kleinbuilt it into Transoft Networks, which Hewlett-Packard acquired in 1999. Consider, too, MickieSiebert, who used her sense of humor to curtailoffensive conversations. Or Sidney Rittenberg’sstrength during his imprisonment. He drewon his personal memories and inner strengthto emerge from his lengthy prison term with-out bitterness.

It is the combination of hardiness and abilityto grasp context that, above all, allows a personto not only survive an ordeal, but to learn fromit, and to emerge stronger, more engaged, andmore committed than ever. These attributesallow leaders to grow from their crucibles, in-stead of being destroyed by them—to find op-portunity where others might find only despair.This is the stuff of true leadership.

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To Order

For






Further Reading

A R T I C L E S

Level 5 Leadership: The Triumph of Humility and Fierce Resolve

by Jim Collins


January 2001Product no. R0507M

The intense self-reflection and transformation that accompany crucible experiences can nur-ture the seed of what Collins defines as

Level 5 leadership

—the rare ability to boost com-panies to greatness

and

keep them there. Level 5 leaders blend the paradoxical combi-nation of

deep personal humility

with

intense professional will

. One of the key characteristics of Level 5 leaders is their ability to deal with the brutal facts of reality—while maintaining absolute faith that they will prevail.

A Survival Guide for Leaders

by Ronald A. Heifetz and Marty Linsky


June 2002Product no. R0206C

If you emerge stronger from a crucible experi-ence, you may encounter the darker side of leadership: the inevitable attempts by change-resistant followers to derail you. Change is painful, and some people try to ease the pain by removing change’s agent: you.

How to counteract resistance? First,

manage your environment

—your organization and its people. For example, operate both in

and

above the fray, asking “What’s really going on? Who’s defending the status quo?” And keep the “heat” high enough to motivate, but low enough to prevent explosions. Second,

manage your vulnerabilities

. Resist the urge to establish order and control for their own sake. And anchor yourself with daily rou-tines that help you recalibrate, as well as confi-dants who support you.

B O O K

Geeks and Geezers: How Era, Values, and Defining Moments Shape Leaders

by Warren G. Bennis and Robert J. ThomasHarvard Business School Press2002Product no. 5823

This book expands on the ideas in “Crucibles of Leadership ” article, introducing readers to forty-three leaders who have experienced cru-cibles. In particular, it compares the transfor-mative experiences of two groups:

geeks

and

geezers

. Geeks are accomplished leaders be-tween the ages of 21 and 35; geezers are be-tween the ages of 70 and 93 and still contrib-uting significantly to professions, industries or society.

The authors explore how key events in these individuals’ times—such as World War II or the dot-com Internet explosion—challenged them and opened them to new ways of seeing the world, of leading, and of being successful, healthy human beings. The book’s many stories can help you define your own best strategies for leading and learning for a lifetime.

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Level 5 Leadership: The Triumph of Humility and Fierce Resolve



82

Further Reading

What catapults a company

from merely good to truly

great? A five-year research

project searched for the

answer to that question, and

its discoveries ought to change

the way we think about

leadership.

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Out of 1,435

Fortune

500 companies that renowned management researcher Jim Collins studied, only 11 achieved and sus-tained greatness—garnering stock returns at least three times the market’s—for 15 years after a major transition period.

What did these 11 companies have in com-mon? Each had a “Level 5” leader at the helm.

Level 5 leaders blend the paradoxical com-bination of

deep personal humility

with

intense professional will

. This rare combi-nation also defies our assumptions about what makes a great leader.

Celebrities like Lee Iacocca may make head-lines. But mild-mannered, steely leaders like Darwin Smith of Kimberly-Clark boost their companies to greatness—and keep them there.

Example:

Darwin Smith—CEO at paper-products maker Kimberly-Clark from 1971 to 1991—epitomizes Level 5 leadership. Shy, awkward, shunning attention, he also showed iron will, determinedly rede-fining the firm’s core business despite Wall Street’s skepticism. The formerly lackluster Kimberly-Clark became the worldwide leader in its industry, generat-ing stock returns 4.1 times greater than the general market’s.

HUMILITY + WILL = LEVEL 5

How do Level 5 leaders manifest humility? They routinely credit others, external factors, and good luck for their companies’ success. But when results are poor, they blame them-selves. They also act quietly, calmly, and deter-minedly—relying on inspired standards, not inspiring charisma, to motivate.

Inspired standards demonstrate Level 5 lead-ers’ unwavering will. Utterly intolerant of me-diocrity, they are stoic in their resolve to do whatever it takes to produce great results—terminating everything else. And they select superb successors, wanting their companies to become even more successful in the future.

CAN YOU DEVELOP LEVEL 5 LEADERSHIP?

Level 5 leaders sit atop a hierarchy of four more common leadership levels—and pos-sess the skills of all four. For example, Level 4 leaders catalyze commitment to and vigorous pursuit of a clear, compelling vision. Can you move from Level 4 to Level 5? Perhaps,

if

you have the Level 5 “seed” within you.

Leaders

without

the seed tend to have monu-mental egos they can’t subjugate to some-thing larger and more sustaining than them-selves, i.e., their companies. But for leaders

with

the seed, the right conditions—such as self-reflection or a profoundly transformative event, such as a life-threatening illness—can stimulate the seed to sprout.

GROWING TO LEVEL 5

Grow Level 5 seeds by practicing these good-to-great disciplines of Level 5 leaders:

First who

Attend to people first, strategy second. Get the right people on the bus and the wrong people off—

then

figure out where to drive it.

Stockdale paradox

Deal with the brutal facts of your current real-ity—while maintaining absolute faith that you’ll prevail.

Buildup-breakthrough flywheel

Keep pushing your organizational “flywheel.” With consistent effort, momentum increases until—bang!—the wheel hits the break-through point.

The hedgehog concept

Think of your company as three intersecting circles: what it can be best at, how its eco-nomics work best, and what ignites its peo-ple’s passions. Eliminate

everything

else.

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What catapults a company from merely good to truly great? A five-year

research project searched for the answer to that question, and its

discoveries ought to change the way we think about leadership.

If there’s one management expert who is synony-mous with the term “high-performance organiza-tion,” it is Jim Collins, who has spent the past 20 years trying to understand how some companies are able to sustain superlative performance.

It may seem surprising that of the seven fac-tors Collins identified as essential to take a com-pany from good to great, he chose to focus on leadership in this 2001 piece. However, even a ca-sual rereading of the article will convince you that he was right to do so.

Collins argues that the key ingredient that al-lows a company to become great is having a Level 5 leader: an executive in whom genuine personal humility blends with intense profes-sional will. To learn that such CEOs exist still comes as a pleasant shock. But while the idea may sound counterintuitive today, it was down-right heretical when Collins first wrote about it—the corporate scandals in the United States hadn’t broken out, and almost everyone be-lieved that CEOs should be charismatic, larger-than-life figures. Collins was the first to blow that belief out of the water.

In 1971, a seemingly ordinary man named Dar-win E. Smith was named chief executive ofKimberly-Clark, a stodgy old paper companywhose stock had fallen 36% behind the generalmarket during the previous 20 years. Smith, thecompany’s mild-mannered in-house lawyer,wasn’t so sure the board had made the rightchoice—a feeling that was reinforced when aKimberly-Clark director pulled him aside andreminded him that he lacked some of the qual-ifications for the position. But CEO he was, andCEO he remained for 20 years.

What a 20 years it was. In that period,Smith created a stunning transformation atKimberly-Clark, turning it into the leadingconsumer paper products company in theworld. Under his stewardship, the companybeat its rivals Scott Paper and Procter & Gam-ble. And in doing so, Kimberly-Clark generatedcumulative stock returns that were 4.1 timesgreater than those of the general market, out-performing venerable companies such asHewlett-Packard, 3M, Coca-Cola, and GeneralElectric.

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Smith’s turnaround of Kimberly-Clark isone the best examples in the twentieth centuryof a leader taking a company from merelygood to truly great. And yet few people—evenardent students of business history—haveheard of Darwin Smith. He probably wouldhave liked it that way. Smith is a classic exam-ple of a Level 5 leader—an individual whoblends extreme personal humility with intenseprofessional will. According to our five-year re-search study, executives who possess this para-doxical combination of traits are catalysts forthe statistically rare event of transforming agood company into a great one. (The researchis described in the sidebar “One Question, FiveYears, 11 Companies.”)

“Level 5” refers to the highest level in a hier-archy of executive capabilities that we identi-fied during our research. Leaders at the otherfour levels in the hierarchy can produce highdegrees of success but not enough to elevatecompanies from mediocrity to sustained excel-lence. (For more details about this concept, seethe exhibit “The Level 5 Hierarchy.”) And whileLevel 5 leadership is not the only requirementfor transforming a good company into a greatone—other factors include getting the rightpeople on the bus (and the wrong people offthe bus) and creating a culture of discipline—our research shows it to be essential. Good-to-great transformations don’t happen withoutLevel 5 leaders at the helm. They just don’t.

Not What You Would Expect

Our discovery of Level 5 leadership is counter-intuitive. Indeed, it is countercultural. Peoplegenerally assume that transforming compa-nies from good to great requires larger-than-life leaders—big personalities like Lee Iacocca,Al Dunlap, Jack Welch, and Stanley Gault,who make headlines and become celebrities.

Compared with those CEOs, Darwin Smithseems to have come from Mars. Shy, unpreten-tious, even awkward, Smith shunned atten-tion. When a journalist asked him to describehis management style, Smith just stared backat the scribe from the other side of his thickblack-rimmed glasses. He was dressed unfash-ionably, like a farm boy wearing his first J.C.Penney suit. Finally, after a long and uncom-fortable silence, he said, “Eccentric.” Needlessto say, the

Wall Street Journal

did not publish asplashy feature on Darwin Smith.

But if you were to consider Smith soft or

meek, you would be terribly mistaken. His lackof pretense was coupled with a fierce, evenstoic, resolve toward life. Smith grew up on anIndiana farm and put himself through nightschool at Indiana University by working theday shift at International Harvester. One day,he lost a finger on the job. The story goes thathe went to class that evening and returned towork the very next day. Eventually, this poorbut determined Indiana farm boy earned ad-mission to Harvard Law School.

He showed the same iron will when he wasat the helm of Kimberly-Clark. Indeed, twomonths after Smith became CEO, doctors diag-nosed him with nose and throat cancer andtold him he had less than a year to live. Heduly informed the board of his illness but saidhe had no plans to die anytime soon. Smithheld to his demanding work schedule whilecommuting weekly from Wisconsin to Hous-ton for radiation therapy. He lived 25 moreyears, 20 of them as CEO.

Smith’s ferocious resolve was crucial to therebuilding of Kimberly-Clark, especially whenhe made the most dramatic decision in thecompany’s history: selling the mills.

To explain: Shortly after he took over,Smith and his team had concluded that thecompany’s traditional core business—coatedpaper—was doomed to mediocrity. Its eco-nomics were bad and the competition weak.But, they reasoned, if Kimberly-Clark werethrust into the fire of the consumer paperproducts business, better economics andworld-class competition like Procter & Gam-ble would force it to achieve greatness orperish.

And so, like the general who burned theboats upon landing on enemy soil, leaving histroops to succeed or die, Smith announcedthat Kimberly-Clark would sell its mills—eventhe namesake mill in Kimberly, Wisconsin. Allproceeds would be thrown into the consumerbusiness, with investments in brands likeHuggies diapers and Kleenex tissues. Thebusiness media called the move stupid, andWall Street analysts downgraded the stock.But Smith never wavered. Twenty-five yearslater, Kimberly-Clark owned Scott Paper andbeat Procter & Gamble in six of eight productcategories. In retirement, Smith reflected onhis exceptional performance, saying simply, “Inever stopped trying to become qualified forthe job.”

Jim Collins

operates a management research laboratory in Boulder, Colorado. He is a coauthor with Jerry I. Porras of

Built to Last: Successful Habits of Visionary Com-panies

(HarperBusiness, 2002). The ideas in this article appeared in his book

Good to Great: Why Some Companies Make the Leap…and Others Don’t

(HarperBusiness, 2001).

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One Question, Five Years, 11 Companies

The Level 5 discovery derives from a re-search project that began in 1996, when my research teams and I set out to an-swer one question: Can a good company become a great company and, if so, how? Most great companies grew up with su-perb parents—people like George Merck, David Packard, and Walt Disney—who instilled greatness early on. But what about the vast majority of companies that wake up partway through life and re-alize that they’re good but not great?

To answer that question, we looked for companies that had shifted from good performance to great performance—and sustained it. We identified comparison companies that had failed to make that sustained shift. We then studied the con-trast between the two groups to discover common variables that distinguished those who made and sustained a shift from those who could have but didn’t.

More precisely, we searched for a spe-cific pattern: cumulative stock returns at or below the general stock market for 15 years, punctuated by a transition point, then cumulative returns at least three times the market over the next 15 years. (See the accompanying exhibit.) We used data from the University of Chicago Cen-ter for Research in Security Prices and ad-justed for stock splits and all dividends re-invested. The shift had to be distinct from the industry; if the whole industry showed the same shift, we’d drop the company. We began with 1,435 compa-nies that appeared on the

Fortune

500 from 1965 to 1995; we found 11 good-to-great examples. That’s not a sample; that’s the total number that jumped all our hurdles and passed into the study.

Those that made the cut averaged cu-mulative stock returns 6.9 times the gen-eral stock market for the 15 years after the point of transition. To put that in per-spective, General Electric under Jack Welch outperformed the general stock

market by 2.8:1 during his tenure from 1986 to 2000. One dollar invested in a mutual fund of the good-to-great compa-nies in 1965 grew to $470 by 2000 com-pared with $56 in the general stock mar-ket. These are remarkable numbers, made all the more so by the fact that they came from previously unremarkable companies.

For each good-to-great example, we se-lected the best direct comparison, based on similarity of business, size, age, cus-tomers, and performance leading up to the transition. We also constructed a set of six “unsustained” comparisons (com-panies that showed a short-lived shift but then fell off) to address the question of sustainability. To be conservative, we con-sistently picked comparison companies that, if anything, were in better shape than the good-to-great companies were in the years just before the transition.

With 22 research associates working in groups of four to six at a time from 1996 to 2000, our study involved a wide range of both qualitative and quantitative anal-yses. On the qualitative front, we col-lected nearly 6,000 articles, conducted 87 interviews with key executives, analyzed companies’ internal strategy documents,

and culled through analysts’ reports. On the quantitative front, we ran financial metrics, examined executive compensa-tion, compared patterns of management turnover, quantified company layoffs and restructurings, and calculated the effect of acquisitions and divestitures on com-panies’ stocks. We then synthesized the results to identify the drivers of good-to-great transformations. One was Level 5 leadership. (The others are described in the sidebar “Not by Level 5 Alone.”)

Since only 11 companies qualified as good-to-great, a research finding had to meet a stiff standard before we would deem it significant. Every component in the final framework showed up in all 11 good-to-great companies during the tran-sition era, regardless of industry (from steel to banking), transition decade (from the 1950s to the 1990s), circumstances (from plodding along to dire crisis), or size (from tens of millions to tens of bil-lions). Additionally, every component had to show up in less than 30% of the comparison companies during the rele-vant years. Level 5 easily made it into the framework as one of the strongest, most consistent contrasts between the good-to-great and the comparison companies.

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Not What We Expected, Either

We’ll look in depth at Level 5 leadership, butfirst let’s set an important context for our find-ings. We were not looking for Level 5 or any-thing like it. Our original question was, Can agood company become a great one and, if so,how? In fact, I gave the research teams explicitinstructions to downplay the role of top execu-tives in their analyses of this question so wewouldn’t slip into the simplistic “credit theleader” or “blame the leader” thinking that isso common today.

But Level 5 found us. Over the course of thestudy, research teams kept saying, “We can’t ig-nore the top executives even if we want to.There is something consistently unusual aboutthem.” I would push back, arguing, “The com-parison companies also had leaders. So what’s

different here?” Back and forth the debateraged. Finally, as should always be the case, thedata won. The executives at companies thatwent from good to great and sustained thatperformance for 15 years or more were all cutfrom the same cloth—one remarkably differ-ent from that which produced the executivesat the comparison companies in our study. Itdidn’t matter whether the company was in cri-sis or steady state, consumer or industrial, of-fering services or products. It didn’t matterwhen the transition took place or how big thecompany. The successful organizations all hada Level 5 leader at the time of transition.

Furthermore, the absence of Level 5 leader-ship showed up consistently across the com-parison companies. The point: Level 5 is an em-pirical finding, not an ideological one. Andthat’s important to note, given how much theLevel 5 finding contradicts not only conven-tional wisdom but much of management the-ory to date. (For more about our findings ongood-to-great transformations, see the sidebar“Not by Level 5 Alone.”)

Humility + Will = Level 5

Level 5 leaders are a study in duality: modestand willful, shy and fearless. To grasp this con-cept, consider Abraham Lincoln, who never lethis ego get in the way of his ambition to createan enduring great nation. Author HenryAdams called him “a quiet, peaceful, shy fig-ure.” But those who thought Lincoln’s under-stated manner signaled weakness in the manfound themselves terribly mistaken—to thescale of 250,000 Confederate and 360,000Union lives, including Lincoln’s own.

It might be a stretch to compare the 11 Level 5CEOs in our research to Lincoln, but they did dis-play the same kind of duality. Take Colman M.Mockler, CEO of Gillette from 1975 to 1991.Mockler, who faced down three takeover at-tempts, was a reserved, gracious man with a gen-tle, almost patrician manner. Despite epic bat-tles with raiders—he took on Ronald Perelmantwice and the former Coniston Partners once—he never lost his shy, courteous style. At theheight of crisis, he maintained a calm business-as-usual demeanor, dispensing first with ongoingbusiness before turning to the takeover.

And yet, those who mistook Mockler’s out-ward modesty as a sign of inner weakness werebeaten in the end. In one proxy battle, Mock-ler and other senior executives called thou-

The Level 5 Hierarchy

The Level 5 leader sits on top of a hierarchy of capabilities and is, according to our research, a necessary requirement for transforming an organization from good to great. But what lies beneath? Four other layers, each one appropriate in its own right but none with the power of Level 5. Individuals do not need to proceed sequentially through each level of the hierarchy to reach the top, but to be a full-fledged Level 5 requires the capabilities of all the lower levels, plus the special characteristics of Level 5.

Level 5

Executive

Builds enduring greatness through a paradoxical combination of personal humility plus professional will.

Level 4

Effective Leader

Catalyzes commitment to and vigorous pursuit of a clear and compelling vision; stimulates the group to high performance standards.

Level 3

Competent Manager

Organizes people and resources toward the effective and efficient pursuit of predetermined objectives.

Level 2

Contributing Team Member

Contributes to the achievement of group objectives; works effectively with others in a group setting.

Level 1

Highly Capable Individual

Makes productive contributions through talent, knowledge, skills, and good work habits.

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sands of investors, one by one, to win theirvotes. Mockler simply would not give in. Hechose to fight for the future greatness ofGillette even though he could have pocketedmillions by flipping his stock.

Consider the consequences had Mockler ca-pitulated. If a share flipper had accepted thefull 44% price premium offered by Perelmanand then invested those shares in the generalmarket for ten years, he still would have comeout 64% behind a shareholder who stayed withMockler and Gillette. If Mockler had given upthe fight, it’s likely that none of us would beshaving with Sensor, Lady Sensor, or the MachIII—and hundreds of millions of people would

have a more painful battle with daily stubble.Sadly, Mockler never had the chance to

enjoy the full fruits of his efforts. In January1991, Gillette received an advance copy of

Forbes

. The cover featured an artist’s renditionof the publicity-shy Mockler standing on amountaintop, holding a giant razor above hishead in a triumphant pose. Walking back to hisoffice just minutes after seeing this public ac-knowledgment of his 16 years of struggle,Mockler crumpled to the floor and died of amassive heart attack.

Even if Mockler had known he would die inoffice, he could not have changed his ap-proach. His placid persona hid an inner inten-

Not by Level 5 Alone

Level 5 leadership is an essential factor for taking a company from good to great, but it’s not the only one. Our research uncovered multiple fac-tors that deliver companies to greatness. And it is the combined package—Level 5 plus these other drivers—that takes companies beyond unre-markable. There is a symbiotic relationship between Level 5 and the rest of our findings: Level 5 enables implementation of the other findings, and practicing the other findings may help you get to Level 5. We’ve already talked about who Level 5 leaders are; the rest of our findings de-scribe what they do. Here is a brief look at some of the other key findings.

First Who

We expected that good-to-great leaders would start with the vision and strategy. In-stead, they attended to people first, strategy second. They got the right people on the bus, moved the wrong people off, ushered the right people to the right seats—and then they figured out where to drive it.

Stockdale Paradox

This finding is named after Admiral James Stockdale, winner of the Medal of Honor, who survived seven years in a Vietcong POW camp by hanging on to two contradictory beliefs:

His life couldn’t be worse at the moment, and his life would someday be better than ever. Like Stockdale, people at the good-to-great companies in our research confronted the most brutal facts of their current reality, yet simultaneously maintained absolute faith that they would prevail in the end. And they held both disciplines—faith and facts—at the same time, all the time.

Buildup-Breakthrough Flywheel

Good-to-great transformations do not hap-pen overnight or in one big leap. Rather, the process resembles relentlessly pushing a gi-

ant, heavy flywheel in one direction. At first, pushing it gets the flywheel to turn once. With consistent effort, it goes two turns, then five, then ten, building increasing momen-tum until—bang!—the wheel hits the break-through point, and the momentum really kicks in. Our comparison companies never sustained the kind of breakthrough momen-tum that the good-to-great companies did; in-stead, they lurched back and forth with radi-cal change programs, reactionary moves, and restructurings.

The Hedgehog Concept

In a famous essay, philosopher and scholar Isa-iah Berlin described two approaches to thought and life using a simple parable: The fox knows a little about many things, but the hedgehog knows only one big thing very well. The fox is complex; the hedgehog simple. And the hedgehog wins. Our research shows that breakthroughs require a simple, hedgehog-like understanding of three intersecting circles: what a company can be the best in the world at, how its economics work best, and what best ignites the passions of its people. Break-throughs happen when you get the hedgehog concept and become systematic and consis-

tent with it, eliminating virtually anything that does not fit in the three circles.

Technology Accelerators

The good-to-great companies had a paradoxi-cal relationship with technology. On the one hand, they assiduously avoided jumping on new technology bandwagons. On the other, they were pioneers in the application of care-fully selected technologies, making bold, far-sighted investments in those that directly linked to their hedgehog concept. Like turbo-chargers, these technology accelerators cre-ate an explosion in flywheel momentum.

A Culture of Discipline

When you look across the good-to-great transformations, they consistently display three forms of discipline: disciplined people, disciplined thought, and disciplined action. When you have disciplined people, you don’t need hierarchy. When you have disciplined thought, you don’t need bureaucracy. When you have disciplined action, you don’t need excessive controls. When you combine a cul-ture of discipline with an ethic of entrepre-neurship, you get the magical alchemy of great performance.

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sity, a dedication to making anything hetouched the best—not just because of what hewould get but because he couldn’t imaginedoing it any other way. Mockler could not giveup the company to those who would destroy it,any more than Lincoln would risk losing thechance to build an enduring great nation.

A Compelling Modesty

The Mockler story illustrates the modesty typ-ical of Level 5 leaders. (For a summary of Level5 traits, see the exhibit “The Yin and Yang ofLevel 5.”) Indeed, throughout our interviewswith such executives, we were struck by theway they talked about themselves—or rather,didn’t talk about themselves. They’d go on andon about the company and the contributionsof other executives, but they would instinc-tively deflect discussion about their own role.When pressed to talk about themselves, they’dsay things like, “I hope I’m not sounding like abig shot,” or “I don’t think I can take muchcredit for what happened. We were blessedwith marvelous people.” One Level 5 leadereven asserted, “There are a lot of people in thiscompany who could do my job better than Ido.”

By contrast, consider the courtship of per-sonal celebrity by the comparison CEOs. ScottPaper, the comparison company to Kimberly-Clark, hired Al Dunlap as CEO—a man whowould tell anyone who would listen (and manywho would have preferred not to) about his ac-complishments. After 19 months atop Scott Pa-

per, Dunlap said in

BusinessWeek,

“The Scottstory will go down in the annals of Americanbusiness history as one of the most successful,quickest turnarounds ever. It makes otherturnarounds pale by comparison.” He person-ally accrued $100 million for 603 days of workat Scott Paper—about $165,000 per day—largely by slashing the workforce, halving theR&D budget, and putting the company ongrowth steroids in preparation for sale. Afterselling off the company and pocketing hisquick millions, Dunlap wrote an autobiogra-phy in which he boastfully dubbed himself“Rambo in pinstripes.” It’s hard to imagineDarwin Smith thinking, “Hey, that Rambocharacter reminds me of me,” let alone statingit publicly.

Granted, the Scott Paper story is one of themore dramatic in our study, but it’s not an iso-lated case. In more than two-thirds of the com-parison companies, we noted the presence of agargantuan ego that contributed to the demiseor continued mediocrity of the company. Wefound this pattern particularly strong in theunsustained comparison companies—the com-panies that would show a shift in performanceunder a talented yet egocentric Level 4 leader,only to decline in later years.

Lee Iacocca, for example, saved Chryslerfrom the brink of catastrophe, performing oneof the most celebrated (and deservedly so)turnarounds in U.S. business history. The auto-maker’s stock rose 2.9 times higher than thegeneral market about halfway through his ten-ure. But then Iacocca diverted his attention totransforming himself. He appeared regularlyon talk shows like the

Today Show

and

LarryKing Live,

starred in more than 80 commer-cials, entertained the idea of running for presi-dent of the United States, and promoted hisautobiography, which sold 7 million copiesworldwide. Iacocca’s personal stock soared, butChrysler’s stock fell 31% below the market inthe second half of his tenure.

And once Iacocca had accumulated all thefame and perks, he found it difficult to leavecenter stage. He postponed his retirement somany times that Chrysler’s insiders began tojoke that Iacocca stood for “I Am Chairman ofChrysler Corporation Always.” When he finallyretired, he demanded that the board continueto provide a private jet and stock options.Later, he joined forces with noted takeover art-ist Kirk Kerkorian to launch a hostile bid for

The Yin and Yang of Level 5

Personal Humility

Demonstrates a compelling modesty, shunning public adulation; never boastful.

Acts with quiet, calm determination; relies principally on inspired standards, not inspiring charisma, to motivate.

Channels ambition into the com-pany, not the self; sets up successors for even more greatness in the next generation.

Looks in the mirror, not out the win-dow, to apportion responsibility for poor results, never blaming other people, ex-ternal factors, or bad luck.

Professional Will

Creates superb results, a clear catalyst in the transition from good to great.

Demonstrates an unwavering resolve to do whatever must be done to produce the best long-term results, no matter how difficult.

Sets the standard of building an en-during great company; will settle for nothing less.

Looks out the window, not in the mir-ror, to apportion credit for the success of the company—to other people, external factors, and good luck.

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Chrysler. (It failed.) Iacocca did make one finalbrilliant decision: He picked a modest yet de-termined man—perhaps even a Level 5—as hissuccessor. Bob Eaton rescued Chrysler from itssecond near-death crisis in a decade and set thefoundation for a more enduring corporatetransition.

An Unwavering Resolve

Besides extreme humility, Level 5 leaders alsodisplay tremendous professional will. WhenGeorge Cain became CEO of Abbott Laborato-ries, it was a drowsy, family-controlled busi-ness sitting at the bottom quartile of the phar-maceutical industry, living off its cash cow,erythromycin. Cain was a typical Level 5leader in his lack of pretense; he didn’t havethe kind of inspiring personality that wouldgalvanize the company. But he had somethingmuch more powerful: inspired standards. Hecould not stand mediocrity in any form andwas utterly intolerant of anyone who wouldaccept the idea that good is good enough. Forthe next 14 years, he relentlessly imposed hiswill for greatness on Abbott Labs.

Among Cain’s first tasks was to destroy oneof the root causes of Abbott’s middling perfor-mance: nepotism. By systematically rebuildingboth the board and the executive team withthe best people he could find, Cain made hisstatement. Family ties no longer mattered. Ifyou couldn’t become the best executive in theindustry within your span of responsibility, youwould lose your paycheck.

Such near-ruthless rebuilding might be ex-pected from an outsider brought in to turn thecompany around, but Cain was an 18-year in-sider—and a part of the family, the son of aprevious president. Holiday gatherings wereprobably tense for a few years in the Cainclan—“Sorry I had to fire you. Want anotherslice of turkey?”—but in the end, family mem-bers were pleased with the performance oftheir stock. Cain had set in motion a profitablegrowth machine. From its transition in 1974 to2000, Abbott created shareholder returns thatbeat the market 4.5:1, outperforming industrysuperstars Merck and Pfizer by a factor of two.

Another good example of iron-willed Level5 leadership comes from Charles R. “Cork”Walgreen III, who transformed dowdy Wal-greens into a company that outperformed thestock market 16:1 from its transition in 1975 to2000. After years of dialogue and debate

within his executive team about what to dowith Walgreens’ food-service operations, thisCEO sensed the team had finally reached a wa-tershed: The company’s brightest future lay inconvenient drugstores, not in food service.Dan Jorndt, who succeeded Walgreen in 1988,describes what happened next:

Cork said at one of our planning committeemeetings, “Okay, now I am going to draw theline in the sand. We are going to be out of therestaurant business completely in five years.” Atthe time we had more than 500 restaurants.You could have heard a pin drop. He said, “Iwant to let everybody know the clock is tick-ing.” Six months later we were at our next plan-ning committee meeting and someone men-tioned just in passing that we had only fiveyears to be out of the restaurant business. Corkwas not a real vociferous fellow. He sort oftapped on the table and said, “Listen, you nowhave four and a half years. I said you had fiveyears six months ago. Now you’ve got four anda half years.” Well, that next day things reallyclicked into gear for winding down our restau-rant business. Cork never wavered. He neverdoubted. He never second-guessed.

Like Darwin Smith selling the mills atKimberly-Clark, Cork Walgreen required stoicresolve to make his decisions. Food service wasnot the largest part of the business, although itdid add substantial profits to the bottom line.The real problem was more emotional than fi-nancial. Walgreens had, after all, invented themalted milk shake, and food service had beena long-standing family tradition dating back toCork’s grandfather. Not only that, some food-service outlets were even named after theCEO—for example, a restaurant chain namedCorky’s. But no matter; if Walgreen had to flyin the face of family tradition in order to refo-cus on the one arena in which Walgreens couldbe the best in the world—convenient drug-stores—and terminate everything else thatwould not produce great results, then Corkwould do it. Quietly, doggedly, simply.

One final, yet compelling, note on our find-ings about Level 5: Because Level 5 leadershave ambition not for themselves but for theircompanies, they routinely select superb succes-sors. Level 5 leaders want to see their compa-nies become even more successful in the nextgeneration and are comfortable with the ideathat most people won’t even know that theroots of that success trace back to them. As one

Good-to-great

transformations don’t

happen without Level 5

leaders at the helm. They

just don’t.

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Level 5 CEO said, “I want to look from myporch, see the company as one of the greatcompanies in the world someday, and be ableto say, ‘I used to work there.’ ” By contrast,Level 4 leaders often fail to set up the companyfor enduring success. After all, what better tes-tament to your own personal greatness thanthat the place falls apart after you leave?

In more than three-quarters of the compari-son companies, we found executives who setup their successors for failure, chose weak suc-cessors, or both. Consider the case of Rubber-maid, which grew from obscurity to becomeone of

Fortune

’s most admired companies—and then, just as quickly, disintegrated intosuch sorry shape that it had to be acquired byNewell.

The architect of this remarkable story was acharismatic and brilliant leader named StanleyC. Gault, whose name became synonymous inthe late 1980s with Rubbermaid’s success.Across the 312 articles collected by our re-search team about the company, Gault comesthrough as a hard-driving, egocentric execu-tive. In one article, he responds to the accusa-tion of being a tyrant with the statement, “Yes,but I’m a sincere tyrant.” In another, drawn di-rectly from his own comments on leadingchange, the word “I” appears 44 times, whilethe word “we” appears 16 times. Of course,Gault had every reason to be proud of his exec-utive success: Rubbermaid generated 40 con-secutive quarters of earnings growth under hisleadership—an impressive performance, to besure, and one that deserves respect.

But Gault did not leave behind a companythat would be great without him. His chosensuccessor lasted a year on the job and the nextin line faced a management team so shallowthat he had to temporarily shoulder four jobswhile scrambling to identify a new number-two executive. Gault’s successors struggled notonly with a management void but also withstrategic voids that would eventually bring thecompany to its knees.

Of course, you might say—as one

Fortune

article did—that the fact that Rubbermaid fellapart after Gault left proves his greatness as aleader. Gault was a tremendous Level 4 leader,perhaps one of the best in the last 50 years. Buthe was not at Level 5, and that is one crucialreason why Rubbermaid went from good togreat for a brief, shining moment and then justas quickly went from great to irrelevant.

The Window and the Mirror

As part of our research, we interviewed AlanL. Wurtzel, the Level 5 leader responsible forturning Circuit City from a ramshackle com-pany on the edge of bankruptcy into one ofAmerica’s most successful electronics retailers.In the 15 years after its transition date in 1982,Circuit City outperformed the market 18.5:1.

We asked Wurtzel to list the top five factorsin his company’s transformation, ranked by im-portance. His number one factor? Luck. “Wewere in a great industry, with the wind at ourbacks,” he said. But wait a minute, we retorted,Silo—your comparison company—was in thesame industry, with the same wind and biggersails. The conversation went back and forth,with Wurtzel refusing to take much credit forthe transition, preferring to attribute it largelyto just being in the right place at the righttime. Later, when we asked him to discuss thefactors that would sustain a good-to-greattransformation, he said, “The first thing thatcomes to mind is luck. I was lucky to find theright successor.”

Luck. What an odd factor to talk about. Yetthe Level 5 leaders we identified invoked it fre-quently. We asked an executive at steel com-pany Nucor why it had such a remarkabletrack record for making good decisions. His re-sponse? “I guess we were just lucky.” Joseph F.Cullman III, the Level 5 CEO of Philip Morris,flat out refused to take credit for his company’ssuccess, citing his good fortune to have greatcolleagues, successors, and predecessors. Eventhe book he wrote about his career—which hepenned at the urging of his colleagues andwhich he never intended to distribute widelyoutside the company—had the unusual title

I’m a Lucky Guy

.At first, we were puzzled by the Level 5 lead-

ers’ emphasis on good luck. After all, there isno evidence that the companies that had pro-gressed from good to great were blessed withmore good luck (or more bad luck, for thatmatter) than the comparison companies. Butthen we began to notice an interesting patternin the executives at the comparison compa-nies: They often blamed their situations on badluck, bemoaning the difficulties of the environ-ment they faced.

Compare Bethlehem Steel and Nucor, forexample. Both steel companies operated withproducts that are hard to differentiate, andboth faced a competitive challenge from cheap

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imported steel. Both companies paid signifi-cantly higher wages than most of their foreigncompetitors. And yet executives at the twocompanies held completely different views ofthe same environment.

Bethlehem Steel’s CEO summed up thecompany’s problems in 1983 by blaming theimports: “Our first, second, and third problemsare imports.” Meanwhile, Ken Iverson and hiscrew at Nucor saw the imports as a blessing:“Aren’t we lucky; steel is heavy, and they haveto ship it all the way across the ocean, giving usa huge advantage.” Indeed, Iverson saw thefirst, second, and third problems facing the U.S.steel industry not in imports but in manage-ment. He even went so far as to speak out pub-licly against government protection againstimports, telling a gathering of stunned steel ex-ecutives in 1977 that the real problems facingthe industry lay in the fact that managementhad failed to keep pace with technology.

The emphasis on luck turns out to be partof a broader pattern that we have come to call“the window and the mirror.” Level 5 leaders,inherently humble, look out the window to ap-portion credit—even undue credit—to factorsoutside themselves. If they can’t find a specificperson or event to give credit to, they creditgood luck. At the same time, they look in themirror to assign responsibility, never citing badluck or external factors when things go poorly.Conversely, the comparison executives fre-quently looked out the window for factors toblame but preened in the mirror to creditthemselves when things went well.

The funny thing about the window-and-mirror concept is that it does not reflect reality.According to our research, the Level 5 leaderswere responsible for their companies’ transfor-mations. But they would never admit that. Wecan’t climb inside their heads and assesswhether they deeply believed what they sawthrough the window and in the mirror. But itdoesn’t really matter, because they acted as ifthey believed it, and they acted with such con-sistency that it produced exceptional results.

Born or Bred?

Not long ago, I shared the Level 5 finding witha gathering of senior executives. A womanwho had recently become chief executive ofher company raised her hand. “I believe whatyou’ve told us about Level 5 leadership,” shesaid, “but I’m disturbed because I know I’m

not there yet, and maybe I never will be. Partof the reason I got this job is because of mystrong ego. Are you telling me that I can’tmake my company great if I’m not Level 5?”

“Let me return to the data,” I responded. “Of1,435 companies that appeared on the

Fortune

500 since 1965, only 11 made it into our study.In those 11, all of them had Level 5 leaders inkey positions, including the CEO role, at thepivotal time of transition. Now, to reiterate,we’re not saying that Level 5 is the only ele-ment required for the move from good togreat, but it appears to be essential.”

She sat there, quiet for a moment, and youcould guess what many people in the roomwere thinking. Finally, she raised her handagain. “Can you learn to become Level 5?” Istill do not know the answer to that question.Our research, frankly, did not delve into howLevel 5 leaders come to be, nor did we attemptto explain or codify the nature of their emo-tional lives. We speculated on the unique psy-chology of Level 5 leaders. Were they “guilty”of displacement—shifting their own raw ambi-tion onto something other than themselves?Were they sublimating their egos for dark andcomplex reasons rooted in childhood trauma?Who knows? And perhaps more important, dothe psychological roots of Level 5 leadershipmatter any more than do the roots of charismaor intelligence? The question remains: CanLevel 5 be developed?

My preliminary hypothesis is that there aretwo categories of people: those who don’t havethe Level 5 seed within them and those whodo. The first category consists of people whocould never in a million years bring themselvesto subjugate their own needs to the greaterambition of something larger and more lastingthan themselves. For those people, work willalways be first and foremost about what theyget—the fame, fortune, power, adulation, andso on. Work will never be about what theybuild, create, and contribute. The great irony isthat the animus and personal ambition thatoften drives people to become a Level 4 leaderstands at odds with the humility required torise to Level 5.

When you combine that irony with the factthat boards of directors frequently operateunder the false belief that a larger-than-life,egocentric leader is required to make a com-pany great, you can quickly see why Level 5leaders rarely appear at the top of our institu-

The great irony is that

the animus and personal

ambition that often

drives people to become

a Level 4 leader stands at

odds with the humility

required to rise to

Level 5.

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tions. We keep putting people in positions ofpower who lack the seed to become a Level 5leader, and that is one major reason why thereare so few companies that make a sustainedand verifiable shift from good to great.

The second category consists of people whocould evolve to Level 5; the capability resideswithin them, perhaps buried or ignored or sim-ply nascent. Under the right circumstances—with self-reflection, a mentor, loving parents, asignificant life experience, or other factors—the seed can begin to develop. Some of theLevel 5 leaders in our study had significant lifeexperiences that might have sparked develop-ment of the seed. Darwin Smith fully blos-somed as a Level 5 after his near-death experi-ence with cancer. Joe Cullman was profoundlyaffected by his World War II experiences, par-ticularly the last-minute change of orders thattook him off a doomed ship on which he surelywould have died; he considered the next 60-odd years a great gift. A strong religious beliefor conversion might also nurture the seed. Col-man Mockler, for example, converted to evan-gelical Christianity while getting his MBA atHarvard, and later, according to the book

Cut-ting Edge

by Gordon McKibben, he became aprime mover in a group of Boston business ex-ecutives that met frequently over breakfast todiscuss the carryover of religious values to cor-porate life.

We would love to be able to give you a listof steps for getting to Level 5—other than con-tracting cancer, going through a religious con-version, or getting different parents—but wehave no solid research data that would supporta credible list. Our research exposed Level 5 asa key component inside the black box of whatit takes to shift a company from good to great.Yet inside that black box is another—the innerdevelopment of a person to Level 5 leadership.

We could speculate on what that inner boxmight hold, but it would mostly be just that:speculation.

In short, Level 5 is a very satisfying idea, atruthful idea, a powerful idea, and, to makethe move from good to great, very likely an es-sential idea. But to provide “ten steps to Level 5leadership” would trivialize the concept.

My best advice, based on the research, is topractice the other good-to-great disciplinesthat we discovered. Since we found a tightsymbiotic relationship between each of theother findings and Level 5, we suspect thatconscientiously trying to lead using the otherdisciplines can help you move in the right di-rection. There is no guarantee that doing sowill turn executives into full-fledged Level 5leaders, but it gives them a tangible place tobegin, especially if they have the seed within.

We cannot say for sure what percentage ofpeople have the seed within, nor how many ofthose can nurture it enough to become Level 5.Even those of us on the research team whoidentified Level 5 do not know whether we willsucceed in evolving to its heights. And yet all ofus who worked on the finding have been in-spired by the idea of trying to move towardLevel 5. Darwin Smith, Colman Mockler, AlanWurtzel, and all the other Level 5 leaders welearned about have become role models for us.Whether or not we make it to Level 5, it isworth trying. For like all basic truths aboutwhat is best in human beings, when we catch aglimpse of that truth, we know that our ownlives and all that we touch will be the betterfor making the effort to get there.

Reprint R0507M


We keep putting people

in positions of power

who lack the seed to

become a Level 5 leader,

and that is one major

reason why there are

so few companies that

make a sustained and

verifiable shift from good

to great.

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Level 5 LeadershipThe Triumph of Humility and Fierce Resolve

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Further ReadingA R T I C L E SLeadership That Gets Resultsby Daniel GolemanHarvard Business ReviewMarch–April 2000Product no. R00204

Collins identifies these characteristics of Level 5 leaders: humility, will, ferocious resolve, and the tendency to give credit to others while as-signing blame to themselves. He demon-strates how Level 5 leaders have transformed their companies from good to great. Gole-man’s “Leadership That Gets Results” does not deal with Level 5 leaders per se, but his re-search on emotional intelligence also distin-guishes between outstanding performers and those who are merely good. His five compo-nents of emotional intelligence are: self-awareness, self-regulation, motivation, empa-thy, and social skill. Goleman also identifies six leadership styles: coercive (demands immedi-ate compliance), authoritative (mobilizes peo-ple toward a vision), affiliative (creates emo-tional bonds and harmony), democratic (builds consensus through participation), pacesetting (expects excellence and self-direction), and coaching (develops people for the future). He stresses that the best leaders have all these styles in their repertoires, switching among them to produce the most powerful results.

Building Your Company’s Visionby James C. Collins and Jerry I. PorrasHarvard Business ReviewSeptember–October 1996Product no. 96501

Level 5 leaders sit on top of a hierarchy of ca-pabilities. To be a full-fledged Level 5 leader requires the capabilities of all the lower levels, plus the special characteristics of Level 5. In “Building Your Company’s Vision,” Collins and Porras focus on the hallmark of Level 4 leader-ship—catalyzing commitment to and pursuit of a clear, compelling vision. A lasting, power-ful vision has two components: a core ideol-

ogy and an envisioned future. Core ideology itself has two parts: core values (guiding prin-ciples by which your company navigates) and core purpose (an organization’s most funda-mental reason for being and what motivates people to do the company’s work). An envi-sioned future also has two parts: BHAGs, “big, hairy, audacious goals” (ambitious plans that rev up the entire organization), and a vivid pic-ture of what it will be like to achieve the BHAGs.

Turning Goals into Results: The Power of Catalytic Mechanismsby James C. CollinsHarvard Business ReviewJuly–August 1999Product no. 99401

This article relates to Collins’s concept of Level 3 leadership—organizing people and resources toward the pursuit of predeter-mined objectives—and to BHAGs, “big, hairy, audacious goals.” Many companies have BHAGs—but just as many get stuck at the first hurdle to meeting those goals, mobilizing the organization away from the status quo. Cata-lytic mechanisms help catapult organizations over this hurdle. These simple yet powerful tools enable companies to propel commit-ment past the point of no return. They are gal-vanizing, non-bureaucratic means of turning visions into reality, usually involving a redistri-bution of power. Short pay is a defining exam-ple of a catalytic mechanism. Granite Rock mobilized its employees to feverish levels of performance improvement with this simple but radical policy that invites customers who are not completely satisfied to reduce their in-voice payment, without returning product.

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www.hbr.org

Seven Transformations of Leadership

by David Rooke and William R. Torbert



article:



84

Article Summary

86




97

Further Reading

Leaders are made, not born,

and how they develop is

critical for organizational

change.

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Every company needs transformational leaders—those who spearhead changes that elevate profitability, expand market share, and change the rules of the game in their industry. But few executives under-stand the unique strengths needed to be-come such a leader. Result? They miss the opportunity to develop those strengths. They and their firms lose out.

How to avoid this scenario? Recognize that great leaders are differentiated not by their personality or philosophy but by their

action logic

—how they interpret their own and others’ behavior and how they maintain power or protect against threats.

Some leaders rely on action logics that hinder organizational performance. Oppor-tunists, for example, believe in winning any way possible, and often exploit others to score personal gains. Few people follow them for long. Other types prove potent change agents. In particular, Strategists be-lieve that every aspect of their organization is open to discussion and transformation. Their action logic enables them to chal-lenge perceptions that constrain their orga-nizations and to overcome resistance to change. They create compelling, shared vi-sions and lead the pragmatic initiatives needed to realize those visions.

Though Strategists are rare, you

can

de-velop their defining strengths. How? Diag-nose your current action logic and work to upgrade it. The payoff? You help your com-pany execute the changes it needs to excel.

SEVEN TYPES OF ACTION LOGIC

CHANGING YOUR ACTION LOGIC TYPE

To change your action logic type, experiment with new interpersonal behaviors, forge new kinds of relationships, and seize advantage of work opportunities. For example:

Type Characteristics Strengths Weaknesses

Opportunist

Wins any way possible.

Self-oriented; manipula-tive; “might makes right.”

Good in emergencies and in pursuing sales.

Few people want to follow them for the long term.

Diplomat

Avoids conflict.

Wants to belong; obeys group norms; doesn’t rock the boat.

Supportive glue on teams. Can’t provide painful feed-back or make the hard deci-sions needed to improve performance.

Expert

Rules by logic and exper-tise.

Uses hard data to gain consensus and buy-in.

Good individual contributor. Lacks emotional intelli-gence; lacks respect for those with less expertise.

Achiever

Meets strategic goals.

Pro-motes teamwork; juggles managerial duties and re-sponds to market demands to achieve goals.

Well suited to managerial work.

Inhibits thinking outside the box.

Individualist

Operates in unconven-tional ways.

Ignores rules he/she regards as irrelevant.

Effective in venture and con-sulting roles.

Irritates colleagues and bosses by ignoring key orga-nizational processes and people.

Strategist

Generates organizational and personal change.

Highly collaborative; weaves visions with pragmatic, timely initiatives; challenges existing assumptions.

Generates transformations over the short and long term.

None

Alchemist

Generates social transfor-mations (e.g., Nelson Man-dela).

Reinvents organiza-tions in historically significant ways.

Leads societywide change. None

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The Idea in Practice

(continued)


To advance from. . . Take these steps

Expert to Achiever Focus more on delivering results than on perfecting your knowledge:• Become aware of differences between your assumptions and those of

others. For example, practice new conversational strategies such as “You may be right, but I’d like to understand what leads you to believe that.”

• Participate in training programs on topics such as effective delegation and leading high-performing teams

Achiever to Individualist Instead of accepting goals as givens to be achieved:• Reflect on the worth of the goals themselves, with the aim of improving

future goals• Use annual leadership development planning to thoughtfully set the

highest-impact goals

Individualist to Strategist Engage in peer-to-peer development:• Establish mutual mentoring with members of your professional

network (board members, top managers, industry leaders) who can challenge your assumptions and practices, as well as those of your company and industry.

Example:One CEO of a dental hygiene company envisioned introducing af-fordable dental hygiene in developing countries. He explored the idea with colleagues across the country, eventually proposing an ed-ucational and charitable venture that his parent company agreed to fund. He was promoted to a new vice presidency for international ventures within the parent company.

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by David Rooke and William R. Torbert

harvard business review • april 2005

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Leaders are made, not born, and how they develop is critical for

organizational change.

Most developmental psychologists agree thatwhat differentiates leaders is not so muchtheir philosophy of leadership, their personal-ity, or their style of management. Rather, it’stheir internal “action logic”—how they inter-pret their surroundings and react when theirpower or safety is challenged. Relatively fewleaders, however, try to understand their ownaction logic, and fewer still have explored thepossibility of changing it.

They should, because we’ve found that lead-ers who do undertake a voyage of personal un-derstanding and development can transformnot only their own capabilities but also thoseof their companies. In our close collabora-tion with psychologist Susanne Cook-Greu-ter—and our 25 years of extensive survey-based consulting at companies such as Deut-sche Bank, Harvard Pilgrim Health Care,Hewlett-Packard, NSA, Trillium Asset Man-agement, Aviva, and Volvo—we’ve workedwith thousands of executives as they’ve triedto develop their leadership skills. The goodnews is that leaders who make an effort to un-

derstand their own action logic can improvetheir ability to lead. But to do that, it’s impor-tant first to understand what kind of leaderyou already are.

The Seven Action Logics

Our research is based on a sentence-completionsurvey tool called the Leadership Develop-ment Profile. Using this tool, participants areasked to complete 36 sentences that beginwith phrases such as “A good leader…,” towhich responses vary widely:

“…cracks the whip.”“…realizes that it’s important to achieve

good performance from subordinates.”“…juggles competing forces and takes

responsibility for her decisions.”By asking participants to complete sen-

tences of this type, it’s possible for highlytrained evaluators to paint a picture of howparticipants interpret their own actions andthe world around them; these “pictures” showwhich one of seven developmental action logics—Opportunist, Diplomat, Expert, Achiever, In-

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David Rooke

([email protected]) is a partner at Harthill Consulting in Hewelsfield, England.

William R. Torbert

([email protected]) is a profes-sor at Boston College’s Carroll School of Management in Massachusetts. They are coauthors of

Action Inquiry: The Secret of Timely and Transforming Leadership

(Berrett-Koehler, 2004).

dividualist, Strategist, or Alchemist—currentlyfunctions as a leader’s dominant way of think-ing. Leaders can move through these categoriesas their abilities grow, so taking the LeadershipDevelopment Profile again several years latercan reveal whether a leader’s action logichas evolved.

Over the past 25 years, we and other re-searchers have administered the sentence-completion survey to thousands of managersand professionals, most between the ages of 25and 55, at hundreds of American and Euro-pean companies (as well as nonprofits andgovernmental agencies) in diverse industries.What we found is that the levels of corporateand individual performance vary according toaction logic. Notably, we found that the threetypes of leaders associated with below-averagecorporate performance (Opportunists, Diplo-mats, and Experts) accounted for 55% of oursample. They were significantly less effective atimplementing organizational strategies thanthe 30% of the sample who measured asAchievers. Moreover, only the final 15% ofmanagers in the sample (Individualists, Strate-gists, and Alchemists) showed the consistentcapacity to innovate and to successfully trans-form their organizations.

To understand how leaders fall into such dis-tinct categories and corporate performance,let’s look in more detail at each leadershipstyle in turn, starting with the least productive(and least complex).

The Opportunist

Our most comforting finding was that only 5%of the leaders in our sample were character-ized by mistrust, egocentrism, and manipula-tiveness. We call these leaders Opportunists, atitle that reflects their tendency to focus onpersonal wins and see the world and otherpeople as opportunities to be exploited. Theirapproach to the outside world is largely deter-mined by their perception of control—inother words, how they will react to an eventdepends primarily on whether or not theythink they can direct the outcome. They treatother people as objects or as competitors whoare also out for themselves.

Opportunists tend to regard their bad be-havior as legitimate in the cut and thrust of aneye-for-an-eye world. They reject feedback, ex-ternalize blame, and retaliate harshly. One cansee this action logic in the early work of Larry

Ellison (now CEO of Oracle). Ellison describeshis managerial style at the start of his career as“management by ridicule.” “You’ve got to begood at intellectual intimidation and rhetori-cal bullying,” he once told Matthew Symondsof the

Economist

. “I’d excuse my behavior bytelling myself I was just having ‘an open andhonest debate.’ The fact is, I just didn’t knowany better.”

Few Opportunists remain managers for long,unless they transform to more effective actionlogics (as Ellison has done). Their constant fire-fighting, their style of self-aggrandizement, andtheir frequent rule breaking is the antithesis ofthe kind of leader people want to work withfor the long term. If you have worked for anOpportunist, you will almost certainly re-member it as a difficult time. By the same to-ken, corporate environments that breed oppor-tunism seldom endure, although Opportunistsoften survive longer than they should becausethey provide an exciting environment in whichyounger executives, especially, can take risks.As one ex-Enron senior staffer said, “Before thefall, those were such exciting years. We felt wecould do anything, pull off everything, writeour own rules. The pace was wild, and we alljust rode it.” Of course, Enron’s shareholdersand pensioners would reasonably feel thatthey were paying too heavily for that staffer’sadventure.

The Diplomat

The Diplomat makes sense of the worldaround him in a more benign way than theOpportunist does, but this action logic canalso have extremely negative repercussions ifthe leader is a senior manager. Loyally servingthe group, the Diplomat seeks to pleasehigher-status colleagues while avoiding con-flict. This action logic is focused on gainingcontrol of one’s own behavior—more than ongaining control of external events or otherpeople. According to the Diplomat’s actionlogic, a leader gains more enduring acceptanceand influence by cooperating with groupnorms and by performing his daily roles well.

In a support role or a team context, thistype of executive has much to offer. Diplo-mats provide social glue to their colleaguesand ensure that attention is paid to theneeds of others, which is probably why thegreat majority of Diplomats work at the mostjunior rungs of management, in jobs such as

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frontline supervisor, customer service repre-sentative, or nurse practitioner. Indeed, researchinto 497 managers in different industriesshowed that 80% of all Diplomats were atjunior levels. By contrast, 80% of all Strate-gists were at senior levels, suggesting that

managers who grow into more effectiveaction logics—like that of the Strategist—have agreater chance of being promoted.

Diplomats are much more problematic intop leadership roles because they try to ignoreconflict. They tend to be overly polite and

Seven Ways of Leading

Different leaders exhibit different kinds of action logic—ways in which they interpret their surroundings and react when their power or safety is challenged. In our re-search of thousands of leaders, we observed seven types of action logics. The least effec-

tive for organizational leadership are the Opportunist and Diplomat; the most effec-tive, the Strategist and Alchemist. Knowing your own action logic can be the first step toward developing a more effective leader-ship style. If you recognize yourself as an In-

dividualist, for example, you can work, through both formal and informal mea-sures, to develop the strengths andcharacteristics of a Strategist.

Action Logic

Opportunist

Diplomat

Expert

Achiever

Individualist

Strategist

Alchemist

5%

12%

38%

30%

10%

4%

1%

Characteristics

Wins any way possible. Self-oriented;

manipulative; “might makes right.”

Avoids overt conflict. Wants to belong;

obeys group norms; rarely rocks the

boat.

Rules by logic and expertise. Seeks

rational efficiency.

Meets strategic goals. Effectively

achieves goals through teams; juggles

managerial duties and market

demands.

Interweaves competing personal and

company action logics. Creates unique

structures to resolve gaps between

strategy and performance.

Generates organizational and personal

transformations. Exercises the power

of mutual inquiry, vigilance, and

vulnerability for both the short and

long term.

Generates social transformations. Inte-

grates material, spiritual, and societal

transformation.

Strengths

Good in emergencies and

in sales opportunities.

Good as supportive glue

within an office; helps bring

people together.

Good as an individual

contributor.

Well suited to managerial

roles; action and goal

oriented.

Effective in venture and

consulting roles.

Effective as a transforma-

tional leader.

Good at leading society-wide

transformations.

% of research sample atthis action logic

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friendly and find it virtually impossible to givechallenging feedback to others. Initiatingchange, with its inevitable conflicts, representsa grave threat to the Diplomat, and he willavoid it if at all possible, even to the point ofself-destruction.

Consider one Diplomat who became the in-terim CEO of an organization when his prede-cessor died suddenly from an aneurysm. Whenthe board split on the selection of a permanentsuccessor, it asked the Diplomat to carry on.Our Diplomat relished his role as a ceremonialfigurehead and was a sought-after speaker atpublic events. Unfortunately, he found themore conflictual requirements of the job lessto his liking. He failed, for instance, to replacea number of senior managers who had seriousongoing performance issues and were resist-ing the change program his predecessor hadinitiated. Because the changes were controver-sial, the Diplomat avoided meetings, evenplanning business trips for the times when thesenior team would meet. The team memberswere so frustrated by the Diplomat’s attitudethat they eventually resigned en masse. He “re-solved” this crisis by thanking the team pub-licly for its contribution and appointing newteam members. Eventually, in the face ofmounting losses arising from this poor man-agement, the board decided to demote theDiplomat to his former role as vice president.

The Expert

The largest category of leader is that of Ex-perts, who account for 38% of all professionalsin our sample. In contrast to Opportunists,who focus on trying to control the worldaround them, and Diplomats, who concen-trate on controlling their own behavior, Ex-perts try to exercise control by perfecting theirknowledge, both in their professional and per-sonal lives. Exercising watertight thinking isextremely important to Experts. Not surpris-ingly, many accountants, investment analysts,marketing researchers, software engineers,and consultants operate from the Expert ac-tion logic. Secure in their expertise, theypresent hard data and logic in their efforts togain consensus and buy-in for their proposals.

Experts are great individual contributorsbecause of their pursuit of continuous im-provement, efficiency, and perfection. But asmanagers, they can be problematic becausethey are so completely sure they are right.

When subordinates talk about a my-way-or-the-highway type of boss, they are probablytalking about someone operating from an Ex-pert action logic. Experts tend to view collabo-ration as a waste of time (“Not all meetings area waste of time—some are canceled!”), andthey will frequently treat the opinion of peopleless expert than themselves with contempt.Emotional intelligence is neither desired norappreciated. As Sun Microsystems’ CEO ScottMcNealy put it: “I don’t do feelings; I’ll leavethat to Barry Manilow.”

It comes as no surprise, then, that after un-successfully pleading with him to scale backin the face of growing losses during the dot-com debacle of 2001 and 2002, nearly a dozenmembers of McNealy’s senior managementteam left.

The Achiever

For those who hope someday to work for amanager who both challenges and supportsthem and creates a positive team and interde-partmental atmosphere, the good news is thata large proportion, 30%, of the managers inour research measured as Achievers. Whilethese leaders create a positive work environ-ment and focus their efforts on deliverables,the downside is that their style often inhibitsthinking outside the box.

Achievers have a more complex and inte-grated understanding of the world than domanagers who display the three previous ac-tion logics we’ve described. They’re open tofeedback and realize that many of the ambigu-ities and conflicts of everyday life are due todifferences in interpretation and ways of relat-ing. They know that creatively transforming orresolving clashes requires sensitivity to rela-tionships and the ability to influence others inpositive ways. Achievers can also reliably lead ateam to implement new strategies over a one-to three-year period, balancing immediate andlong-term objectives. One study of ophthal-mologists in private practice showed that thosewho scored as Achievers had lower staff turn-over, delegated more responsibility, and hadpractices that earned at least twice the grossannual revenues of those run by Experts.

Achievers often find themselves clashingwith Experts. The Expert subordinate, in par-ticular, finds the Achiever leader hard to takebecause he cannot deny the reality of theAchiever’s success even though he feels supe-

Initiating change, with

its inevitable conflicts,

represents a grave threat

to the Diplomat, and he

will avoid it if at all

possible, even to the point

of self-destruction.

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rior. Consider Hewlett-Packard, where the re-search engineers tend to score as Experts andthe lab managers as higher-level Achievers. Atone project meeting, a lab manager—a de-cided Achiever—slammed her coffee cup onthe table and exclaimed, “I

know

we can get 18features into this, but the customers want de-livery some time this century, and the maineight features will do.” “Philistine!” snorted oneengineer, an Expert. But this kind of conflictisn’t always destructive. In fact, it provides muchof the fuel that has ignited—and sustained—the competitiveness of many of the country’smost successful corporations.

The Individualist

The Individualist action logic recognizes thatneither it nor any of the other action logics are“natural”; all are constructions of oneself andthe world. This seemingly abstract idea enablesthe 10% of Individualist leaders to contributeunique practical value to their organizations;they put personalities and ways of relatinginto perspective and communicate well withpeople who have other action logics.

What sets Individualists apart from Achiev-ers is their awareness of a possible conflictbetween their principles and their actions, orbetween the organization’s values and its im-plementation of those values. This conflict be-comes the source of tension, creativity, and agrowing desire for further development.

Individualists also tend to ignore rules theyregard as irrelevant, which often makes thema source of irritation to both colleagues andbosses. “So, what do you think?” one of ourclients asked us as he was debating whetherto let go of one of his star performers, awoman who had been measured as an Indi-vidualist. Sharon (not her real name) hadbeen asked to set up an offshore shared ser-vice function in the Czech Republic in orderto provide IT support to two separate and in-ternally competitive divisions operating there.She formed a highly cohesive team withinbudget and so far ahead of schedule that shequipped that she was “delivering services be-fore Group Business Risk had delivered itsreport saying it can’t be done.”

The trouble was that Sharon had a reputa-tion within the wider organization as a wildcard. Although she showed great politicalsavvy when it came to her individual projects,she put many people’s noses out of joint in the

larger organization because of her unique, un-conventional ways of operating. Eventually,the CEO was called in (not for the first time) toresolve a problem created by her failure to ac-knowledge key organizational processes andpeople who weren’t on her team.

Many of the dynamics created by differentaction logics are illustrated by this story and itsoutcome. The CEO, whose own action logicwas that of an Achiever, did not see how hecould challenge Sharon to develop and movebeyond creating such problems. Although am-bivalent about her, he decided to retain herbecause she was delivering and because the or-ganization had recently lost several capable, ifunconventional, managers.

So Sharon stayed, but only for a while. Even-tually, she left the company to set up an off-shoring consultancy. When we examine in thesecond half of this article how to help execu-tives transform their leadership action logics,we’ll return to this story to see how bothSharon and the CEO might have succeeded intransforming theirs.

The Strategist

Strategists account for just 4% of leaders.What sets them apart from Individualists istheir focus on organizational constraints andperceptions, which they treat as discussableand transformable. Whereas the Individualistmasters communication with colleagues whohave different action logics, the Strategist mas-ters the second-order organizational impact ofactions and agreements. The Strategist is alsoadept at creating shared visions across differ-ent action logics—visions that encourage bothpersonal and organizational transformations.According to the Strategist’s action logic, orga-nizational and social change is an iterative de-velopmental process that requires awarenessand close leadership attention.

Strategists deal with conflict more comfort-ably than do those with other action logics,and they’re better at handling people’s instinc-tive resistance to change. As a result, Strate-gists are highly effective change agents. Wefound confirmation of this in our recent studyof ten CEOs in six different industries. All oftheir organizations had the stated objective oftransforming themselves and had engaged con-sultants to help with the process. Each CEOfilled out a Leadership Development Profile,which showed that five of them were Strate-

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gists and the other five fell into other actionlogics. The Strategists succeeded in generatingone or more organizational transformationsover a four-year period; their companies’ prof-itability, market share, and reputation allimproved. By contrast, only two of the otherfive CEOs succeeded in transforming theirorganizations—despite help from consultants,who themselves profiled as Strategists.

Strategists are fascinated with three distinctlevels of social interplay: personal relation-ships, organizational relations, and nationaland international developments. ConsiderJoan Bavaria, a CEO who, back in 1985, mea-sured as a Strategist. Bavaria created one of thefirst socially responsible investment funds, anew subdivision of the investments industry,which by the end of 2001 managed more than$3 trillion in funds. In 1982, Bavaria foundedTrillium Asset Management, a worker-ownedcompany, which she still heads. She alsocowrote the CERES Environmental Principles,which dozens of major companies have signed.In the late 1990s, CERES, working with theUnited Nations, created the Global ReportingInitiative, which supports financial, social,and environmental transparency and account-ability worldwide.

Here we see the Strategist action logic atwork. Bavaria saw a unique moment in whichto make ethical investing a viable business, thenestablished Trillium to execute her plan. Strate-gists typically have socially conscious businessideas that are carried out in a highly collabora-tive manner. They seek to weave together ideal-ist visions with pragmatic, timely initiatives andprincipled actions. Bavaria worked beyond theboundaries of her own organization to influ-ence the socially responsible investment indus-try as a whole and later made the developmentof social and environmental accountability stan-dards an international endeavor by involvingthe United Nations. Many Achievers will usetheir influence to successfully promote theirown companies. The Strategist works to createethical principles and practices beyond the in-terests of herself or her organization.

The Alchemist

The final leadership action logic for which wehave data and experience is the Alchemist. Ourstudies of the few leaders we have identified asAlchemists suggest that what sets them apartfrom Strategists is their ability to renew or

even reinvent themselves and their organiza-tions in historically significant ways. Whereasthe Strategist will move from one engagementto another, the Alchemist has an extraordi-nary capacity to deal simultaneously withmany situations at multiple levels. The Alche-mist can talk with both kings and commoners.He can deal with immediate priorities yetnever lose sight of long-term goals.

Alchemists constitute 1% of our sample,which indicates how rare it is to find them inbusiness or anywhere else. Through an exten-sive search process, we found six Alchemistswho were willing to participate in an up-closestudy of their daily actions. Though this is obvi-ously a very small number that cannot statisti-cally justify generalization, it’s worth notingthat all six Alchemists shared certain character-istics. On a daily basis, all were engaged in mul-tiple organizations and found time to deal withissues raised by each. However, they were notin a constant rush—nor did they devote hourson end to a single activity. Alchemists are typi-cally charismatic and extremely aware individ-uals who live by high moral standards. Theyfocus intensely on the truth. Perhaps most im-portant, they’re able to catch unique momentsin the history of their organizations, creatingsymbols and metaphors that speak to people’shearts and minds. In one conservative financialservices company in the UK, a recently ap-pointed CEO turned up for work in a tracksuitinstead of his usual pinstripes but said nothingabout it to anyone. People wondered whetherthis was a new dress code. Weeks later, theCEO spoke publicly about his attire and theneed to be unconventional and to move withgreater agility and speed.

A more celebrated example of an Alchemistis Nelson Mandela. Although we never for-mally profiled Mandela, he exemplifies the Al-chemist action logic. In 1995, Mandela symbol-ized the unity of a new South Africa when heattended the Rugby World Cup game in whichthe Springboks, the South African nationalteam, were playing. Rugby had been the bastionof white supremacy, but Mandela attended thegame. He walked on to the pitch wearing theSpringboks’ jersey so hated by black South Af-ricans, at the same time giving the clenchedfist salute of the ANC, thereby appealing, al-most impossibly, both to black and whiteSouth Africans. As Tokyo Sexwale, ANC activ-ist and premier of South Africa’s Gauteng prov-

What sets Alchemists

apart from Strategists is

their ability to renew or

even reinvent themselves

and their organizations

in historically significant

ways.

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ince, said of him: “Only Mandela could wearan enemy jersey. Only Mandela would godown there and be associated with the Spring-boks… All the years in the underground, in thetrenches, denial, self-denial, away from home,prison, it was worth it. That’s all we wanted tosee.”

Evolving as a Leader

The most remarkable—and encouraging—finding from our research is that leaders cantransform from one action logic to another.We have, in fact, documented a number ofleaders who have succeeded in transformingthemselves from Experts into Achievers, fromAchievers into Individualists, and from Indi-vidualists into Strategists.

Take the case of Jenny, one of our clients,who initially measured as an Expert. She be-came disillusioned with her role in her com-pany’s PR department and resigned in orderto, as she said, “sort out what I really want todo.” Six months later, she joined a differentcompany in a similar role, and two years afterthat we profiled her again and she still mea-sured as an Expert. Her decision to resign fromthe first company, take a “sabbatical,” and thenjoin the second company had made no differ-ence to her action logic. At that point, Jennychose to join a group of peer leaders commit-ted to examining their current leadership pat-terns and to experimenting with new ways ofacting. This group favored the Strategist per-spective (and the founder of the group wasprofiled as an Alchemist), which in the endhelped Jenny’s development. She learned thather habit of consistently taking a critical posi-tion, which she considered “usefully objective,”isolated her and generated distrust. As a resultof the peer group’s feedback, she started a se-ries of small and private experiments, such asasking questions rather than criticizing. She re-alized that instead of seeing the faults in oth-ers, she had to be clear about what

she

couldcontribute and, in doing so, started the movefrom an Expert to an Achiever. Spiritually,Jenny learned that she needed an ongoingcommunity of inquiry at the center of her lifeand found a spiritual home for continuing re-flection in Quaker meetings, which later sup-ported (and indeed signaled) her transitionfrom an Achiever to an Individualist.

Two years later, Jenny left the second job tostart her own company, at which point she

began profiling as a Strategist. This was ahighly unusual movement of three action log-ics in such a short time. We have had only twoother instances in which a leader has trans-formed twice in less than four years.

As Jenny’s case illustrates, there are a num-ber of personal changes that can support lead-ership transformation. Jenny experienced lossof faith in the system and feelings of boredom,irritability, burnout, depression, and even an-ger. She began to ask herself existential ques-tions. But another indication of a leader’sreadiness to transform is an increasing attrac-tion to the qualities she begins to intuit in peo-ple with more effective action logics. Jenny, aswe saw, was drawn to and benefited hugelyfrom her Strategist peer group as well as froma mentor who exhibited the Alchemist actionlogic. This search for new perspectives oftenmanifests itself in personal transformations:The ready-to-transform leader starts develop-ing new relationships. She may also explorenew forms of spiritual practice or new forms ofcentering and self-expression, such as playing amusical instrument or doing tai chi.

External events can also trigger and supporttransformation. A promotion, for example,may give a leader the opportunity to expandhis or her range of capabilities. Earlier, we citedthe frustration of Expert research engineers atHewlett-Packard with the product and deliveryattitude of Achiever lab managers. Within ayear of one engineer’s promotion to lab man-ager, a role that required coordination of oth-ers and cooperation across departments, theformer Expert was profiling as an Achiever. Al-though he initially took some heat (“Sellout!”)from his former buddies, his new Achieverawareness meant that he was more focused oncustomers’ needs and clearer about deliveryschedules. For the first time, he understood thedance between engineers trying to perfect thetechnology and managers trying to deliver onbudget and on schedule.

Changes to a manager’s work practices andenvironment can also facilitate transformation.At one company we studied, leaders changedfrom Achievers to Individualists partly becauseof simple organizational and process changes.At the company’s senior manager meetings,for example, executives other than the CEOhad the chance to lead the meetings; these op-portunities, which were supported by newspirit of openness, feedback, and frank debate,

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fostered professional growth among many ofthe company’s leaders.

Planned and structured development inter-ventions are another means of supportingleadership transformation. We worked with aleading oil and gas exploration company on de-veloping the already high-level capabilities of apool of future senior managers; the managerswere profiled and then interviewed by twoconsultants who explored each manager’s ac-tion logic and how it constrained and enabledhim or her to perform current and recent roles.Challenges were discussed as well as a viewof the individual’s potential and a possible de-velopmental plan. After the exercise, severalmanagers, whose Individualist and Strategistcapabilities had not been fully understood bythe company, were appreciated and engageddifferently in their roles. What’s more, the or-ganization’s own definition of leadership talentwas reframed to include the capabilities of theIndividualist and Strategist action logics. Thisin turn demanded that the company radicallyrevisit its competency framework to incorpo-rate such expectations as “sees issues from mul-tiple perspectives” and “creates deep changewithout formal power.”

Now that we’ve looked generally at some ofthe changes and interventions that can sup-port leadership development, let’s turn tosome specifics about how the most commontransformations are apt to take place.

From Expert to Achiever

This transformation is the most commonly ob-served and practiced among businesspeopleand by those in management and executiveeducation. For the past generation or more,the training departments of large companieshave been supporting the development ofmanagers from Experts into Achievers by run-ning programs with titles like “Managementby Objectives,” “Effective Delegation,” and“Managing People for Results.” These programstypically emphasize getting results throughflexible strategies rather than through oneright method used in one right way.

Observant leaders and executive coachescan also formulate well-structured exercisesand questions related to everyday work to helpExperts become aware of the different assump-tions they and others may be making. Theseefforts can help Experts practice new conver-sational strategies such as, “You may be right,

but I’d like to understand what leads you tobelieve that.” In addition, those wishing topush Experts to the next level should considerrewarding Achiever competencies like timelydelivery of results, the ability to manage forperformance, and the ability to implementstrategic priorities.

Within business education, MBA programsare apt to encourage the development of themore pragmatic Achievers by frustrating theperfectionist Experts. The heavy workloads,use of multidisciplinary and ambiguous casestudies, and teamwork requirements all pro-mote the development of Achievers. By con-trast, MSc programs, in particular disciplinessuch as finance or marketing research, tend toreinforce the Expert perspective.

Still, the transition from Expert to Achieverremains one of the most painful bottlenecks inmost organizations. We’ve all heard the eternallament of engineers, lawyers, and other profes-sionals whose Expert success has saddled themwith managerial duties, only to estrange themfrom the work they love. Their challenge be-comes working as highly effective Achieverswho can continue to use their in-depth exper-tise to succeed as leaders and managers.

From Achiever to Individualist

Although organizations and business schoolshave been relatively successful in developingleaders to the Achiever action logic, they have,with few exceptions, a dismal record in recog-nizing, supporting, and

actively

developingleaders to the Individualist and Strategist actionlogics, let alone to the Alchemist logic. This isnot surprising. In many organizations, theAchiever, with his drive and focus on the end-game, is seen as the finish line for develop-ment: “This is a competitive industry—we needto keep a sharp focus on the bottom line.”

The development of leaders beyond theAchiever action logic requires a very differenttack from that necessary to bring about theExpert-to-Achiever transformation. Interven-tions must encourage self-awareness on thepart of the evolving leader as well as a greaterawareness of other worldviews. In both busi-ness and personal relationships, speaking andlistening must come to be experienced not asnecessary, taken-for-granted ways of communi-cating predetermined ideas but as intrinsicallyforward-thinking, creative actions. Achieversuse inquiry to determine whether they (and

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the teams and organization to which they be-long) are accomplishing their goals and howthey might accomplish them more effectively.The developing Individualist, however, beginsto inquire about and reflect on the goalsthemselves—with the aim of improving futuregoals. Annual development plans that set newgoals, are generated through probing andtrusting conversation, are actively supportedthrough executive coaching, and are carefullyreviewed at the end of the cycle can be criticalenablers at this point. Yet few boards and CEOsappreciate how valuable this time investmentcan be, and it is all too easily sacrificed in theface of short-term objectives, which can seemmore pressing to leaders whose action logicsare less developed.

Let’s go back to the case of Sharon, the Indi-vidualist we described earlier whose AchieverCEO wasn’t able to manage her. How might acoach or consultant have helped the CEO feelless threatened by Sharon and more capable ofsupporting her development while also beingmore open to his own needs and potential?One way would have been to try role-playing,asking the CEO to play Sharon while the coachor consultant enacts the CEO role. The role-playing might have gone as follows:

“Sharon, I want to talk with you about yourfuture here at our company. Your completionof the Czech project under budget and aheadof time is one more sign that you have the ini-tiative, creativity, and determination to makethe senior team here. At the same time, I’vehad to pick up a number of pieces after youthat I shouldn’t have had to. I’d like to brain-storm together about how you can approachfuture projects in a way that eliminates thishassle and gets key players on your side. Then,we can chat several times over the next year asyou begin to apply whatever new principles wecome up with. Does this seem like a good useof our time, or do you have a different perspec-tive on the issue?”

Note that the consultant in the CEO’s roleoffers clear praise, a clear description of a limi-tation, a proposed path forward, and an in-quiry that empowers the CEO (playing Sharon)to reframe the dilemma if he wishes. Thus, in-stead of giving the CEO one-way advice aboutwhat he should do, the coach enacts a dialogicscenario with him, illustrating a new kind ofpractice and letting the CEO judge whetherthe enacted relationship is a positive one. The

point is not so much to teach the CEO a newconversational repertoire but to make himmore comfortable with how the Individualistsees and makes sense of the world around herand what feedback may motivate her to com-mit to further learning. Such specific experi-ments with new ways of listening and talkingcan gradually dissolve the fears associated withtransformational learning.

To Strategist and Beyond

Leaders who are moving toward the Strate-gist and Alchemist action logics are no longerprimarily seeking personal skills that willmake them more effective within existing or-ganizational systems. They will already havemastered many of those skills. Rather, theyare exploring the disciplines and commit-ments entailed in creating projects, teams,networks, strategic alliances, and whole orga-nizations on the basis of collaborative in-quiry. It is this ongoing practice of reframinginquiry that makes them and their corpora-tions so successful.

The path toward the Strategist and Alchemistaction logics is qualitatively different from otherleadership development processes. For a start,emergent Strategists and Alchemists are nolonger seeking mentors to help them sharpenexisting skills and to guide them toward influen-tial networks (although they may seek spiritualand ethical guidance from mentors). Instead,they are seeking to engage in mutual mentoringwith peers who are already part of their net-works (such as board members, top managers,or leaders within a scientific discipline). The ob-jective of this senior-peer mentoring is not, inconventional terms, to increase the chances ofsuccess but to create a sustainable communityof people who can challenge the emergentleader’s assumptions and practices and those ofhis company, industry, or other area of activity.

We witnessed just this kind of peer-to-peerdevelopment when one senior client becameconcerned that he, his company, and the indus-try as a whole were operating at the Achieverlevel. This concern, of course, was itself a signof his readiness to transform beyond that logic.This executive—the CEO of a dental hygienecompany—and his company were among themost successful of the parent company’s sub-sidiaries. However, realizing that he and thosearound him had been keeping their headsdown, he chose to initiate a research project—

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on introducing affordable dental hygiene indeveloping countries—that was decidedly outof the box for him and for the corporation.

The CEO’s timing was right for such an ini-tiative, and he used the opportunity to en-gage in collaborative inquiry with colleaguesacross the country. Eventually, he proposedan educational and charitable venture, whichthe parent company funded. The executivewas promoted to a new vice presidency forinternational ventures within the parentcompany—a role he exercised with an in-creased sense of collaboration and a greaterfeeling of social responsibility for his com-pany in emerging markets.

Formal education and development processescan also guide individuals toward a Strategist ac-tion logic. Programs in which participants act asleaders and challenge their conventional as-sumptions about leading and organizing arevery effective. Such programs will be eitherlong term (one or two years) or repeated, in-tense experiences that nurture the moment-to-moment awareness of participants, alwaysproviding the shock of dissonance that stimu-lates them to reexamine their worldviews. Path-breaking programs of this type can be foundat a few universities and consultancies aroundthe globe. Bath University in the UK, for in-stance, sponsors a two-year master’s degree inresponsibility and business practice in whichstudents work together during six one-week get-togethers. These programs involve small-learning teams, autobiographical writing, psy-chodrama, deep experiences in nature, and ayearlong business project that involves actionand reflection. Interestingly, many peoplewho attend these programs report that theseexperiences have had the transformative powerof a life-altering event, such as a career or exis-tential crisis or a new marriage.

Leadership Teams and Leadership Cultures Within Organizations

So far, our discussion has focused on the lead-ership styles of individuals. But we have foundthat our categories of leadership styles can beused to describe teams and organizations aswell. Here we will talk briefly about the actionlogics of teams.

Over the long term, the most effectiveteams are those with a Strategist culture, inwhich the group sees business challenges asopportunities for growth and learning on the

part of both individuals and the organization.A leadership team at one of the companieswe worked with decided to invite managersfrom across departments to participate intime-to-market new product teams. Seen as arisky distraction, few managers volunteered,except for some Individualists and buddingStrategists. However, senior managementprovided sufficient support and feedback toensure the teams’ early success. Soon, thefirst participants were promoted and leadingtheir own cross-departmental teams. TheAchievers in the organization, seeing thatothers were being promoted, started volun-teering for these teams. Gradually, morepeople within the organization were experi-encing shared leadership, mutual testing ofone another’s assumptions and practices, andindividual challenges that contributed totheir development as leaders.

Sadly, few companies use teams in this way.Most senior manager teams operate at theAchiever action logic—they prefer unambiguoustargets and deadlines, and working with clearstrategies, tactics, and plans, often against tightdeadlines. They thrive in a climate of adversity(“When the going gets tough, the tough get go-ing”) and derive great pleasure from pulling to-gether and delivering. Typically, the team’s lead-ers and several other members will be Achievers,with several Experts and perhaps one or two Indi-vidualists or Strategists (who typically feel ig-nored). Such Achiever teams are often impatientat slowing down to reflect, are apt to dismissquestions about goals and assumptions as “end-less philosophizing,” and typically respond withhostile humor to creative exercises, calling them“off-the-wall” diversions. These behaviors will ul-timately limit an Achiever team’s success.

The situation is worse at large, mature com-panies where senior management teams op-erate as Experts. Here, vice presidents seethemselves as chiefs and their “teams” as an in-formation-reporting formality. Team life is be-reft of shared problem-solving, decision-mak-ing, or strategy-formulating efforts. Seniorteams limited by the Diplomat action logic areeven less functional. They are characterized bystrong status differences, undiscussable norms,and ritual “court” ceremonies that are carefullystage-managed.

Individualist teams, which are more likelyto be found in creative, consulting, and non-profit organizations, are relatively rare and

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very different from Achiever, Expert, andDiplomat teams. In contrast to Achiever teams,they may be strongly reflective; in fact, exces-sive time may be spent reviewing goals, as-sumptions, and work practices. Because indi-vidual concerns and input are veryimportant to these teams, rapid decisionmaking may be difficult.

But like individual people, teams canchange their style. For instance, we’ve seenStrategist CEOs help Individualist seniorteams balance action and inquiry and sotransform into Strategist teams. Another ex-ample is an Achiever senior team in a finan-cial services company we worked with thatwas emerging from two years of harsh costcutting during a market downturn. To adaptto a changing and growing financial servicesmarket, the company needed to become sig-nificantly more visionary and innovative andlearn how to engage its workforce. To leadthis transformation, the team had to startwith itself. We worked with it to help teammembers understand the constraints of theAchiever orientation, which required a num-ber of interventions over time. We began byworking to improve the way the team dis-cussed issues and by coaching individualmembers, including the CEO. As the teamevolved, it became apparent that its composi-tion needed to change: Two senior executives,who had initially seemed ideally suited to thegroup because of their achievements, had tobe replaced when it became clear that theywere unwilling to engage and experimentwith the new approach.

During this reorientation, which lasted

slightly more than two years, the team becamean Individualist group with emergent Strate-gist capabilities. The CEO, who had profiled atAchiever/Individualist, now profiled as a Strat-egist, and most other team members showedone developmental move forward. The impactof this was also felt in the team’s and organiza-tion’s ethos: Once functionally divided, theteam learned to accept and integrate the di-verse opinions of its members. Employee sur-veys reported increased engagement across thecompany. Outsiders began seeing the companyas ahead of the curve, which meant the organi-zation was better able to attract top talent. Inthe third year, bottom- and top-line resultswere well ahead of industry competitors.

• • •

The leader’s voyage of development is not aneasy one. Some people change little in theirlifetimes; some change substantially. Despitethe undeniably crucial role of genetics,human nature is not fixed. Those who arewilling to work at developing themselves andbecoming more self-aware can almost cer-tainly evolve over time into truly transforma-tional leaders. Few may become Alchemists,but many will have the desire and potentialto become Individualists and Strategists. Cor-porations that help their executives and lead-ership teams examine their action logics canreap rich rewards.

Reprint R0504D


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To Order

For






Further Reading

A R T I C L E S

Moments of Greatness: Entering the Fundamental State of Leadership

by Robert E. Quinn


July 2005Product no. R0507K

Changing your action logic requires a signifi-cant shift in your thinking processes. In this article, Quinn describes another strategy for changing your thinking process in order to strengthen your leadership skills. This strategy entails asking yourself a series of questions to generate insights into the changes you must make to become a more effective leader. The questions: 1)

“Am I results-centered?”

Have you articulated the results you want to achieve? 2)

“Am I internally directed?”

Are you willing to challenge others’ expectations in order to act consistently with your own values? 3)

“Am I other-focused?”

Have you put your organization’s needs above your own? 4)

“Am I externally open?”

Do you recognize signals suggesting the need for personal change?


by Daniel Goleman


February 2000Product no. R0401H

Upgrading your action logic—whether it’s from Expert to Achiever, from Achiever to Indi-vidualist, or from Individualist to Strategist or Alchemist—requires

emotional intelligence

, a powerful blend of self-management and re-lational skills. Goleman defines the five com-ponents of emotional intelligence.

Self-management skills

include

self-awareness

(knowledge of your weaknesses and willing-ness to discuss them),

self-regulation

(the abil-ity to control your impulses and channel them for good), and

motivation

(a passion for achievement for its own sake).

Relational skills

include

empathy

(the capacity to take others’ feelings into account while making de-cisions) and

social skill

(the ability to build rap-port with others, win their cooperation, and move them in the direction you desire). To boost your emotional intelligence, commit to making the changes necessary to becom-ing an effective leader, ask colleagues for feedback on your leadership, and practice the five skills.

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www.hbr.org

Discovering Your Authentic Leadership

by Bill George, Peter Sims, Andrew N. McLean, and

Diana Mayer

We all have the capacity to

inspire and empower others.

But we must first be willing to

devote ourselves to our

personal growth and

development as leaders.

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http://www.hbr.org



by Bill George, Peter Sims, Andrew N. McLean, and

Diana Mayer

harvard business review • hbr.org • february 2007

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We all have the capacity to inspire and empower others. But we must

first be willing to devote ourselves to our personal growth and

development as leaders.

During the past 50 years, leadership scholarshave conducted more than 1,000 studies in anattempt to determine the definitive styles,characteristics, or personality traits of greatleaders. None of these studies has produced aclear profile of the ideal leader. Thank good-ness. If scholars had produced a cookie-cutterleadership style, individuals would be forevertrying to imitate it. They would make them-selves into personae, not people, and otherswould see through them immediately.

No one can be authentic by trying to imitatesomeone else. You can learn from others’ expe-riences, but there is no way you can be success-ful when you are trying to be like them. Peopletrust you when you are genuine and authentic,not a replica of someone else. Amgen CEO andpresident Kevin Sharer, who gained pricelessexperience working as Jack Welch’s assistant inthe 1980s, saw the downside of GE’s cult of per-sonality in those days. “Everyone wanted to belike Jack,” he explains. “Leadership has manyvoices. You need to be who you are, not try toemulate somebody else.”

Over the past five years, people have devel-oped a deep distrust of leaders. It is increas-ingly evident that we need a new kind of busi-ness leader in the twenty-first century. In 2003,Bill George’s book, Authentic Leadership: Redis-covering the Secrets to Creating Lasting Value,challenged a new generation to lead authenti-cally. Authentic leaders demonstrate a passionfor their purpose, practice their values consis-tently, and lead with their hearts as well astheir heads. They establish long-term, mean-ingful relationships and have the self-disciplineto get results. They know who they are.

Many readers of Authentic Leadership, in-cluding several CEOs, indicated that they had atremendous desire to become authentic lead-ers and wanted to know how. As a result, ourresearch team set out to answer the question,“How can people become and remain authen-tic leaders?” We interviewed 125 leaders tolearn how they developed their leadership abil-ities. These interviews constitute the largest in-depth study of leadership development everundertaken. Our interviewees discussed openly

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and honestly how they realized their potentialand candidly shared their life stories, personalstruggles, failures, and triumphs.

The people we talked with ranged in agefrom 23 to 93, with no fewer than 15 per de-cade. They were chosen based on their reputa-tions for authenticity and effectiveness asleaders, as well as our personal knowledgeof them. We also solicited recommendationsfrom other leaders and academics. The result-ing group includes women and men from a di-verse array of racial, religious, and socioeco-nomic backgrounds and nationalities. Half ofthem are CEOs, and the other half comprisesa range of profit and nonprofit leaders, midca-reer leaders, and young leaders just startingon their journeys.

After interviewing these individuals, we be-lieve we understand why more than 1,000 stud-ies have not produced a profile of an idealleader. Analyzing 3,000 pages of transcripts,our team was startled to see that these peopledid not identify any universal characteristics,traits, skills, or styles that led to their success.Rather, their leadership emerged from theirlife stories. Consciously and subconsciously,they were constantly testing themselves throughreal-world experiences and reframing their lifestories to understand who they were at theircore. In doing so, they discovered the purposeof their leadership and learned that being au-thentic made them more effective.

These findings are extremely encouraging:You do not have to be born with specific char-acteristics or traits of a leader. You do not haveto wait for a tap on the shoulder. You do nothave to be at the top of your organization. In-stead, you can discover your potential rightnow. As one of our interviewees, Young &Rubicam chairman and CEO Ann Fudge, said,“All of us have the spark of leadership in us,whether it is in business, in government, oras a nonprofit volunteer. The challenge is tounderstand ourselves well enough to discoverwhere we can use our leadership gifts toserve others.”

Discovering your authentic leadership re-quires a commitment to developing yourself.Like musicians and athletes, you must devoteyourself to a lifetime of realizing your poten-tial. Most people Kroger CEO David Dillon hasseen become good leaders were self-taught.Dillon said, “The advice I give to individuals inour company is not to expect the company to

hand you a development plan. You need totake responsibility for developing yourself.”

In the following pages, we draw upon les-sons from our interviews to describe how peo-ple become authentic leaders. First and mostimportant, they frame their life stories in waysthat allow them to see themselves not as pas-sive observers of their lives but rather as indi-viduals who can develop self-awareness fromtheir experiences. Authentic leaders act onthat awareness by practicing their values andprinciples, sometimes at substantial risk tothemselves. They are careful to balance theirmotivations so that they are driven by theseinner values as much as by a desire for externalrewards or recognition. Authentic leaders alsokeep a strong support team around them, en-suring that they live integrated, grounded lives.

Learning from Your Life Story

The journey to authentic leadership beginswith understanding the story of your life. Yourlife story provides the context for your experi-ences, and through it, you can find the inspira-tion to make an impact in the world. As thenovelist John Barth once wrote, “The story ofyour life is not your life. It is your story.” Inother words, it is your personal narrative thatmatters, not the mere facts of your life. Yourlife narrative is like a permanent recordingplaying in your head. Over and over, you re-play the events and personal interactions thatare important to your life, attempting to makesense of them to find your place in the world.

While the life stories of authentic leaderscover the full spectrum of experiences—including the positive impact of parents, ath-letic coaches, teachers, and mentors—manyleaders reported that their motivation camefrom a difficult experience in their lives. Theydescribed the transformative effects of the lossof a job; personal illness; the untimely death ofa close friend or relative; and feelings of beingexcluded, discriminated against, and rejectedby peers. Rather than seeing themselves as vic-tims, though, authentic leaders used these for-mative experiences to give meaning to theirlives. They reframed these events to rise abovetheir challenges and to discover their passionto lead.

Let’s focus now on one leader in particular,Novartis chairman and CEO Daniel Vasella,whose life story was one of the most difficult ofall the people we interviewed. He emerged

Bill George

, the former chairman and CEO of Medtronic, is a professor of management practice at Harvard Busi-ness School in Boston. Peter Sims es-tablished “Leadership Perspectives,” a class on leadership development at the Stanford Graduate School of Business in California. Andrew N. McLean is a research associate at Harvard Business School. Diana Mayer is a former Citi-group executive in New York. This arti-cle was adapted from True North: Discover Your Authentic Leadership by Bill George with Peter Sims (Jossey-Bass, forthcoming in March 2007).

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from extreme challenges in his youth to reachthe pinnacle of the global pharmaceutical in-dustry, a trajectory that illustrates the trialsmany leaders have to go through on their jour-neys to authentic leadership.

Vasella was born in 1953 to a modest fam-ily in Fribourg, Switzerland. His early yearswere filled with medical problems that stokedhis passion to become a physician. His firstrecollections were of a hospital where he wasadmitted at age four when he suffered fromfood poisoning. Falling ill with asthma at agefive, he was sent alone to the mountains ofeastern Switzerland for two summers. Hefound the four-month separations from hisparents especially difficult because his care-taker had an alcohol problem and was unre-sponsive to his needs.

At age eight, Vasella had tuberculosis, fol-lowed by meningitis, and was sent to a sanato-rium for a year. Lonely and homesick, he suf-fered a great deal that year, as his parentsrarely visited him. He still remembers the painand fear when the nurses held him down dur-ing the lumbar punctures so that he would notmove. One day, a new physician arrived andtook time to explain each step of the proce-dure. Vasella asked the doctor if he could holda nurse’s hand rather than being held down.“The amazing thing is that this time the proce-dure didn’t hurt,” Vasella recalls. “Afterward,the doctor asked me, ‘How was that?’ I reachedup and gave him a big hug. These human ges-tures of forgiveness, caring, and compassionmade a deep impression on me and on thekind of person I wanted to become.”

Throughout his early years, Vasella’s life con-tinued to be unsettled. When he was ten, his18-year-old sister passed away after sufferingfrom cancer for two years. Three years later,his father died in surgery. To support the fam-ily, his mother went to work in a distant townand came home only once every three weeks.Left to himself, he and his friends held beerparties and got into frequent fights. This lastedfor three years until he met his first girlfriend,whose affection changed his life.

At 20, Vasella entered medical school, latergraduating with honors. During medical school,he sought out psychotherapy so he could cometo terms with his early experiences and not feellike a victim. Through analysis, he reframedhis life story and realized that he wanted tohelp a wider range of people than he could as

an individual practitioner. Upon completion ofhis residency, he applied to become chief phy-sician at the University of Zurich; however, thesearch committee considered him too youngfor the position.

Disappointed but not surprised, Vasella de-cided to use his abilities to increase his impacton medicine. At that time, he had a growingfascination with finance and business. Hetalked with the head of the pharmaceutical di-vision of Sandoz, who offered him the oppor-tunity to join the company’s U.S. affiliate. Inhis five years in the United States, Vasella flour-ished in the stimulating environment, first as asales representative and later as a productmanager, and advanced rapidly through theSandoz marketing organization.

When Sandoz merged with Ciba-Geigy in1996, Vasella was named CEO of the combinedcompanies, now called Novartis, despite hisyoung age and limited experience. Once in theCEO’s role, Vasella blossomed as a leader. Heenvisioned the opportunity to build a greatglobal health care company that could helppeople through lifesaving new drugs, such asGleevec, which has proved to be highly effec-tive for patients with chronic myeloid leuke-mia. Drawing on the physician role models ofhis youth, he built an entirely new Novartisculture centered on compassion, competence,and competition. These moves established No-vartis as a giant in the industry and Vasella as acompassionate leader.

Vasella’s experience is just one of dozensprovided by authentic leaders who traced theirinspiration directly from their life stories. Askedwhat empowered them to lead, these leadersconsistently replied that they found theirstrength through transformative experiences.Those experiences enabled them to under-stand the deeper purpose of their leadership.

Knowing Your Authentic Self

When the 75 members of Stanford GraduateSchool of Business’s Advisory Council wereasked to recommend the most important ca-pability for leaders to develop, their answerwas nearly unanimous: self-awareness. Yet manyleaders, especially those early in their careers,are trying so hard to establish themselves inthe world that they leave little time for self-exploration. They strive to achieve success intangible ways that are recognized in the ex-ternal world—money, fame, power, status, or

Analyzing 3,000 pages of

transcripts, our team was

startled to see you do not

have to be born with

specific characteristics or

traits of a leader.

Leadership emerges from

your life story.

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a rising stock price. Often their drive enablesthem to be professionally successful for a while,but they are unable to sustain that success. Asthey age, they may find something is missingin their lives and realize they are holding backfrom being the person they want to be. Know-ing their authentic selves requires the courageand honesty to open up and examine their ex-periences. As they do so, leaders become morehumane and willing to be vulnerable.

Of all the leaders we interviewed, DavidPottruck, former CEO of Charles Schwab, hadone of the most persistent journeys to self-awareness. An all-league football player inhigh school, Pottruck became MVP of his col-lege team at the University of Pennsylvania.After completing his MBA at Wharton and astint with Citigroup, he joined Charles Schwabas head of marketing, moving from New Yorkto San Francisco. An extremely hard worker,Pottruck could not understand why his newcolleagues resented the long hours he put inand his aggressiveness in pushing for results. “Ithought my accomplishments would speak forthemselves,” he said. “It never occurred to methat my level of energy would intimidate andoffend other people, because in my mind I wastrying to help the company.”

Pottruck was shocked when his boss toldhim, “Dave, your colleagues do not trust you.”As he recalled, “That feedback was like a dag-ger to my heart. I was in denial, as I didn’tsee myself as others saw me. I became a light-ning rod for friction, but I had no idea how self-serving I looked to other people. Still, some-where in my inner core the feedback resonatedas true.” Pottruck realized that he could notsucceed unless he identified and overcame hisblind spots.

Denial can be the greatest hurdle that lead-ers face in becoming self-aware. They all haveegos that need to be stroked, insecurities thatneed to be smoothed, fears that need to be al-layed. Authentic leaders realize that they haveto be willing to listen to feedback—especiallythe kind they don’t want to hear. It was onlyafter his second divorce that Pottruck finallywas able to acknowledge that he still had largeblind spots: “After my second marriage fellapart, I thought I had a wife-selection prob-lem.” Then he worked with a counselor whodelivered some hard truths: “The good news isyou do not have a wife-selection problem;the bad news is you have a husband-behavior

problem.” Pottruck then made a determinedeffort to change. As he described it, “I was likea guy who has had three heart attacks and fi-nally realizes he has to quit smoking and losesome weight.”

These days Pottruck is happily remarriedand listens carefully when his wife offers con-structive feedback. He acknowledges that hefalls back on his old habits at times, particu-larly in high stress situations, but now he hasdeveloped ways of coping with stress. “I havehad enough success in life to have that founda-tion of self-respect, so I can take the criticismand not deny it. I have finally learned to toler-ate my failures and disappointments and notbeat myself up.”

Practicing Your Values and Principles

The values that form the basis for authenticleadership are derived from your beliefs andconvictions, but you will not know what yourtrue values are until they are tested underpressure. It is relatively easy to list your valuesand to live by them when things are goingwell. When your success, your career, or evenyour life hangs in the balance, you learn whatis most important, what you are prepared tosacrifice, and what trade-offs you are willingto make.

Leadership principles are values translatedinto action. Having a solid base of values andtesting them under fire enables you to developthe principles you will use in leading. For ex-ample, a value such as “concern for others”might be translated into a leadership principlesuch as “create a work environment wherepeople are respected for their contributions,provided job security, and allowed to fulfilltheir potential.”

Consider Jon Huntsman, the founder andchairman of Huntsman Corporation. His moralvalues were deeply challenged when he workedfor the Nixon administration in 1972, shortlybefore Watergate. After a brief stint in the U.S.Department of Health, Education, and Welfare(HEW), he took a job under H.R. Haldeman,President Nixon’s powerful chief of staff. Hunts-man said he found the experience of takingorders from Haldeman “very mixed. I wasn’tgeared to take orders, irrespective of whetherthey were ethically or morally right.” He ex-plained, “We had a few clashes, as plenty ofthings that Haldeman wanted to do were ques-

When the 75 members of

Stanford Graduate

School of Business’s

Advisory Council were

asked to recommend the

most important

capability for leaders to

develop, their answer

was nearly unanimous:

self-awareness.

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tionable. An amoral atmosphere permeatedthe White House.”

One day, Haldeman directed Huntsman tohelp him entrap a California congressman whohad been opposing a White House initiative.The congressman was part owner of a plantthat reportedly employed undocumentedworkers. To gather information to embarrassthe congressman, Haldeman told Huntsman toget the plant manager of a company Hunts-man owned to place some undocumentedworkers at the congressman’s plant in an un-dercover operation.

“There are times when we react too quicklyand fail to realize immediately what is rightand wrong,” Huntsman recalled. “This was oneof those times when I didn’t think it through. Iknew instinctively it was wrong, but it took afew minutes for the notion to percolate. After15 minutes, my inner moral compass made it-self noticed and enabled me to recognize thiswasn’t the right thing to do. Values that had ac-companied me since childhood kicked in. Half-way through my conversation with our plantmanager, I said to him, ‘Let’s not do this. I don’twant to play this game. Forget that I called.’”

Huntsman told Haldeman that he wouldnot use his employees in this way. “Here I wassaying no to the second most powerful personin the country. He didn’t appreciate responses

like that, as he viewed them as signs of disloy-alty. I might as well have been saying farewell.So be it. I left within the next six months.”

Balancing Your Extrinsic and Intrinsic Motivations

Because authentic leaders need to sustainhigh levels of motivation and keep their livesin balance, it is critically important for them tounderstand what drives them. There are twotypes of motivations—extrinsic and intrinsic.Although they are reluctant to admit it, manyleaders are propelled to achieve by measuringtheir success against the outside world’s pa-rameters. They enjoy the recognition and sta-tus that come with promotions and financialrewards. Intrinsic motivations, on the otherhand, are derived from their sense of themeaning of their life. They are closely linkedto one’s life story and the way one frames it.Examples include personal growth, helpingother people develop, taking on social causes,and making a difference in the world. The keyis to find a balance between your desires forexternal validation and the intrinsic motiva-tions that provide fulfillment in your work.

Many interviewees advised aspiring lead-ers to be wary of getting caught up in social,peer, or parental expectations. Debra Dunn,who has worked in Silicon Valley for decadesas a Hewlett-Packard executive, acknowledgedthe constant pressures from external sources:“The path of accumulating material posses-sions is clearly laid out. You know how tomeasure it. If you don’t pursue that path, peo-ple wonder what is wrong with you. The onlyway to avoid getting caught up in materialismis to understand where you find happinessand fulfillment.”

Moving away from the external validationof personal achievement is not always easy.Achievement-oriented leaders grow so accus-tomed to successive accomplishments through-out their early years that it takes courage to pur-sue their intrinsic motivations. But at somepoint, most leaders recognize that they need toaddress more difficult questions in order to pur-sue truly meaningful success. McKinsey’s AliceWoodwark, who at 29 has already achieved no-table success, reflected: “My version of achieve-ment was pretty naive, born of things I learnedearly in life about praise and being valued. Butif you’re just chasing the rabbit around the course,you’re not running toward anything meaningful.”

Your Development as an Authentic Leader

As you read this article, think about the basis for your leadership development and the path you need to follow to be-come an authentic leader. Then ask yourself these questions:

1. Which people and experiences in

your early life had the greatest impact

on you?

2. What tools do you use to become

self-aware?

What is your authentic self? What are the moments when you say to yourself, this is the real me?

3. What are your most deeply held

values?

Where did they come from? Have your values changed significantly since your childhood? How do your val-ues inform your actions?

4. What motivates you extrinsi-

cally?

What are your intrinsic motiva-

tions? How do you balance extrinsic and intrinsic motivation in your life?

5. What kind of support team do you

have?

How can your support team make you a more authentic leader? How should you diversify your team to broaden your perspective?

6. Is your life integrated?

Are you able to be the same person in all aspects of your life—personal, work, family, and com-munity? If not, what is holding you back?

7. What does being authentic mean

in your life?

Are you more effective as a leader when you behave authentically? Have you ever paid a price for your au-thenticity as a leader? Was it worth it?

8. What steps can you take today, to-

morrow, and over the next year to de-

velop your authentic leadership?

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Intrinsic motivations are congruent withyour values and are more fulfilling than extrin-sic motivations. John Thain, CEO of the NewYork Stock Exchange, said, “I am motivated bydoing a really good job at whatever I am doing,but I prefer to multiply my impact on societythrough a group of people.” Or as Ann Moore,chairman and CEO of Time, put it, “I camehere 25 years ago solely because I loved maga-zines and the publishing world.” Moore had adozen job offers after business school but tookthe lowest-paying one with Time because ofher passion for publishing.

Building Your Support Team

Leaders cannot succeed on their own; even themost outwardly confident executives needsupport and advice. Without strong relation-ships to provide perspective, it is very easy tolose your way.

Authentic leaders build extraordinary sup-port teams to help them stay on course. Thoseteams counsel them in times of uncertainty,help them in times of difficulty, and celebratewith them in times of success. After their hard-est days, leaders find comfort in being withpeople on whom they can rely so they can beopen and vulnerable. During the low points,they cherish the friends who appreciate themfor who they are, not what they are. Authenticleaders find that their support teams provideaffirmation, advice, perspective, and calls forcourse corrections when needed.

How do you go about building your supportteam? Most authentic leaders have a multifac-eted support structure that includes theirspouses or significant others, families, mentors,close friends, and colleagues. They build theirnetworks over time, as the experiences, sharedhistories, and openness with people close tothem create the trust and confidence theyneed in times of trial and uncertainty. Leadersmust give as much to their supporters as theyget from them so that mutually beneficial rela-tionships can develop.

It starts with having at least one person inyour life with whom you can be completelyyourself, warts and all, and still be accepted un-conditionally. Often that person is the only onewho can tell you the honest truth. Most lead-ers have their closest relationships with theirspouses, although some develop these bondswith another family member, a close friend, ora trusted mentor. When leaders can rely on un-

conditional support, they are more likely to ac-cept themselves for who they really are.

Many relationships grow over time throughan expression of shared values and a commonpurpose. Randy Komisar of venture capitalfirm Kleiner Perkins Caufield & Byers said hismarriage to Hewlett-Packard’s Debra Dunn islasting because it is rooted in similar values.“Debra and I are very independent but ex-tremely harmonious in terms of our personalaspirations, values, and principles. We have astrong resonance around questions like, ‘Whatis your legacy in this world?’ It is important tobe in sync about what we do with our lives.”

Many leaders have had a mentor whochanged their lives. The best mentoring inter-actions spark mutual learning, exploration ofsimilar values, and shared enjoyment. If peopleare only looking for a leg up from their men-tors, instead of being interested in their men-tors’ lives as well, the relationships will not lastfor long. It is the two-way nature of the con-nection that sustains it.

Personal and professional support groupscan take many forms. Piper Jaffray’s Tad Piperis a member of an Alcoholics Anonymousgroup. He noted, “These are not CEOs. Theyare just a group of nice, hard-working peoplewho are trying to stay sober, lead good lives,and work with each other about being open,honest, and vulnerable. We reinforce eachother’s behavior by talking about our chemicaldependency in a disciplined way as we gothrough the 12 steps. I feel blessed to be sur-rounded by people who are thinking aboutthose kinds of issues and actually doing some-thing, not just talking about them.”

Bill George’s experiences echo Piper’s: In1974, he joined a men’s group that formedafter a weekend retreat. More than 30 yearslater, the group is still meeting every Wednes-day morning. After an opening period ofcatching up on each other’s lives and dealingwith any particular difficulty someone maybe facing, one of the group’s eight membersleads a discussion on a topic he has selected.These discussions are open, probing, andoften profound. The key to their success isthat people say what they really believe with-out fear of judgment, criticism, or reprisal. Allthe members consider the group to be one ofthe most important aspects of their lives, en-abling them to clarify their beliefs, values,and understanding of vital issues, as well as

Denial can be the

greatest hurdle that

leaders face in becoming

self-aware.

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serving as a source of honest feedback whenthey need it most.

Integrating Your Life by Staying Grounded

Integrating their lives is one of the greatestchallenges leaders face. To lead a balanced life,you need to bring together all of its constitu-ent elements—work, family, community, andfriends—so that you can be the same person ineach environment. Think of your life as ahouse, with a bedroom for your personal life, astudy for your professional life, a family roomfor your family, and a living room to sharewith your friends. Can you knock down thewalls between these rooms and be the sameperson in each of them?

As John Donahoe, president of eBay Market-places and former worldwide managing direc-tor of Bain, stressed, being authentic meansmaintaining a sense of self no matter whereyou are. He warned, “The world can shape youif you let it. To have a sense of yourself as youlive, you must make conscious choices. Some-times the choices are really hard, and youmake a lot of mistakes.”

Authentic leaders have a steady and confi-dent presence. They do not show up as oneperson one day and another person the next.Integration takes discipline, particularly duringstressful times when it is easy to become reac-tive and slip back into bad habits. Donahoefeels strongly that integrating his life has en-abled him to become a more effective leader.“There is no nirvana,” he said. “The struggle isconstant, as the trade-offs don’t get any easieras you get older.” But for authentic leaders,personal and professional lives are not a zero-sum game. As Donahoe said, “I have no doubttoday that my children have made me a farmore effective leader in the workplace. Havinga strong personal life has made the difference.”

Leading is high-stress work. There is no wayto avoid stress when you are responsible forpeople, organizations, outcomes, and manag-ing the constant uncertainties of the environ-ment. The higher you go, the greater yourfreedom to control your destiny but also thehigher the degree of stress. The question isnot whether you can avoid stress but how youcan control it to maintain your own sense ofequilibrium.

Authentic leaders are constantly aware ofthe importance of staying grounded. Besides

spending time with their families and closefriends, authentic leaders get physical exer-cise, engage in spiritual practices, do commu-nity service, and return to the places wherethey grew up. All are essential to their effec-tiveness as leaders, enabling them to sustaintheir authenticity.

Empowering People to Lead

Now that we have discussed the process of dis-covering your authentic leadership, let’s lookat how authentic leaders empower people intheir organizations to achieve superior long-term results, which is the bottom line for allleaders.

Authentic leaders recognize that leadershipis not about their success or about getting loyalsubordinates to follow them. They know thekey to a successful organization is having em-powered leaders at all levels, including thosewho have no direct reports. They not only in-spire those around them, they empower thoseindividuals to step up and lead.

A reputation for building relationships andempowering people was instrumental in chair-man and CEO Anne Mulcahy’s stunning turn-around of Xerox. When Mulcahy was asked totake the company’s reins from her failed prede-cessor, Xerox had $18 billion in debt, and allcredit lines were exhausted. With the shareprice in free fall, morale was at an all-time low.To make matters worse, the SEC was investi-gating the company’s revenue recognitionpractices.

Mulcahy’s appointment came as a surpriseto everyone—including Mulcahy herself. AXerox veteran, she had worked in field salesand on the corporate staff for 25 years, but notin finance, R&D, or manufacturing. How couldMulcahy cope with this crisis when she hadhad no financial experience? She brought tothe CEO role the relationships she had builtover 25 years, an impeccable understanding ofthe organization, and, above all, her credibilityas an authentic leader. She bled for Xerox, andeveryone knew it. Because of that, they werewilling to go the extra mile for her.

After her appointment, Mulcahy met per-sonally with the company’s top 100 executivesto ask them if they would stay with the com-pany despite the challenges ahead. “I knewthere were people who weren’t supportive ofme,” she said. “So I confronted a couple ofthem and said, ‘This is about the company.’”

Think of your life as a

house. Can you knock

down the walls between

the rooms and be the

same person in each of

them?

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The first two people Mulcahy talked with, bothof whom ran big operating units, decided toleave, but the remaining 98 committed to stay.

Throughout the crisis, people in Xerox wereempowered by Mulcahy to step up and lead inorder to restore the company to its formergreatness. In the end, her leadership enabledXerox to avoid bankruptcy as she paid back$10 billion in debt and restored revenuegrowth and profitability with a combination ofcost savings and innovative new products. Thestock price tripled as a result.

• • •

Like Mulcahy, all leaders have to deliverbottom-line results. By creating a virtuouscircle in which the results reinforce the effec-tiveness of their leadership, authentic leadersare able to sustain those results through goodtimes and bad. Their success enables them toattract talented people and align employees’activities with shared goals, as they empowerothers on their team to lead by taking on

greater challenges. Indeed, superior resultsover a sustained period of time is the ulti-mate mark of an authentic leader. It may bepossible to drive short-term outcomes with-out being authentic, but authentic leadershipis the only way we know to create sustainablelong-term results.

For authentic leaders, there are special re-wards. No individual achievement can equalthe pleasure of leading a group of people toachieve a worthy goal. When you cross the fin-ish line together, all the pain and suffering youmay have experienced quickly vanishes. It is re-placed by a deep inner satisfaction that youhave empowered others and thus made theworld a better place. That’s the challenge andthe fulfillment of authentic leadership.

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Superior results over a

sustained period of time

is the ultimate mark of

an authentic leader.

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In Praise of the Incomplete Leader

by Deborah Ancona, Thomas W. Malone,

Wanda J. Orlikowski, and Peter M. Senge

Included with this full-text Harvard Business Review article:



109

Article Summary

110




118

Further Reading

No leader is perfect. The best

ones don’t try to be—they

concentrate on honing their

strengths and find others who

can make up for their

limitations.

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Have you ever feigned confidence to superiors or reports? Hidden the fact you were confused by the latest business results or blindsided by a competitor’s move? If so, you’ve bought into the myth of the com-plete leader: the flawless being at the top who’s got it all figured out.

It’s an alluring myth. But in today’s world of increasingly complex problems, no human being can meet this standard. Leaders who try only exhaust themselves, endangering their organizations.

Ancona and her coauthors suggest a better way to lead: Accept that you’re human, with strengths and weaknesses. Understand the four leadership capabilities all organi-zations need:

• Sensemaking—interpreting develop-ments in the business environment

• Relating—building trusting relationships

• Visioning—communicating a compelling image of the future

• Inventing—coming up with new ways of doing things

Then find and work with others who can provide the capabilities you’re missing.

Take this approach, and you promote lead-ership throughout your organization, unleashing the expertise, vision, and new ideas your company needs to excel.

Incomplete leaders find people throughout their company who can complement their strengths and offset their weaknesses. To do this, understand the four leadership capabilities organizations need. Then diagnose your strength in each:

Capability What it means Example Look for help in this capability if you...

Sensemaking Constantly under-standing changes in the business environment and interpreting their ramifications for your industry and company

A CEO asks, “How will new technologies reshape our industry?” “How does globalization of labor markets affect our recruitment strategy?”

• Feel strongly that you’re always right.

• Frequently get blindsided by changes in your company or industry.

• Feel resentful when things change.

Relating Building trusting relationships, balancing advocacy (explaining your viewpoints) with inquiry (listening to understand others’ viewpoints), and cultivating networks of supportive confidants

Former Southwest Airlines CEO Herb Kelleher excels at building trusting relationships. He wasn’t afraid to tell employees he loved them, and reinforced those emotional bonds with equitable compensation and profit sharing.

• Blame others for failed projects.

• Feel others are constantly letting you down or that they can’t be trusted.

• Frequently experience unpleasant, frustrating, or argumentative interactions with others.

Visioning Creating credible and compelling images of a desired future that people in the organization want to create together

eBay founder Pierre Omidyar envisioned a new way of doing large-scale retailing: an online community where users took responsibility for what happened and had equal access to information.

• Often wonder, “Why are we doing this?” or “Does it really matter?”

• Can’t remember the last time you felt excited about your work.

• Feel you’re lacking sense of larger purpose.

Inventing Creating new ways of approaching tasks or overcoming seemingly insurmountable problems to turn visions into reality

eBay CEO Meg Whitman helped bring Omidyar’s vision of online retailing to life by inventing ways to deal with security, vendor reliability, and product diversification.

• Have difficulty relating the company’s vision to what you’re doing today.

• Notice gaps between your firm’s aspirations and the way work is organized.

• Find that things tend to revert to business as usual.

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by Deborah Ancona, Thomas W. Malone,

Wanda J. Orlikowski, and Peter M. Senge

harvard business review • february 2007

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No leader is perfect. The best ones don’t try to be—they concentrate on

honing their strengths and find others who can make up for their

limitations.

We’ve come to expect a lot of our leaders. Topexecutives, the thinking goes, should have theintellectual capacity to make sense of unfath-omably complex issues, the imaginative powersto paint a vision of the future that generateseveryone’s enthusiasm, the operational know-how to translate strategy into concrete plans,and the interpersonal skills to foster commit-ment to undertakings that could cost people’sjobs should they fail. Unfortunately, no singleperson can possibly live up to those standards.

It’s time to end the myth of the completeleader: the flawless person at the top who’sgot it all figured out. In fact, the sooner lead-ers stop trying to be all things to all people,the better off their organizations will be. Intoday’s world, the executive’s job is no longerto command and control but to cultivate andcoordinate the actions of others at all levelsof the organization. Only when leaders cometo see themselves as incomplete—as havingboth strengths and weaknesses—will they beable to make up for their missing skills byrelying on others.

Corporations have been becoming lesshierarchical and more collaborative for de-cades, of course, as globalization and thegrowing importance of knowledge workhave required that responsibility and initia-tive be distributed more widely. Moreover, itis now possible for large groups of people tocoordinate their actions, not just by bringinglots of information to a few centralizedplaces but also by bringing lots of informa-tion to lots of places through ever-growingnetworks within and beyond the firm. Thesheer complexity and ambiguity of problemsis humbling. More and more decisions aremade in the context of global markets andrapidly—sometimes radically—changing fi-nancial, social, political, technological, andenvironmental forces. Stakeholders such asactivists, regulators, and employees all haveclaims on organizations.

No one person could possibly stay on top ofeverything. But the myth of the completeleader (and the attendant fear of appearingincompetent) makes many executives try to do

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just that, exhausting themselves and damag-ing their organizations in the process. Theincomplete leader, by contrast, knows whento let go: when to let those who know thelocal market do the advertising plan or whento let the engineering team run with its ideaof what the customer needs. The incompleteleader also knows that leadership existsthroughout the organizational hierarchy—wherever expertise, vision, new ideas, andcommitment are found.

We’ve worked with hundreds of peoplewho have struggled under the weight of themyth of the complete leader. Over the past sixyears, our work at the MIT Leadership Centerhas included studying leadership in manyorganizations and teaching the topic to se-nior executives, middle managers, and MBAstudents. In our practice-based programs, wehave analyzed numerous accounts of organi-zational change and watched leaders struggleto meld top-down strategic initiatives with vi-brant ideas from the rest of the organization.

All this work has led us to develop a modelof distributed leadership. This framework,which synthesizes our own research with ideasfrom other leadership scholars, views leader-ship as a set of four capabilities: sensemaking(understanding the context in which a com-pany and its people operate), relating (buildingrelationships within and across organizations),visioning (creating a compelling picture of thefuture), and inventing (developing new ways toachieve the vision).

While somewhat simplified, these capabili-ties span the intellectual and interpersonal,the rational and intuitive, and the conceptualand creative capacities required in today’s busi-ness environment. Rarely, if ever, will someonebe equally skilled in all four domains. Thus,incomplete leaders differ from incompetentleaders in that they understand what they’regood at and what they’re not and have goodjudgment about how they can work withothers to build on their strengths and offsettheir limitations.

Sometimes, leaders need to further developthe capabilities they are weakest in. The exhib-its throughout this article provide some sug-gestions for when and how to do that. Othertimes, however, it’s more important for leadersto find and work with others to compensate fortheir weaknesses. Teams and organizations—not just individuals—can use this framework

to diagnose their strengths and weaknessesand find ways to balance their skill sets.

Sensemaking

The term “sensemaking” was coined by orga-nizational psychologist Karl Weick, and itmeans just what it sounds like: making senseof the world around us. Leaders are constantlytrying to understand the contexts they are op-erating in. How will new technologies reshapethe industry? How will changing cultural ex-pectations shift the role of business in society?How does the globalization of labor marketsaffect recruitment and expansion plans?

Weick likened the process of sensemakingto cartography. What we map depends onwhere we look, what factors we choose tofocus on, and what aspects of the terrain wedecide to represent. Since these choices willshape the kind of map we produce, there is noperfect map of a terrain. Therefore, makingsense is more than an act of analysis; it’s anact of creativity. (See the exhibit “Engage inSensemaking.”)

The key for leaders is to determine whatwould be a useful map given their particulargoals and then to draw one that adequatelyrepresents the situation the organization isfacing at that moment. Executives who arestrong in this capability know how to quicklycapture the complexities of their environ-ment and explain them to others in simpleterms. This helps ensure that everyone isworking from the same map, which makes itfar easier to discuss and plan for the journeyahead. Leaders need to have the courage topresent a map that highlights features theybelieve to be critical, even if their map doesn’tconform to the dominant perspective.

When John Reed was CEO of Citibank, thecompany found itself in a real estate crisis. Atthe time, common wisdom said that Citibankwould need to take a $2 billion write-off, butReed wasn’t sure. He wanted a better under-standing of the situation, so to map the prob-lem, he met with federal regulators as well ashis managers, the board, potential investors,economists, and real estate experts. He keptasking, “What am I missing here?” After thosemeetings, he had a much stronger grasp of theproblem, and he recalibrated the write-off to$5 billion—which turned out to be a far moreaccurate estimate. Later, three quarters intothe bank’s eight-quarter program to deal with

Deborah Ancona

is the Seley Distin-guished Professor of Management at the MIT Sloan School of Management and the faculty director of the MIT Leadership Center in Cambridge, Massachusetts. She is also the coau-thor (with Henrik Bresman) of X-Teams: How to Build Teams that Lead, Innovate, and Succeed, forthcoming from Harvard Business School Press in June 2007. Thomas W. Malone is the Patrick J. McGovern Professor of Man-agement at the MIT Sloan School and the director of the MIT Center for Collective Intelligence. Wanda J. Orlikowski is the Eaton-Peabody Professor of Communication Science and a professor of information technol-ogies and organization studies at the MIT Sloan School. Peter M. Senge is the founding chairperson of the Society for Organizational Learning and a se-nior lecturer at the MIT Sloan School.

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the crisis, Reed realized that progress hadstopped. He began talking to other CEOsknown for their change management skills.This informal benchmarking process led himto devise an organizational redesign.

Throughout the crisis, real estate valuations,investors’ requirements, board demands,and management team expectations were allchanging and constantly needed to be re-assessed. Good leaders understand that sense-making is a continuous process; they let themap emerge from a melding of observations,data, experiences, conversations, and analyses.In healthy organizations, this sort of sensemak-ing goes on all the time. People have ongoingdialogues about their interpretations of mar-kets and organizational realities.

At IDEO, a product design firm, sensemak-ing is step one for all design teams. Accordingto founder David Kelley, team members mustact as anthropologists studying an alien cul-ture to understand the potential productfrom all points of view. When brainstorming anew design, IDEO’s teams consider multipleperspectives—that is, they build multiplemaps to inform their creative process. OneIDEO team was charged with creating a newdesign for an emergency room. To better un-derstand the experience of a key stakeholder—the patient—team members attached acamera to a patient’s head and captured hisexperience in the ER. The result: nearly tenfull hours of film of the ceiling. The sense-making provoked by this perspective led to

a redesign of the ceiling that made it moreaesthetically pleasing and able to displayimportant information for patients.

Relating

Many executives who attempt to foster trust,optimism, and consensus often reap anger,cynicism, and conflict instead. That’s becausethey have difficulty relating to others, espe-cially those who don’t make sense of the worldthe way they do. Traditional images of leader-ship didn’t assign much value to relating.Flawless leaders shouldn’t need to seek coun-sel from anyone outside their tight innercircle, the thinking went, and they wereexpected to issue edicts rather than connecton an emotional level. Times have changed,of course, and in this era of networks, beingable to build trusting relationships is a re-quirement of effective leadership.

Three key ways to do this are inquiring, advo-cating, and connecting. The concepts of inquir-ing and advocating stem from the work oforganizational development specialists ChrisArgyris and Don Schon. Inquiring means lis-tening with the intention of genuinely under-standing the thoughts and feelings of thespeaker. Here, the listener suspends judgmentand tries to comprehend how and why thespeaker has moved from the data of his orher experiences to particular interpretationsand conclusions.

Advocating, as the term implies, means ex-plaining one’s own point of view. It is the flipside of inquiring, and it’s how leaders makeclear to others how they reached their inter-pretations and conclusions. Good leadersdistinguish their observations from theiropinions and judgments and explain theirreasoning without aggression or defensive-ness. People with strong relating skills aretypically those who’ve found a healthy balancebetween inquiring and advocating: They ac-tively try to understand others’ views but areable to stand up for their own. (See the exhibit“Build Relationships.”)

We’ve seen countless relationships under-mined because people disproportionatelyemphasized advocating over inquiring. Eventhough managers pay lip service to the impor-tance of mutual understanding and sharedcommitment to a course of action, often theirreal focus is on winning the argument ratherthan strengthening the connection. Worse, in

Engage in Sensemaking

1. Get data from multiple sources: customers, suppliers, employees, competitors, other depart-ments, and investors.

2. Involve others in your sensemaking. Say what you think you are seeing, and check with people who have different perspectives from yours.

3. Use early observations to shape small experi-ments in order to test your conclusions. Look for new ways to articulate alternatives and better ways to understand options.

4. Do not simply apply existing frameworks but instead be open to new possibilities. Try not to describe the world in stereotypical ways, such as good guys and bad guys, victims and oppressors, or marketers and engineers.

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many organizations, the imbalance goes so farthat having one’s point of view prevail is whatis understood as leadership.

Effective relating does not mean avoidinginterpersonal conflict altogether. Argyris andSchon found that “maintaining a smooth sur-face” of conviviality and apparent agreement isone of the most common defensive routinesthat limits team effectiveness. Balancing in-quiring and advocating is ultimately aboutshowing respect, challenging opinions, askingtough questions, and taking a stand.

Consider Twynstra Gudde (TG), one of thelargest independent consulting companies inthe Netherlands. A few years ago, it replacedthe role of CEO with a team of four managingdirectors who share leadership responsibili-ties. Given this unique structure, it’s vital thatthese directors effectively relate to one an-other. They’ve adopted simple rules, such as arequirement that each leader give his opinionon every issue, majority-rules voting, and vetopower for each director.

Clearly, for TG’s senior team model towork, members must be skilled at engaging indialogue together. They continually practiceboth inquiring and advocating, and becauseeach director can veto a decision, each mustthoroughly explain his reasoning to convincethe others’ that his perspective has merit. It’snot easy to reach this level of mutual respectand trust, but over time, the team members’willingness to create honest connectionswith one another has paid off handsomely.

Although they don’t always reach consensus,they are able to settle on a course of action.Since this new form of leadership was intro-duced, TG has thrived: The company’s profitshave doubled, and employee satisfactionlevels have improved. What’s more, TG’s lead-ership structure has served as a model forcooperation throughout the organization aswell as in the firm’s relations with its clients.

The third aspect of relating, connecting,involves cultivating a network of confidantswho can help a leader accomplish a widerange of goals. Leaders who are strong in thiscapability have many people they can turn towho can help them think through difficultproblems or support them in their initiatives.They understand that the time spent buildingand maintaining these connections is timespent investing in their leadership skills.Because no one person can possibly have allthe answers, or indeed, know all the rightquestions to ask, it’s crucial that leaders beable to tap into a network of people who canfill in the gaps.

Visioning

Sensemaking and relating can be called theenabling capabilities of leadership. Theyhelp set the conditions that motivate andsustain change. The next two leadershipcapabilities—what we call “visioning” andinventing—are creative and action oriented:They produce the focus and energy needed tomake change happen.

Visioning involves creating compellingimages of the future. While sensemakingcharts a map of what is, visioning produces amap of what could be and, more important,what a leader wants the future to be. It consistsof far more than pinning a vision statement tothe wall. Indeed, a shared vision is not a staticthing—it’s an ongoing process. Like sensemak-ing, visioning is dynamic and collaborative, aprocess of articulating what the members ofan organization want to create together.

Fundamentally, visioning gives people asense of meaning in their work. Leaders whoare skilled in this capability are able to getpeople excited about their view of the futurewhile inviting others to help crystallize thatimage. (See the exhibit “Create a Vision.”) Ifthey realize other people aren’t joining in orbuying into the vision, they don’t just turn upthe volume; they engage in a dialogue about

Build Relationships

1. Spend time trying to understand others’ perspectives, listening with an open mind and without judgment.

2. Encourage others to voice their opinions. What do they care about? How do they interpret what’s going on? Why?

3. Before expressing your ideas, try to antici-pate how others will react to them and how you might best explain them.

4. When expressing your ideas, don’t just give a bottom line; explain your reasoning process.

5. Assess the strengths of your current connec-tions: How well do you relate to others when receiving advice? When giving advice? When thinking through difficult problems? When asking for help?

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the reality they hope to produce. They usestories and metaphors to paint a vivid pictureof what the vision will accomplish, even ifthey don’t have a comprehensive plan for get-ting there. They know that if the vision iscredible and compelling enough, others willgenerate ideas to advance it.

In South Africa in the early 1990s, a joke wasmaking the rounds: Given the country’s daunt-ing challenges, people had two options, onepractical and the other miraculous. The practi-cal option was for everyone to pray for a bandof angels to come down from heaven and fixthings. The miraculous option was for peopleto talk with one another until they could find away forward. In F.W. de Klerk’s famous speechin 1990—his first after assuming leadership—he called for a nonracist South Africa andsuggested that negotiation was the only wayto achieve a peaceful transition. That speechsparked a set of changes that led to NelsonMandela’s release from Robben Island prisonand the return to the country of previouslybanned political leaders.

Few of South Africa’s leaders agreed onmuch of anything regarding the country’sfuture. It seemed like a long shot, at best, thata scenario-planning process convened by ablack professor from the University of the

Western Cape and facilitated by a white Cana-dian from Royal Dutch Shell would be able tobring about any sort of change. But they, to-gether with members of the African NationalCongress (ANC), the radical Pan AfricanistCongress (PAC), and the white business com-munity, were charged with forging a new pathfor South Africa.

When the team members first met, theyfocused on collective sensemaking. Theirdiscussions then evolved into a yearlong vi-sioning process. In his book, Solving ToughProblems, Adam Kahane, the facilitator, saysthe group started by telling stories of “left-wing revolution, right-wing revolts, and freemarket utopias.” Eventually, the leadershipteam drafted a set of scenarios that describedthe many paths toward disaster and the onetoward sustainable development.

They used metaphors and clear imagery toconvey the various paths in language thatwas easy to understand. One negative sce-nario, for instance, was dubbed “Ostrich”:A nonrepresentative white government sticksits head in the sand, trying to avoid a negoti-ated settlement with the black majority. An-other negative scenario was labeled “Icarus”:A constitutionally unconstrained black gov-ernment comes to power with noble inten-tions and embarks on a huge, unsustainablepublic-spending spree that crashes the econ-omy. This scenario contradicted the popularbelief that the country was rich and couldsimply redistribute wealth from whites toblacks. The Icarus scenario set the stage fora fundamental (and controversial) shift ineconomic thinking in the ANC and otherleft-wing parties—a shift that led the ANCgovernment to “strict and consistent fiscaldiscipline,” according to Kahane.

The group’s one positive scenario involvedthe government adopting a set of sustainablepolicies that would put the country on a pathof inclusive growth to successfully rebuildthe economy and establish democracy. Thisoption was called “Flamingo,” invoking theimage of a flock of beautiful birds all takingflight together.

This process of visioning unearthed anextraordinary collective sense of possibilityin South Africa. Instead of talking about whatother people should do to advance someagenda, the leaders spoke about what theycould do to create a better future for every-

Create a Vision

1. Practice creating a vision in many arenas, including your work life, your home life, and in community groups. Ask yourself, “What do I want to create?”

2. Develop a vision about something that in-spires you. Your enthusiasm will motivate you and others. Listen to what they find exciting and important.

3. Expect that not all people will share your passion. Be prepared to explain why people should care about your vision and what can be achieved through it. If people don’t get it, don’t just turn up the volume. Try to construct a shared vision.

4. Don’t worry if you don’t know how to accom-plish the vision. If it is compelling and credible, other people will discover all sorts of ways to make it real—ways you never could have imagined on your own.

5. Use images, metaphors, and stories to convey complex situations that will enable others to act.

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one. They didn’t have an exact implementa-tion plan at the ready, but by creating a crediblevision, they paved the way for others to joinin and help make their vision a reality.

Leaders who excel in visioning walk thewalk; they work to embody the core values andideas contained in the vision. Darcy Winslow,Nike’s global director for women’s footwear,is a good example. A 14-year veteran at Nike,Winslow previously held the position of gen-eral manager of sustainable business opportu-nities at the shoe and apparel giant. Her workin that role reflected her own core values, in-cluding her passion for the environment. “Wehad come to see that our customers’ healthand our own ability to compete were insepara-ble from the health of the environment,”she says. So she initiated the concept of eco-logically intelligent product design. Winslow’steam worked at determining the chemicalcomposition and environmental effects ofevery material and process Nike used. Theyvisited factories in China and collected samplesof rubber, leather, nylon, polyester, and foamsto determine their chemical makeup. Thisled Winslow and her team to develop a list of“positive” materials—those that weren’t harm-ful to the environment—that they hoped touse in more Nike products. “Environmentalsustainability” was no longer just an abstractterm on a vision statement; the team now felta mandate to realize the vision.

Inventing

Even the most compelling vision will loseits power if it floats, unconnected, above theeveryday reality of organizational life. Totransform a vision of the future into a present-day reality, leaders need to devise processesthat will give it life. This inventing is what

moves a business from the abstract world ofideas to the concrete world of implementa-tion. In fact, inventing is similar to execution,but the label “inventing” emphasizes that thisprocess often requires creativity to help peo-ple figure out new ways of working together.

To realize a new vision, people usually can’tkeep doing the same things they’ve been do-ing. They need to conceive, design, and putinto practice new ways of interacting and orga-nizing. Some of the most famous examplesof large-scale organizational innovation comefrom the automotive industry: Henry Ford’sconception of the assembly-line factory andToyota’s famed integrated production system.

More recently, Pierre Omidyar, the founderof eBay, invented through his company anew way of doing large-scale retailing. Hisvision was of an online community whereusers would take responsibility for what hap-pened. In a 2001 BusinessWeek Online inter-view, Omidyar explained, “I had the idea thatI wanted to create an efficient market and alevel playing field where everyone had equalaccess to information. I wanted to give thepower of the market back to individuals, notjust large corporations. That was the drivingmotivation for creating eBay at the start.”

Consequently, eBay outsources most of thefunctions of traditional retailing—purchasing,order fulfillment, and customer service, forexample—to independent sellers worldwide.The company estimates that more than430,000 people make their primary livingfrom selling wares on eBay. If those individu-als were all employees of eBay, it would bethe second largest private employer in theUnited States after Wal-Mart.

The people who work through eBay areessentially independent store owners, and, assuch, they have a huge amount of autonomyin how they do their work. They decide whatto sell, when to sell it, how to price, and howto advertise. Coupled with this individualfreedom is global scale. EBay’s infrastructureenables them to sell their goods all over theworld. What makes eBay’s inventing so radi-cal is that it represents a new relationshipbetween an organization and its parts. Unliketypical outsourcing, eBay doesn’t pay itsretailers—they pay the company.

Inventing doesn’t have to occur on such agrand scale. It happens every time a personcreates a way of approaching a task or figures

Cultivate Inventiveness

1. Don’t assume that the way things have al-ways been done is the best way to do them.

2. When a new task or change effort emerges, encourage creative ways of getting it done.

3. Experiment with different ways of organiz-ing work. Find alternative methods for grouping and linking people.

4. When working to understand your current environment, ask yourself, “What other options are possible?”

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out how to overcome a previously insur-mountable obstacle. In their book

Car Launch,

George Roth and Art Kleiner describe a highlysuccessful product development team in theautomobile industry that struggled with com-pleting its designs on time. Much of the sourceof the problem, the team members concluded,came from the stovepipe organizational struc-ture found in the product development divi-sion. Even though they were a “colocated”team dedicated to designing a common newcar, members were divided by their differenttechnical expertise, experience, jargon, andnorms of working.

When the team invented a mechanicalprototyping device that complemented itscomputer-aided design tools, the group mem-bers found that it facilitated a whole new wayof collaborating. Multiple groups within theteam could quickly create physical mock-upsof design ideas to be tested by the various en-gineers from different specialties in the team.The group called the device “the harmonybuck,” because it helped people break out oftheir comfortable engineering specialtiesand solve interdependent design problems to-gether. Development of a “full body” physicalmock-up of the new car allowed engineers tohang around the prototype, providing a cen-tral focal point for their interactions. It en-abled them to more easily identify and raisecross-functional issues, and it facilitated mu-tual problem solving and coordination.

In sum, leaders must be able to succeed atinventing, and this requires both attention todetail and creativity. (See the exhibit “CultivateInventiveness.”)

Balancing the Four Capabilities

Sensemaking, relating, visioning, and invent-ing are interdependent. Without sensemak-ing, there’s no common view of reality fromwhich to start. Without relating, people workin isolation or, worse, strive toward differentaims. Without visioning, there’s no shared di-rection. And without inventing, a vision re-mains illusory. No one leader, however, willexcel at all four capabilities in equal measure.

Typically, leaders are strong in one or twocapabilities. Intel chairman Andy Grove is thequintessential sensemaker, for instance, witha gift for recognizing strategic inflectionpoints that can be exploited for competitiveadvantage. Herb Kelleher, the former CEO ofSouthwest Airlines, excels at relating. Heremarked in the journal Leader to Leader that“We are not afraid to talk to our peoplewith emotion. We’re not afraid to tell them,‘We love you.’ Because we do.” With thisemotional connection comes equitable com-pensation and profit sharing.

Apple CEO Steve Jobs is a visionary whoseambitious dreams and persuasiveness have cat-alyzed remarkable successes for Apple, Next,and Pixar. Meg Whitman, the CEO of eBay,helped bring Pierre Omidyar’s vision of online

Examining Your Leadership Capabilities

Few people wake up in the morning and say, “I’m a poor sensemaker” or “I just can’t relate to others.” They tend to experience their own weaknesses more as chronic or inexplicable failures in the organization or in those around them. The following descriptions will help you recognize opportunities to develop your leadership capabilities and identify openings for working with others.

Signs of Weak Sensemaking

1. You feel strongly that you are usually right and others are often wrong.

2. You feel your views describe reality correctly, but others’ views do not.

3. You find you are often blindsided by changes in your organization or industry.

4. When things change, you typically feel resentful. (That’s not the way it should be!)

Signs of Weak Relating

1. You blame others for failed projects.2. You feel others are constantly letting you

down or failing to live up to your expectations.3. You find that many of your interactions

at work are unpleasant, frustrating, or argu-mentative.

4. You find many of the people you work with untrustworthy.

Signs of Weak Visioning

1. You feel your work involves managing an endless series of crises.

2. You feel like you’re bouncing from pillar

to post with no sense of larger purpose.3. You often wonder, “Why are we doing

this?” or “Does it really matter?”4. You can’t remember the last time you

talked to your family or a friend with excite-ment about your work.

Signs of Weak Inventing

1. Your organization’s vision seems abstract to you.

2. You have difficulty relating your com-pany’s vision to what you are doing today.

3. You notice dysfunctional gaps between your organization’s aspirations and the way work is organized.

4. You find that things tend to revert to busi-ness as usual.

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retailing to life by inventing ways to dealwith security, vendor reliability, and productdiversification.

Once leaders diagnose their own capabili-ties, identifying their unique set of strengthsand weaknesses, they must search for otherswho can provide the things they’re missing.(See the sidebar “Examining Your LeadershipCapabilities.”) Leaders who choose only peo-ple who mirror themselves are likely to findtheir organizations tilting in one direction,missing one or more essential capabilitiesneeded to survive in a changing, complexworld. That’s why it’s important to examinethe whole organization to make sure it isappropriately balanced as well. It’s theleader’s responsibility to create an environ-ment that lets people complement oneanother’s strengths and offset one another’sweaknesses. In this way, leadership is dis-tributed across multiple people throughoutthe organization.

• • •

Years ago, one of us attended a three-daymeeting on leadership with 15 top managersfrom different companies. At the close of it,participants were asked to reflect on their ex-perience as leaders. One executive, responsi-ble for more than 50,000 people in his divisionof a manufacturing corporation, drew two pic-tures on a flip chart. The image on the left was

what he projected to the outside world: It wasa large, intimidating face holding up a hugefist. The image on the right represented howhe saw himself: a small face with wide eyes,hair standing on end, and an expression ofsheer terror.

We believe that most leaders experience thatprofound dichotomy every day, and it’s a heavyburden. How many times have you feignedconfidence to superiors or reports when youwere really unsure? Have you ever felt com-fortable conceding that you were confused bythe latest business results or caught off guardby a competitor’s move? Would you ever admitto feeling inadequate to cope with the complexissues your firm was facing? Anyone who canidentify with these situations knows firsthandwhat it’s like to be trapped in the myth of thecomplete leader—the person at the top with-out flaws. It’s time to put that myth to rest, notonly for the sake of frustrated leaders but alsofor the health of organizations. Even the mosttalented leaders require the input and leader-ship of others, constructively solicited andcreatively applied. It’s time to celebrate theincomplete—that is, the human—leader.

Reprint R0702E


Most leaders experience

a profound dichotomy

every day, and it’s a

heavy burden. They are

trapped in the myth of

the complete leader —the

person at the top without

flaws.

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Further Reading

A R T I C L E S

What to Ask the Person in the Mirror

by Robert S. Kaplan


January 2007Product no. R0701H

Diagnosing your own strengths and weak-nesses isn’t easy, so you may seek feedback from others in the organization. But the higher you climb on the corporate ladder, the less likely people are to give you candid feedback. So ask yourself some specific hard questions. For example, to assess your sense-making capability, ask, “Am I attuned to business changes that may require shifts in how we run the company?” To assess your re-lating capability, ask, “How do I behave under pressure?” To assess your visioning capability, ask, “How often do I communicate a vision and key priorities to achieve that vision?”


by Bill George, Peter Sims, Andrew N. McLean, and Diana Mayer


February 2007Product no. R0702H

No leader has all the answers, but authen-tic leaders—those who generate long-term results—have the self-awareness critical to making the best use of their strengths and capitalizing on others’ strengths. Denial can be the greatest hurdle that leaders face in becoming self-aware. Rather than falling vic-tim to denial, authentic leaders work hard at developing self-awareness through persistent and often courageous self-exploration. They ask for, and listen to, honest feedback. And they use formal and informal support net-works to help them stay grounded and lead integrated lives.

Primal Leadership: The Hidden Driver of Great Performance

by Daniel Goleman, Richard Boyatzis, and Annie McKeeHarvard Business ReviewDecember 2001Product no. R0111C

This article focuses on the relating capability. Relating hinges on your ability to manage your own emotional state so it exerts a posi-tive impact on others’ emotions. Depressed, ruthless bosses create toxic organizations filled with negative underachievers. Upbeat, inspirational leaders cultivate positive em-ployees who embrace and surmount even the toughest challenges. One way to manage your emotional state effectively is to repeat-edly rehearse productive behaviors. For example, Tom wanted to learn how to coach rather than castigate struggling employees. Using his commuting time to visualize a difficult meeting with one employee, he envi-sioned asking questions and listening. And he mentally rehearsed how he’d handle feeling impatient. The exercise prepared him to adopt new behaviors during the actual meeting.

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