Denial Ain’t Just a River in Egypt: Leadership Team Development

Mark Twain is commonly given credit for this saying, although there is not conclusive proof of his authorship. It does sound like something he would have said, especially if he observed contemporary management meetings.

This saying about denial is a humorous way of describing a situation in which a person or team refuses to see what is obvious to others as a means of avoiding confronting a painful truth. This behavior is seen too often in organizations where the executives live in denial about the competitive position and performance of a business. A classic example of this is the statement: “But our customers love us”, which is said in meetings to discuss declining sales and margins on sales.

Denial is perhaps the most primitive defense mechanism seen in people. If a person thinks that a circumstance will be difficult or painful, the person simply pretends that the circumstance does not exist. In some cases, the person is aware of their pretense, while many others are not. This last category is the most dangerous for an executive, as the executive managers convince themselves that the circumstance and condition simply do not exist. Denial is the polar opposite of accountability.

Too often managers live in denial rather than having action and commitment based conversations. In public there is a pretense that everything is going smooth and nothing has happened, but in private the managers will admit knowing about the issues. Denial serves to remove personal accountability and avoid the need for action. Denial is a primary means of explaining and justifying the lack of results, e.g., “you do not understand”.

Denial is a “rot that is waiting to invalidate accountability”. Given that it is a primitive mind mechanism, logic often does not work. It usually requires a more compelling and forceful approach which simply says that this level of thinking is not appropriate from an executive or manager in your organization. While that may be difficult at the time, the consequences of not dealing with it will be much worse.

Justification and Rationalization

Justification is an act of providing reasons for complaints and defenses. In business it is the act of trying to defend and is most commonly used to defend lower than expected performance and results.

A humorous example of justification was on a t-shirt worn near Christmas by one of my favorite baristas. The slogan on front of tee shirt was “But Santa, I can explain”. This reflects how justification is often used to explain events and performance which does not meet expectation. Justification used by executives may provide a short term “pass”, but actually works against those executives over time. Employees often can see the actual performance as well as the hollowness of the justification. Instead of justification, Kouzes and Posner (1993) say that when accountable leaders see that mistakes have occurred that it is important that the leader:

  • openly admit the mistake
  • avoid the temptation to deny it or make justifications, and
  • apologize to those who were affected by the mistake.

They add that covering up or denying any wrongdoing actually assures more damage to the leader’s reputation than admitting the mistake in the first place.

Rationalization is another defense mechanism in which one’s true motivation is concealed by offering an explanation which is expected to excuse the behaviors. While rationalizations often appear “logical”, others see through the attempted explanation. Accountability is the enemy of justification and rationalization. Accountability calls for a concise description of what was promised, what happened, and what is next. Being accountable for a result says:

  1. I promised X.
  2. I achieved X, or I did not.
  3. If I achieve Y this is what I am doing to close the gap between X and Y, and how and when I expect the gap to be closed and the missing amount to be made up.
  4. If I see that I can no longer close the gap and make up the missing amount, I revoke my original promise and now make this new promise. (If the new promise reduces a key operating factor like earnings, margin and volume, there is a promise to explore what other results can be increased so as to keep the overall operating commitments and promises.)

Denial in Action Example

I consulted with a company which held monthly performance reviews in corporate headquarters. Each month the executives running the business units would go into a large conference room in which the tables were arranged in a U-shape. At the head of the table were the Chairman/CEO, COO, and CFO. Sitting on each side were a cadre of corporate staff. Each business unit would go in, present their results, and then be interrogated by the C-level executives as well as corporate staff. This practice of revising monthly performance could sound like good management, until you hear the rest of the story.

First, the business units were complex and quite large, so there could be substantial variability in reporting from month to month. This natural variability between months significantly reduced the accuracy of monthly numbers at the time of this meeting, so the attempt to assess performance on a monthly basis was of limited value. Further, the staff executives appeared to view this monthly meeting as their opportunity to appear smart and adding value in front of CEO and COO. As a consequence, when the business unit heads prepared for these meetings they spent more time preparing for “thrust and parry” from the staff groups than understanding the details of the financials. If the expected results were not achieved, the focus was on excruciating details as to why. As I observed this tradition several interesting things emerged:

  1. The conversations were always focused on reasons, not on results.
  2. The quality of the presentation and conversations were based on how well the executives could spin an interesting tale of reasons. Promotions in the company were a reflection of skill in making up reasons, rather than producing results.
  3. The environment was one of blame, excuses and justifications, which produced silly conversations and decisions. Missing was the basic integrity of the results.

Results Matter

If a leadership team uses denial, justification and rationalization, over time the actual business results will seem not to matter. Ironically these conversations will become overly past-based, with attention on “why didn’t you do better”. While understanding gaps in performance is useful, it matters only if this information can benefit future behavior and performance. Keeping the past separate from future and dealing with commitments for actions and results in the future will strengthen a leadership team.

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Premortems: Technique for Improving Strategic Thinking

I recently was looking through blogs from McKinsey Quarterly and ran across one of my favorites. It is entitled Bias busters: Premortems: Being Smart at the StartThe authors advocate the use of Premortems as a tool for identifying biases which can get in the way of good decision making. I agree as I use a similar process with clients who are developing strategies and transforming their organizations.

Reading the blog from McKinsey & Co. also brought back fond memories of a great man who originally taught me about Premortems. Marty Leaf was an accomplished lawyer in New York. He began his career as a trial lawyer and later expanded to handle dispute resolution as well as complex contract negotiations. Marty also provided a great service to humanitarian organizations such as the Buckminster Fuller Institute, Hunger Project and a United Nations NGO. Marty’s clients were typically large, well-known businesses, but also included a diverse group of individuals such as Lhamo Dondrub, the 14th Dalai Lama, John Denver and Werner Erhard.

I met Martin Leaf through a mutual friend, and then got to know him better as we sorted through some knotty corporate legal issues in New York. In addition to being excellent as an attorney and extremely bright and gracious, Marty was also fun to be around. As an example of his humor, when we were in a very tense moment sorting out this legal matter, I turned to Marty and had this exchange:

Me: “Marty, is it better to be dealing with a crook or a fool?”
Marty: “A crook.”
Me: “Why is that?”
Marty: “Because you can go have a nice meal with a crook since you know who you are dealing with, where it is much more difficult to deal with a fool!”

During this process Marty introduced me to his version of a Premortem. He said that at the completion of a trial, one of two things happen:

  1. The winning side goes out to a fabulous restaurant to celebrate. During the meal the client toasts the legal team for their brilliance. After winning a big case, collecting the last of the fees is seldom an issue for the winning attorneys.
  2. The losing side schleps back to the client’s offices, orders sandwiches, and immediately begins a postmortem to analyze what went wrong. Of course, the client’s opening presupposition is that the lawyers screwed up and lost the case. During the postmortem, however, new information often emerges which would have been helpful in the trial.

It was during one of these postmortems that it occurred to Marty that it would be a really good idea to have this conversation before they went to trial. Hence his use of the term Premortem. Marty graciously gave me permission to use the term, so I have for many years.

Marty’s view of a Premortem was designed to:

  • Create strategic thinking from the future
  • Discover information which existed in the company but was for some reason not being communicated upward
  • Explore the blind spots and biases in the company’s thinking about the topic being litigated. It was easy for the legal team to be influenced by this mindset and not see the flaws in their client’s points of view

 

Create Strategic Thinking from the Future

Premortems are useful tools for vetting business strategies, designing a culture change and organizational transformation, as well as large capital projects. This value comes from creating a conversation regarding the future. One of the biggest challenges in helping executives develop strategies and plan for the execution of those strategies is confronting that the future is not knowable. Ironically for a trial lawyer this is easier, as the company either wins or loses the case. There are two clear and defined futures to consider.

In working with executives though, it is often more complicated since at the beginning they can think only from one place or future. Their thinking about the future is some form of a continuation of the past or present. Getting the executives to think from the future perspective, rather than just a continuation of the same from the past can be challenging since it is not knowable.

The future is not knowable because it has not happened yet. Since the future has not happened yet and is not knowable, it requires thinking strategically. That is, thinking without the comfort of analytical predictions which are based only on the past. Thinking strategically requires thinking from points in the future which are not necessarily a linear progression from the past. Given we naturally think from the past to today and project that forward, thinking from a future that is not necessarily like the past is a challenge. Hence, the value of being able to locate one’s thinking at a point in the future. In other words, providing a place to stand in the future in order to observe and think about big challenges to be faced in execution.

I find it useful to have executive teams think from two scenarios:

#1 Invented Future. Invented Future is created by executives to describe a future in which the intent of the organization is being fulfilled and stakeholders are thrilled. Conversations from the future rather than about the future provide a new and much improved perspective for strategic thinking. This Invented Future can be achieved through:

  • Changes in mindsets
  • Creativity and innovation
  • Breakthroughs in how employees think about the business
  • Improved listening to customers’ needs

 

#2 Failed Future. This provides opportunity for Premortem. This Premortem begins with a point in the future in which the strategies and execution plans have failed. Often there is a triggering event which led to the overall failure. These triggering events can include:

  • Customers changing preferences for products and services
  • Large customers being acquired or going out of business
  • Digital disruption which radically reshapes the competitive landscape
  • Global competitors entering a market with different financial drivers and product offerings

Discover “New” Information

A major risk to developing and executing strategies is critical information which is known by people in the organization but NOT communicated upward to decision makers in the organization. This dynamic can lead to catastrophic failures and safety issues. An excellent example of this is the case study of the events surrounding the deadly failure of NASA’s Columbia. In that case, managers who were responsible for safety were aware of issues which ultimately caused the disaster but chose not to communicate that information upward to those managing the mission.

Marty said that similar things happen in trials. During the trial the other side introduces facts or information which Marty and his team did not have. Often this new data was important to the outcomes. During the Postmortem, they discover that new facts and information existed within the client company but, for whatever reason, they were not communicated upward. The reasons for not disclosing this important information varied, but the consequences were still final.

A key question in conducting a Premortem is “What important data and information exists within our organization which we are currently not aware of but will be crucial in our strategic deliberations and execution?” I find that at first, there are blank looks on executive’s faces, but as we engage more people, we start to uncover very important information. This is among the reasons I recommend expanding the size of the group when planning execution of strategic projects.

Explore Biases, Blind Spots and Unproductive Mindsets

There is an abundance of evidence that cognitive biases are a major threat to strategic thinking. As an executive group begins to explore opportunities for growth, innovation and performance enhancement, it is useful to review some of the more common cognitive biases that could occur. If the group is candid, they will readily identify examples in which cognitive biases affected previous decisions. When a group can acknowledge the risks they face based on cognitive biases, it greatly expands its capability to think strategically. To illustrate the risks, I may ask the group to start with a future and then imagine how cognitive biases could negatively impact their conversations and deliberations.

I also use the term blind spots to encourage executives to explore dynamics in their thinking. Blind spots are often assumptions held by the group, but they have forgotten they are only assumptions. Challenging blind spots allows the group to uncover assumptions that need to be revisited and assessed. Among the most important set of assumptions to be revisited are those which involve external drivers that have huge impact on a company’s operations, as well as its customers. Examples include financial interest rates, number of housing starts, number of new autos built in a year, oil prices, number of active drilling rigs working on shore, etc.

Conclusion

Martin N. Leaf died in New York City after a long illness on May 23, 2015. At the time of his death he was surrounded by his family. The acknowledgements of the difference he made in people’s lives poured in. I loved one such acknowledgement which read,

“To Marty Leaf, a man for all seasons. You were a mighty influence in my life and the world”.

That sentiment expresses how many of us who knew Marty felt about him.

I hope this story about Marty has given you a new perspective about the use of Premortems. It is a simple, but highly effective tool in improving strategic thinking through identifying biases and blind spots.

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The Words Leaders Use Can Greatly Impact Performance

In getting their jobs done, executives and managers primarily deal in communications. This includes the spoken and written word, along with the behaviors associated with those words. Words in the English language are full of richness in meaning. Yet for all the richness, we in business tend to bend, borrow and, in some cases, overtly distort the meaning of words to fit our purposes. While this convenient borrowing serves near-term purposes, often the long-term consequences are that the implied meaning of words we use in business are confusing if not compromised. This increases the complication of situations and can lead us astray.

Words are full of meaning and message, and in business are theoretically assumed to describe behavior. When the behaviors of executives and managers are consistent with their words, a powerful dynamic is created. Consider that an operational definition of integrity is behavior that is consistent with words. Doing what we said we would do, or not doing what we said we would not do is an essential part of establishing credibility and integrity as an executive or manager. Conversely, saying one thing and behaving differently is a surefire way to send mixed messages to a group, organization or team. At the end of the day, communication, which is comprised of behavior and words, matters greatly.

The clarity and crispness in the meaning of words is important for executives and managers now more than ever. The challenges and complexities facing businesses continues to grow, which in turn demands accelerated changes, creative strategies, innovative business models, and new models for organizing. Yet many of the words which could be used in accelerating change have been used up. For example, breakthroughs are often what is needed in the business.

Breakthroughs

In the early days of organizational transformation, our firm piloted the use of language-based breakthrough principles. As an example, using breakthrough principles we contributed to the transformation of Ford Motor company in the 1980’s. Even with this outstanding success, we were very hesitant to use this term since it made many executives uncomfortable. When the word breakthrough was used, it was to delineate and designate an extraordinary accomplishment which would open huge new possibilities for the business. Then the term became widely used to describe products, most of which were anything but a breakthrough. Rather, they were unremarkable if not overtly forgettable. Along the way, a powerful word for use in describing organizational transformation was weakened. The cruel irony is that a word used to describe an important distinction in the transformation of Ford Motor Company was later used to describe a completely forgettable Cadillac product!

Culture

It is now widely accepted that an organization’s culture is important. Two leading scholars (James Heskett and John Kotter) from Harvard Business School conducted a study comparing the business outcomes for companies with good cultures and bad cultures. The results were stunning as can be seen in the chart below:

Average Increase for Twelve Firms with Performance-Enhancing Cultures Average Increase for Twenty Firms without Performance-Enhancing Cultures
Revenue Growth 682% 166%
Employment Growth 282% 36%
Stock Price Growth 901% 74%
Net Income Growth 756% 1%

 

Most of us agree that a good culture promotes change and success, while a bad culture stifles innovation and promotes bureaucracy which, in turn, inhibits growth and performance. While the word culture is widely used in business, its meaning has been compromised to become synonymous with principles and values. The assumption has become that the way to change culture is to change values. This is not accurate and contributes to many failed change projects. While values are one part of culture, they are not the part that drives most behavior and lays the foundation for culture.

Leadership & Management

Perhaps there is no better example of the misuse of terms than the words leadership and management. A quick glance at a good dictionary will demonstrate that the two terms have quite different meanings.

Leadership: “the actions of leading a group of people or an organization” and “the state of being a leader”

Management: “the process of dealing with or controlling things or people”

Both functions and roles are important in business organizations, yet they are different. Leadership is critical for success in creating strategies and implementing change. Yet in many organizations the two terms are used interchangeably. The management team is called a leadership team, yet all the topics and work are concerned with management, not leadership. The people on the leadership team do not possess leadership skills and show little interest in acquiring them. Calling a team of managers ‘our leadership team’ serves only to confuse the organization and reduce the probability that actual leadership will be exhibited, even when it is desperately needed.

Organization Design

Unfortunately, the two terms organizational design and organizational structure have also become synonymous terms. Both terms describe an important element for executives, yet what I consider the most important element of organizational design has by and large lost its meaning. Organizational structure deals with how formal authority is delegated and managed. For example, is the company organized around business units or does it function as one large company organized around functions? Further, the term organizational structure is also used to describe the reporting relationships within the organization. This is the most common use of the word, which translates to boxes and lines on an organizational chart. This structure is important for administering the functions and reporting relationships as well as providing clarity to employees. The structure is commonly thought of as the boxes and lines which depict the organization.

The challenges facing most business continue to increase because of accelerating rates of change, disruptive innovations and technologies, expanding expectations and sophistication of customers, increasing global competitors, regulatory changes, shareholders who want near term results, etc. In order to act on those challenges, executive must rethink how their organization can see and respond to these challenges. The executive must be intentional in designing their organization to increase its capability to explore possibilities, identify opportunities and threats, and ultimately act in extraordinary ways. Organizational design can be described as:

“Change the company’s most fundamental building blocks: how people in the company made decisions, adopted new behaviors, rewarded performance, agreed on commitments, managed information, made sense of that information, allocated responsibility, and connected with one another.”

The issues or problems come when organizational structure is misused by executives thinking about strategic challenges and creating strategic execution. The executives who confront external dynamics and strategic challenges move quickly to questions of how best to structure the organization. At times it appears that when executives are facing tough external challenges and changes in the market, they instead change the organizational structures, or restructure. It often appears that reorganization is chosen because they are not sure what else to do.

Redeployment

Redeployment is a special case for me. I was working on a book with my colleague and good friend, Francis Vidal. We were developing methods that companies could use to mobilize their organizations during times of change. I relocated my family to Paris so Francis and I could work together as consultants and develop our methodologies. We chose the term redeployment to describe our methods since the word redeployment is the same in both English and French. Unfortunately, during the time we were working on the book and building our common practice methods, the term redeployment took on new meaning in the U.S. Companies began using the term ‘redeployed’ to denote downsizing of employees. The term became synonymous with getting fired and outplacement. That simple change in the meaning of the word was the kiss of death to this practice in the U.S. and the usefulness of the book for KingChapman. So, we published the book in France, but not in the US.

Conclusion

Words are a primary tool for those in business. Words are full of meaning and message. Words are the basis for leadership. We use words to create new futures, bring clarity, raise awareness and inspire people. We must, however, remain alert to when our favorite words and terms have taken on additional meanings or lost their value to properly distinguish our intent.

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What Henry Cavendish Can Teach Us About Organizational Culture

Organizational culture is one of the most important and yet misunderstood aspects in business today. Culture has profound impact on a business organization’s performance. For example, a Harvard Business School study documented the significant impact of culture on performance. Heskett and Kotter documented the dramatic differences between companies with good cultures vs those with poor cultures on key performance measures. For example, the companies with good cultures achieved 756% growth in net income during the same time period that companies with poor performing culture saw just 1% net income growth.

Given the importance of culture on performance, one would assume that those of us in business would have an excellent understanding of what culture is. While this seems obvious, it is not the case. Most of us have an incomplete understanding of organizational culture. We assume that culture is:

  • The artifacts which can be seen in the organization. These artifacts include the behaviors which can be seen. It also includes how communication is delivered, the workplace is organized as well as how practices and processes deployed. While declaration is given that those artifacts are the culture, less consideration is given as to why those artifacts occur. Said differently, identifying what the cultural artifacts are is useful, however, meaningful change can occur only after determining why that culture occurs.
  • The values of the organization. It is common practice for executives who seek to change or improve their organization’s culture to use exercises to develop the exact wording for the desired values and principles of the organization. The assumption is that by identifying and claiming these new values that they will now occur in the culture. While this is a popular approach to culture change, it seldom works out for any length of time.

So, the state of play is that we have strong evidence that culture has significant impact on an organization’s performance, yet we do not have a good understanding of what or why a culture is or how to improve it. This is startling given that we have spent most of our lives in some form of organization, each of which had unique cultures. Think about it, most of us went to kindergarten or preschool before we were age six and have been in various organizations ever since. Each of these organizations had distinct cultures which impacted our experience, yet we do not have a good understanding of organizational cultures. This is because the culture of the organization was established before we arrived in that organization and functioned so much in the background that we could not see it. Chances are we felt the impacts of the culture from time to time, but never were able to see the entire culture nor understand the origins of the culture.

Who Discovered Water?

This reminds me of one of my favorite rhetorical questions that I use in helping others understand culture. The question is “who discovered water?” Think about it. We take water so much for granted that at first the question seems daft or stupid. Yet thinking provides an important clue in understanding organizational culture.

One response to this question that I like is “I don’t know, but I’m pretty sure it wasn’t the fish.” This response has an interesting parallel to our experience with cultures. The fish spends all its entire life in water and yet it has no concept of water. The fish begins to experience water only when it is pulled out of the water; that is, when some fundamental change occurs. Often that is how we first begin to encounter culture -when some fundamental changes occur.

The question remains “Who invented water?” This question brings us to the title of this blog: What Henry Cavendish Can Teach Us About Organizational Culture? If you do a search for the question “Who invented water?”, the most common answer is Henry Cavendish. A sample response is:

Henry Cavendish. (1731 – 1810) was a chemist, who discovered the composition of water, when he experimented with hydrogen and oxygen and mixed these elements together to create an explosion (oxyhydrogen effect).

Consequently, Cavendish is generally credited with discovering water. A more thorough description of Cavendish’s is:

A natural philosopher, the greatest experimental and theoretical English chemist and physicist of his age, Henry Cavendish (10 Oct. 1731 – 24 Feb. 1810) was distinguished for great accuracy and precision in researches into the composition of atmospheric air, the properties of different gases, the synthesis of water, the law governing electrical attraction and repulsion, and calculations of the density (and hence the weight) of the Earth.

The story of Henry Cavendish is fascinating. He was born into English aristocracy. His father, Lord Charles Cavendish, was active in politics and science. Henry was painfully shy and had no interest in politics, however, he did share his father’s passion for science. His father introduced Henry to the Royal Society, where he became an active member. He spent his life involved in a wide range of problem solving and research. He was a pioneer in scientific research and discovery. So, what can we learn from Henry Cavendish that helps us understand organizational culture?

Lessons on Organizational Culture from Cavendish

The statement “Cavendish was distinguished for great accuracy and precision in researches” gives us a clue and says much about his approach to problem solving. Cavendish experimented to increase the understanding of complex phenomenon. He was also noted for his great accuracy and precision. Perhaps the first lesson from Cavendish for us about culture is experimentation. I frequently encounter executives who think they know culture and consequently have closed off inquiry and thinking strategically about culture. I use this expression know culture to describe a mindset which I frequently encounter that executives have:

  • Read articles about culture
  • Been involved in processes to identify the organization’s values
  • Can talk convincingly about the importance of culture to performance of business

Unfortunately, this is based on surface level understanding of culture which in turn provides little access to action. What most of us miss is that there is a third level of culture which determines how the organization functions.

The Third Level of Culture

Edgar Schein first identified this third level which he called Basic or Tacit Assumptions. This third level is based on the shared learning of the group which is used in orienting new people to the organization and has over time become so taken for granted that it is no longer visible to participants in the organization. It becomes the context for that organization.

To deepen our understanding of culture, let’s think about how this context based on tacit assumptions is formed. An organization’s culture begins forming as soon as people come together as a group to address a common opportunity or problem. The culture begins being shaped by the attitudes, decisions and learning of this group. Cultures are built on shared learning by the group as to what works and what produces success and/or avoids failure. Each culture is unique since it is shaped by the nationalities of people involved, personalities of early leaders, professional backgrounds, technologies with which working, etc. Over time there is additional experiences and shared learning by the group which modify and refine the culture. Once we understand how culture is created, we realize that every organization’s culture is unique and so complex that it is virtually impossible to completely know or understand. The most we can hope to achieve is learning enough about how a culture functions that we can develop possible interventions.

Edgar Schein uses the concept of human personality as an analogy to demonstrate that culture is way too complex to understand. He says, “Culture in that sense is like personality or character for an individual, once you’ve learned to be a certain kind of person that is you in all aspects of your functioning and you don’t want to be any different. Which is why culture is hard to change.

Schein advocates identifying a specific problem or issue that needs to be addressed, and then begins inquiring into the nature of that problem. The assertion is that the presenting problem will likely reflect deeper issues in the organization which can only be identified and addressed through this inquiry. This is where Henry Cavendish can teach us about great accuracy and precision. Cavendish discovered water by identifying the component parts and seeing how these parts interact with each other. As we start to examine a particular problem or opportunity to identify how the culture is influencing it, we want to avoid introducing our favorite explanations or theories. Instead we want to use “great accuracy and precision” which was the hallmark of Cavendish’s career. We want to examine and observe based on what presents itself, rather than our opinions about what is being seen.

Application

At KingChapman we assist clients to develop strategies to change their culture and transform their organization. This intervention begins with identifying the Default Future of their organization. The Default Future is what is going to happen if nothing dramatically changes. That is, if the organization continues on auto pilot what will probably occur. This Default Future is based on the current context and is business as usual. Once the Default Future is identified, the question is “Do you want it?” If the answer is yes, then no further changes are needed.

If the answer is a rousing no (often expressed as “Hell No!”), then the next step is to design a new future which is more attractive and robust for the organization. The next step is to create a new future in which dramatic cultural change and performance improvements occurs. We call this the Invented Future since it is created or literally made up. The Invented Future provides a platform from which clients can see the existing culture as well as design changes in the culture which will enable the organization to make dramatic improvements.

In order to determine areas of the culture which need to be changed, we at KingChapman use our Breakdown Methods. We say that a breakdown is an interruption of a commitment. That is, a group of people are committed to something and for whatever reason that commitment is not kept. This lack of keeping a commitment provides a view for our clients to inquire into the bedrock of their culture, which is the tacit assumptions. Using the Breakdown Methods as a tool, clients are able to separate the observable facts from the opinions and stories which invariably accompany any perceived problem. This separating of observable facts from opinions allows our clients to clearly see a specific part of their culture that is causing problems and interfering with improvements. And with this clear vision of it, clients can see and address the underlying implicit assumptions to implement changes which will improve organizational performance.

What our clients find when they declare a breakdown and begin inquiring into the breakdown is that an unexpected element of the culture has shown itself and caused unexpected behavior by people in the organization. Something surprising occurs. When our methodology is used to identify and inquire into problems which are a reflection of commitments being kept, our clients see specific examples of how a culture is impacting performance. With these insights, our clients can create new ways of thinking and approaching understanding the culture and ultimately making the desired changes.

Conclusion

Who discovered water? Henry Cavendish. What can he teach us about organizational culture? To inquire and observe using great accuracy and precision about how the context and tacit assumptions shape how an organizational culture perceives situations and elicits specific actions. Through great accuracy and precision, we are able to discover the third level of culture which will allow us to be successful in making  changes in organizational culture.

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How Hollywood Might Depict Changing Organizational Culture

Most of us love movies and TV shows because it allows us to look in on characters and situations to see how things play out. Recently there has been fascinating news coverage and social media chatter about the unexpected ending to Game of Thrones. Many people are outraged at the treatment of their favorite characters. In a similar time frame, the long running TV sitcom Big Bang Theory also completed its story. While there was not as much angst and upset as with Game of Thrones, there still were plenty of points of view on how it should have ended.

This recent news got me thinking how Hollywood writers would develop a script about executives involved in changing organizational culture. What would the story line be and who would be the main characters? How might this story play out?

If we assume the screen writers looked on the internet for guidance and used the prevailing mindset about changing organizational culture, then we could expect a hero or two who were inspiring. This inspiration would be geared toward helping groups of people find new values, which in turn changed the values in the organization.

  • Given that, what movies come to mind which are inspiring?
  • What would be your list of top 10?
  • Would you include any of the following?
  • If asked to name movies which depict how you think about changing a culture, which movies would you pick?
  • Would you think of movies which you found inspiring?

Top 10 Most Inspirational Movies

  1. Forrest Gump
  2. The Shawshank Redemption
  3. The Pursuit of Happiness
  4. The Blind Side
  5. 3 Idiots
  6. Rocky
  7. Braveheart
  8. Remember the Titans
  9. 127 Hours
  10. It’s a Wonderful Life

This list is from a blog entitled Top Ten Most Inspirational Movies of All Time. We think that changing organizational culture should look heroic and inspiring. In most movies, we can see who or what the obstacle is and what is needed to overcome. With that insight we can imagine how the story should play out.

Misunderstandings About Organizational Culture

At this point in time there is little doubt that the quality of an organizational culture has profound impact on the performance of an organization. Given the magnitude of the impact of culture on performance, one would think that those of us in business would be very knowledgeable about what culture is and how to improve it. Nothing could be further from the case. Most of us have an incomplete and superficial view of what constitutes organizational culture and how culture can be changed. The “prevailing wisdom” is that culture is the values and principles of an organization. We assume that what is needed to change culture is to articulate some lofty and inspiring principles and values. Culture change will be based on inspiration and look like the first list of films. We assume that if we articulate inspiring principles and values that surely people in the organization will adopt them and the culture will change. Oh, were it that easy.

While values and principles are an important element in culture there is much more to the story. Culture is comprised of:

  • Artifacts of behavior, processes and structures. These are the things that are visible to people in the organization. Most employees see these artifacts as indicating what the “real culture is”.
  • Values and principles. Unfortunately, in many organizations the artifacts which people can feel and see are disconnected from the values and principles.
  • Tacit assumptions. These assumptions are developed over time through shared learning by groups of people in the organizations. These tacit assumptions are passed on to new employees joining the company as how to fit in and succeed in this organization. In most organizations these tacit assumptions are so taken for granted as to be invisible to most people in the organization yet form the context for the organization.

Changing or improving organizational culture requires digging in to understand this third level of tacit assumptions. It is tedious and tense work … which I think Hollywood would depict in very different ways if the screenwriters actually understood what’s required to change culture. That’s why I have a different list of movies that I think best describe organizational culture change.

Movies That Describe Organizational Culture

  1. The Abyss
  2. Armageddon
  3. Lethal Weapon 3
  4. Blown Away
  5. Juggernaut
  6. Fight Club
  7. The Shadow
  8. Die Hard with A Vengeance
  9. MacGruber
  10. The Rock

When you look at that list, what comes to mind? If I told you those were the Top Ten movies on a list, what do you think is the criteria for being on that list?

This list is from a blog entitled, Top 10 Wire-Cutting Bomb Moments in Film. You are likely thinking of wire cutting to defuse a bomb as a curious choice to depict what changing organizational culture looks like. Yet it is, so read on.

Think about watching movies when a bomb squad specialist in working to defuse a bomb. What did you see? Painstaking actions to understand how the bomb was built as well as how it can be deconstructed. Each move is calculated based on understanding the unique attributes of the bomb rather than assuming that all bombs are made the same. The actions are calculated and focused to take each step, which will lead to the next step. Hurry and shortcuts are not a formula for success in deconstructing bombs… nor is a good formula for deconstructing cultures in order to see a path to making changes in the culture.

The similarities of wire-cutting bomb movies and organizational culture is this: we have a vague understanding of how either works. The difference is we know that we know very little about defusing bombs, while most of us think we know much more about how organizational culture works than we actually do.

Organizational culture is the shared learning by groups of people in the organization. This shared learning involves what produces success and survival of the organization. As an organization matures these “shared learnings” are passed on to new people who join the organization. At some point these shared learnings become so imbedded in the organization that it “disappears” into the background and can no longer be seen by those in the organization. While it is “invisible” to members of the organization, this imbedded share learning has significant impact on how things are perceived and acted on.

Organizational cultures are much more complex that we realize. In fact, cultures are so complex that is hard to comprehend how the culture developed over time or how the culture shapes behaviors and performance of the organization. Edgar Schein is the preeminent authority on organizational culture. He has consulted with and studied cultures for over fifty years. He has also written the definitive text on organizational cultures and leadershipSchein says that cultures are so complex and large that it is impossible to comprehend and study. He uses an analogy of human personality. He says imagine that you have decided that you want to change all of your personality. How would that work? It would not. Personality is too well established to be amenable to wholesale changes. Schein says that the best you can do is identify an aspect of your personality which is causing problems, e.g., over eating or too much drinking. It is possible to work on that specific problem related to one’s personality … albeit a huge challenge.

The Great Irony

Think how ironic it is that we know so little about the culture of organization. How is that possible given we have had a lifetime of experience in organizations with distinct and unique cultures and yet work with a superficial understanding?

We all have grown up in complex organizations with clear cultures, called schools. We started in elementary school which had a distinct culture. We then moved on to middle school and then high school. Then many of us went on to universities, which also have clear cultures which are quite unique from high school. After our university experiences we took our first job with a company, whose organizational culture was probably very unique from our educational experiences. Many of us have had several to many different jobs in different organizations. Each time we enter a new organization we sense the uniqueness of the cultures, and our capacity to see this uniqueness fades as we come to feel at home in this organization.

With all this experience in entering and adapting to unique cultures, it would seem like we would be experts at understanding how cultures work. Yet we are not. That is because the nature of cultures is so pervasive that it is very hard to see except when first entering the organization. After a relatively short time we become part of the culture and can no longer see the particular distinctiveness of our new organization. We come to function within the culture without being able to see it per se. This is because a primary role of culture is to show new people to the organization how to fit in and behave in the organization.

Summary

Organizational culture has a significant impact on organizational culture performance, yet most of us in organizations have an incomplete understanding of what constitutes culture. If we are to improve organizational performance by changing the organization’s culture, we will need to look past the superficial concept that simply changing the values will change the culture. The best approach is to carefully understand how the specific culture you are dealing with developed over time and then identify specific problems which can serve as the “wires to cut” in defusing the complexity that every culture has.

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Appreciating I.M. Pei and Architecture for Transformation

A remarkable man died at the age of 102 on May 16th, 2019. I.M Pei lead the design of some of the most unique buildings, which blended daring visual effect with practicality. Among his most notable projects were Boston’s John F Kennedy Library and Museum, Bank of China tower in Hong Kong, Japan’s Miho Museum, Suzhou Museum in China and Dallas City Hall with fellow architect Theodore J Musho. Remarkably, Pei was in his eighties when he designed the spectacular Islamic Museum of Art in Qatar.

I came to appreciate I.M. Pei for his work on Louvre Museum in Paris. This project was for me a masterful example of architecture for transformation of a building. I have adopted some of the lessons I observed from the Louvre project to my work with clients as an architect for organizational transformation. Let me explain.

A crucial aspect of organizational transformation is developing the architecture. That is, the use of design principles to uniquely visualize and plan for implementing transformative changes in an organization. Unless you have been involved in designing and initiating the transformation of an organization, you may be unfamiliar with the term architecture for transformation. This term came into use in the 1980’s and continues to be used. The basis for architecture for transformation:

  • Translating the executives’ vision for the future of the organization into words. “Painting a word picture” of the commitments and intent of the executives with the future of the organization is the crucial first step. This involves identifying what the future is likely going to look like, called the Default Future. With the Default Future articulated, the next step is for the executives to create a new future that if achieved would fulfill the needs and wants of key stakeholders of the organization. This Invented Future is one which becomes the basis for developing an architecture for transformation.
  • Combining the core elements which have proven to be important for achieving success in other transformations. McKinsey refers to these as “transformational tactics”. These core elements or tactics include changing mindsets, inclusion of groups in planning and implementing the specific projects and etc.
  • Execution or implementation plans which establish urgency for undertaking the transformation as well as creating tangible results in the business. The challenge is to create action and momentum without overstraining the capabilities and resources of the organization.

 

Lessons Learned from I.M. Pei & the Louvre Project

Challenging Design

In redesigning a building or transforming an organization, the first step is to assess the level of complexity. The Louvre was an exceptional example of complexity. The first structures were built in the 12th century as a fortress on the banks of the Seine River. The building slowly evolved into a royal residence. Successive Kings built increasingly elaborate galleries, halls and residences. Architects of different eras had been asked to develop plans for construction of a new component or structure in the Louvre. Because the Louvre was the palace of the Kings, it played a prominent role in the French Revolution. The buildings were first opened to the public in 1793. This was during the French Revolution and came shortly after the executions of King Louis XVI and Marie Antoinette. After the Revolution, different buildings were used as governmental administrative offices and residences. Eventually it became a museum.

By the early 1980’s it was painfully clear that a major remodeling of the Louvre was required. The architectural challenge was to honor the magnificent history, protect the unique beauty and to remake the various buildings into an efficient, modern museum. The buildings were in need of renovation, core infrastructure was missing, and the gallery space was very inefficient. The building was “constructed as a royal palace and was fundamentally ill-suited to serve as a museum.” In addition, there was a problem with the entrance. It was too small to accommodate ever increasing numbers of guests. The Louvre Project was to change all of that, as well as add 650,000 square feet of much needed support space.

I’ve been involved in organizational transformations for over thirty years. Each one has had a plethora of surprises and unique dynamics. Each requires creative thinking about these unique challenges of the business and personalities of key stakeholders.

Diverse Stakeholders

If you have spent any time in France, you know that the French are very passionate about the beauty of their splendid country. This beauty is both natural and man-made. There are many magnificent buildings, of which the French are very proud, and certainly the Louvre is one of those buildings.

Excitement built as the initial plans for remodeling the Louvre were discussed in the early 1980’s. As you probably know, the French LOVE to hotly debate items of French life. During this time the Parisian cafes were filled with animated conversations about how the remodeling should be done, and of course everyone had their own unique views. That is, until the French government announced that it had hired I.M. Pei as the architect who would oversee a complete redesign of the Louvre. The first shock was that the government had not hired a Frenchman. A second shock came with the realization that the architect to whom this precious French treasure had been entrusted was not a European! Then there was a moment of stunned silence followed by outrage. What set the ‘tongues wagging’ in the cafes, restaurants, and homes was that the French government had awarded this most prestigious assignment to a Chinese born American! An AMERICAN!?!?!

Needless to say, there are many strongly held opinions about consultants in every organization. In developing the architecture for transformation, it is essential that each group of stakeholders are able to express their commitments and concerns. The willingness of consultants and executives to listen to the various stakeholders is a crucial first step. The second step is to consider how to address what stakeholders have said in developing the design for the transformation. Of course, not every point of view can be completely satisfied… but some elements can be included.

Disruptive Approaches

Organizational transformation requires disruption in approaches to communication, employee mindsets and ways of conducting the business. These disruptions are to interrupt the status quo so that new ways to working and thinking can be implemented. While this is completely logical, nonetheless it is upsetting to people when it is happening. This was clearly the case for Pei’s design for the Louvre. The focal point would become the plaza of the Louvre with the construction of a series of glass pyramids and fountains. For many onlookers, the construction of pyramids made of glass and steel was too modern and seemed completely out of line with the architecture of the existing buildings.

Sustaining Momentum During Execution

Given that meaningful transformation of an organization takes three plus years, the architecture must include plans for sustaining the commitment and engagement over that length of time. A building construction such as the Louvre clearly faces the same challenges. The Louvre project took six years to complete. During those long years there continued to be hot debate about the decision to hire an American and the radical changes this “rogue American” was proposing. While there were construction barriers, the citizens could see the beginning of the frames for the glass pyramids that became a focal point of the changes. The furor over hiring an American was compounded by the inevitable traffic jams that were created by renovation activities in the heart of Paris. Of course, the traffic jams were inevitable regardless of the nationality of the architect, but that was not the conversation among frustrated drivers at the time. I had the pleasure to briefly live in Paris during this time and was frequently in the Tuileries with my young children. Given my kids were playing at the boat pond and in the gardens, I often spoke with other parents and tourists. I found it interesting how often I was asked about what I thought about an American being hired as the architect for the Louvre…. given that my accent makes it clear that I am an American. That was one of those questions for which there was not a good answer.

Stunning Accomplishments

Transformation of organizations produces achievements and results which were previously thought impossible. Further, there are major changes in the organizational culture. There is an enthusiasm about the activities in the organization as well as what the future holds. So too was the time just before the grand opening for the renovations brought about by Pei’s design. For all the initial criticism and uproar, the Louvre project was a stunning success. I.M. Pei cemented his place in history as a great architect with this project. The architecture enabled remaking the Louvre from a very old palace into a modern museum. One part of the design was to shift the feel of the Louvre from being a series of long linear buildings into a coherent U-shaped configuration with multiple views of the courtyard or plaza. The courtyard now serves as the focal point for the Louvre. Highlighting the focal point of the courtyard or plaza are the pyramids.

Dennis Sharp says:

“Of all the Grand Projects in Paris, none created such a stir as the Pei Pyramids in the courtyard of the famous Louvre Museum. Spectacular in concept and form, they provide a startling reminder of the audacious ability of modern architects to invigorate and re-circulate traditional architectural forms”

Conclusion

He was a quiet, soft spoken person whose influence is enormous. I.M. Pei’s unique style and vision can be seen in buildings all over the world. Each is a unique expression of the location and intent for the building. His mastery of architecture and design can also be appreciated by those of us who engage in developing architecture for organizational transformation. Pei’s contributions during his 102 years of life were enormous. He serves as a model for creativity and innovation for the rest of us.

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Spotting Leaders to Promote Growth and Innovation

Introduction

Firms that want significant growth and innovation will find that organizational transformation is an essential element in executing their strategies. Without this large scale change the factors which have been limiting growth and innovation will persist. Acting to promote growth and innovation without organizational transformation is the embodiment of the popular definition of insanity:

Insanity is doing the same things over and over while expecting a different result.

Organizational transformation is required to alter the organizational context and culture. To better understand the word context, think of it as assumptions, beliefs, and experiences which, while in the background, actively shape how a person perceives events and phenomenon as they occur. While we are largely unaware of our contexts, these contexts shape our experiences, perceptions and thinking. As an example, if you are in a business conversation, the term leadership will be shaped by your experiences in business as well as how the organizations with which you are engaged use the word leadership.

Context occurs in language. The context in which words are used clearly shapes the meaning of that word as well as the sentence in which it is used. Consider, for example, how the word beauty takes on very different meanings given the specific context. “Beauty” can be used to describe an attractive woman as well as “beauty products”. However, the same word (beauty) can be used to describe a physical injury to the eye (as expressed by “that shiner’s a real beauty”), and many physical objects such as an auto, classic sailboat, etc. Same word, but very different meanings given the context in which the word is used.

Growth and Innovation are two words with intense meaning in business. Growth is directly related to value creation, which is why businesses exist. Shareholders punish and reward executive and management teams based on growth achieved and sustained. Some management’s attempt to achieve short term growth through a combination of acquisitions, cost cutting and financial engineering. However, for long term sustained growth the organization must demonstrate organic growth, which is based in part on innovation. Organic growth and innovation require organizational transformation. Organizational transformation requires leaders throughout the organization.

Leadership in Growth & Transformation

A business exists to create value and the only sustainable way to create value is to continually expand the business’s capacity to grow, innovate and achieve results. Growth and expansion of capacity for results does not happen by accident, it is caused! The cause is leaders working intensely to engage others in making this happen. In most cases the actions required to achieve the growth and sustainable capacity occur because of the capability, good will and hard work of front-line workers throughout the organization. Leaders engage people and people in turn enable the business to achieve outstanding results while changing to meet the needs of customers and demands of competitive markets.

Leaders are the starting point. Leaders create clarity of purpose, appreciation of shared values, and an articulation of the future that engages everyone in the organization. The leaders enable employees to take actions that will lead to results. Leaders create clarity of purpose based on the results that are needed and promised for the organization. Leaders get their own being from their Foundational Commitments as well as the commitments that they have made in regard to the business. The shared values that are articulated and come to be appreciated by the people in the business come from the leader’s commitments as well. The values say what we believe in as an organization, what is important to us, and what we can be counted on. Values for leaders will always have a couple of elements. One is doing what we say we will do. The second is results, or as one leader told me “Results, Results, Results”. It is not that leaders are not compassionate people who don’t care about their employee’s safety and well-being. Most do care quite deeply. In addition, they appreciate that employees’ safety and well-being is intimately related to achieving excellent business results.

Leadership is the reason organizations achieve results that were otherwise not going to happen. If the desired level of results could be accomplished through doing nothing out of the ordinary or maintaining the status quo, there is not a need for leadership. Leadership is required when the needed results will not occur absent some intervention. The intervention that produces the results is the role of the leader, and the evidence that a leader was there. If the results are not being accomplished, then the leader is not getting the job done. While that statement may seem harsh or judgmental, I invite you to think along with me as to what that statement makes available and possible to a person who is committed to be a leader. It puts in stark relief the reason for the being of a leader and a measure that is most valuable.

“Being a leader requires being a leader.”

This simple statement goes to the heart of what is required for success in implementing a transformation. Those who are accountable for strategic execution must be leaders. That is, on a moment to moment basis the person in charge is called on to be a leader. Notice that this statement speaks to being. Being a leader is not the same as sitting in the office thinking about what should be done. It does not necessarily involve getting a group of people together to discuss what should be done next. Simply convening a group of people does not necessarily imply the presence of leadership. When a group of people are inspired and taking actions that will produce unprecedented and unexpected levels of results, that is the evidence that leadership is present.

Let’s look at some of the behaviors that you will want to look for in identifying real leaders.

Personally Involved

It is essential that the leaders are personally involved and demonstrating personal commitment to the employees and the business. Employees are inspired by seeing their leaders personally involved and committed. At MacMillan Bloedel, Tom Stephens met directly with the various union leaders to challenge them to get involved in transforming the company. Some of the leaders cooperated while others did not. However, to the employees it was clear that Tom was stepping out and personally getting involved in taking on the hard issues related to the transformation. Tom also had meetings with environmentalists from Greenpeace and other environmental constituents as well as governmental leaders to chart a path by which MB could be successful. In all of the situations, the employees could see that the leader was making a personal commitment to the employees and the future success of the business.

Committing to a Desirable Future

Leaders think from a future that will be created for the business and the employees. Further, leaders look for other leaders who are already committed to a bright future for the business. Ironically, those who will be the most effective leaders may be quite different than you. They may not articulate it like you do, but their commitment is authentic and intense. You are not looking for people who need PowerPoint slide decks to be able to talk about the future and their commitments. You want those who are so authentic and genuine that they are their commitments. When they talk, people listen. They do not need props. They speak from their commitments and their heart. These leaders are so respected that when they speak about the future, employees feel like they can trust and they can listen. I heard a description for a leader like this. The statement was “If he tells you it is Christmas; you can go hang your stocking”. That is the kind of credibility that you are looking for.

In addition to credibility, you are looking for leaders who can commit to a future without knowing all the details of how that future will be achieved. This person is able to communicate a future that will be the basis for communication and engagement of others.

Completed the Past

Leaders are focused on the future, not the past. Ironically, the leaders you are looking for have often had difficult experiences with this organization, or a similar organization in the past. The knowledge of the prior difficulties makes these leaders more credible with some groups of employees. What makes these leaders powerful is that they are able to complete experiences from the past. The leaders you are looking for have completed the events of the past. They are not influenced or shaped by events of the past. They do not hold a grudge or are seeking retribution for events from the past. People who do hold a grudge and/or seeking retribution are not trusted by their colleagues and will not be effective as leaders.

The kind of leaders you want will acknowledge mistakes of the past. This acknowledgement does not require involvement of these past events. Rather, this person works from the business future in responsible ways, whether they happened to be individually involved or not. This willingness to be responsible is essential for credibility and effective communication.

If the leaders were involved in past mistakes, that needs to be addressed clearly and forthrightly. I am often surprised by how many people are unwilling to admit that they made a mistake, or that mistakes were made “on their watch”. People will pay an enormous price to maintain the “illusion of infallibility”. What is sad about this is that it is an illusion, and not a well-hidden illusion at that. Usually it is widely known that the incident or situation occurred, and yet much energy is spent in maintaining the illusion. It is like the old story of the king who is walking around naked, and yet the loyal subjects complement him on his beautiful suit of clothes.

Leaders often find that they also have to deal with events and perceptions from the past for which they were neither involved nor responsible. You can imagine how much resistance I receive from people about this point. It is common for managers to blame the employees and the union for the problems of the past. Of course, the employees sit around in the lunchroom and the union halls and blame the managers for the same problems.

The task is to get whatever happened in the past resolved for those involved. The term I use for this is completed. Completed means that whatever needs to be said and done to complete the past is done. If there is misbehavior from the past, it needs to be acknowledged and addressed. In most cases an authentic apology is appropriate. In some cases, there is action that needs to be taken as well. The leaders should take whatever actions are appropriate to be able to resolve matters from the past and get them complete. Getting matters resolved is essential so that these topics do not continue to come up in discussions. The leaders want for all to have matters from the past left in the past, and not injected into conversations and deliberation of the future.

For example, at MacMillan Bloedel Ltd., at the time Canada’s largest forest products company, one aspect of Tom Stephen’s leadership was that he discussed openly that the past failures in business was not the fault of the employees. In the first meeting with employees and union leaders, the executive running the business unit made a plea for involvement of the unions in a Co-Design™ project. After the executive spoke, a union leader gave a well-documented treatise on the prior failings of management in dealing with the employees and running the mill. In the midst of the treatise, Tom interrupted the speech with a very colorful and direct acknowledgement that prior management had thoroughly messed things up. The union leader was shocked at the candor of the acknowledgement and speech, and a possibility for transformation was established.

The closed mills and mediocre performance was attributed to management, and Tom was open that he was accepting the shortcomings of the past so that the employees and management could move forward to achieve better results. What Tom was doing was role modeling the desired mind-set of taking responsibility for what had happened in the past, even though he was not part of the company at the time. However, when he became CEO he “inherited the good and bad of the past” and thereby could take responsibility for what had happened in the past. By accepting responsibility himself, he was able to avoid the blame and finger pointing that otherwise was predictable and move on to transforming the situation and creating a future that was not possible prior to his intervention.

Walking the Talk

You want to spot leaders who “walk the talk”. If you are considering someone as a possible leader and they do not walk the talk, take them off your list of candidates. You have neither the required energy nor time to rehabilitate people’s reputations. Employees are very savvy about who walks the talk and who does not. You cannot “spin” or smooth talk credibility for those who have lost it on their own. You want people who are known to walk the talk because other employees will challenge everything in the transformation, including well established practices and processes. The leaders must be credible and willing to engage in the same challenging thoughts and discussions. If the leaders are not credible they will not get candor and openness from employees, and there is little chance that the employees will engage and participate.

Willing to Make Personal Changes

Leadership of a business in transformation requires personal change. A transformation requires dramatic change by the people in the organization to learn to work in a different way, to alter processes and most of all, to raise the level of performance. Most employees will experience some discomfort with giving up old ways of working and having to learn new ways. Leaders are not immune from this change, and in fact need to be out front in making the personal changes. Employees are aware of many of the changes that their leaders will need to make if the transformation is to be successful, and often keep a close eye on the leader to see what happens. The leader’s actions speak much more powerfully that their words.

Being leaders will require personal change and leaders often experience this change as uncomfortable. I must admit that I am still amazed at how frequently leaders are unwilling to face their own discomfort with changes and dig their heels in rather than make the needed changes. Needless to say, change efforts led by those who are unwilling to make personal changes are severely hampered if not doomed. Gandhi’s famous quote is:

“If we are to change, first we must change”
– Gandhi

Committed to Communication

Leaders are the communication. They are the future and the transformation that will be required for the business to achieve that future. Their communication reflects their being committed to the organization, the people and executing the strategy. The leaders you are looking for may not be eloquent speakers. You might not select them for a debate team. You would however want them “in the trenches with you”.

Communication translates the leadership messages to the employees and helps them see the future, how the strategy being executed will deliver that future, how each employee fits into that future, and what is wanted from them. Effective communication speaks to where employees are, not where you wish they were. Let me share an example.

Tom Stephens is among the most effective communicators I have ever seen. It is not that he is unusually eloquent, but rather he speaks to the heart of the matter and connects with employees around their concerns. He then effectively builds a bridge from the employees’ concerns to what is important for the business. While he was in Canada as CEO of MacMillan Bloedel Ltd, he asked the employees to work with him to make MB the safest and the most respected company in their industry. He went on to ask that they also work with him to make the company outrageously successful. What made this message dramatic to the employees was that at the time MB had at best a mediocre safety record and little apparent concern for the employees’ well-being. Further, there was a history of acrimony with the towns in which the company did business as well as with the unions. More notable was that the company had been the target of numerous pickets by Greenpeace and other environmental groups for its practices of clear cutting the forest and harvesting old growth rainforest trees. For Tom to say, “Help me make us the most respected company in our industry” was shocking, and yet was clear that he was committed to making a transformation with the help of the employees. Each employee came to see that their role was to be responsible for their own safety, and the safety of others. That made the transformation meaningful for each person, and was the platform on which the other aspects of the transformation were based.

Naturally Engages Others

The leaders you are looking to spot are very effective in engaging others. This is important since strategic execution and transformation is successful only when a critical mass of employees decides that it is in their best interests that the transformation succeeds, and join in. Employees are “engaged” or enrolled when they see that the transformation is meaningful for themselves and the business. Each employee who becomes involved in the transformation will engage with a series of questions, e.g., what is the company trying to do, why now, what does this mean to me personally, will I have a job when this is over, etc. Employees engage with a transformation on a very personal level. If the leader speaks about the transformation as a concept, and does not make the translation for the employees, it will make it more difficult for the employees to determine if the transformation is a good thing and if they should become involved. The leader must “build the bridge” from the concept of the transformation to the specific requests for actions and involvement.

The transformation is made meaningful by the leader engaging and inspiring groups of people, who in turn engage and inspire others. For success in execution the employees need to be more engaged and committed than they were prior to the beginning of the transformation. This engagement will not occur if they do not consider the strategic execution and transformation to be personally meaningful, and essential to the future success of the business.

Addressing Those Whose Actions are Inconsistent

You are looking for leaders who are willing to have difficult conversations. In particular, you are looking for leaders who will address the actions of others that are inconsistent with the future and the transformation. “Truing up” others’ behavior will be essential. Leading requires causing disruptions as well as taking difficult positions with those whose actions are inconsistent with the intent of the strategic execution.

One type of interaction is with people who are complaining and have a persistent complaint. The first step is to listen to the complaint. In some cases, the complaint is an accurate description of a circumstance that is in need of attention. Those are the easy ones. A second category of complaints is actually a poorly formed request. The person is asking for something, and often wants to contribute to the transformation but is speaking in a manner that makes it difficult to hear. Generous listening by the leaders will usually allow this complaint to be re-expressed as a request for inclusion, and from that point it is also easy to accept and get the person included. The tough ones are when a person or group has a persistent complaint. When the leader listens to the complaint there sometimes is not a viable circumstance in need of attention nor is there a poorly expressed commitment. Rather, what is present are undifferentiated complaints, also known as whining. This situation eventually calls for the leaders to address those who are complaining and ask them to be responsible for their speaking and to find a way to contribute. Easier said than done in some cases.

A special group of people whose actions should be watched closely is the management team. In working with companies that are wanting to achieve a transformation, the biggest and most frequent stumbling block I see are members of the management team whose actions are inconsistent with the commitments of the transformation. That is, managers who are unable or unwilling to lead and are actively sabotaging the transformation. This appears to occur when the person discovers what it will cost them personally to lead. I cannot stress how essential this point is. Too often leaders attempt to “limp along” with members of management who are not strong, not committed, and in some cases, both. While there are always extenuating circumstances and good reasons, it is nonetheless a mistake.

One of the behaviors of managers that cannot be tolerated is blaming past failures and mistakes on the employees and implying that the same thing will happen again. Leaders of transformation must continue to reinforce that management is accountable for the quality of the results, that management cannot achieve anything without the active support of employees, and together they can be much more successful that working apart or against each other. After this clarity on accountability, the leaders should then make sure that the transformation is connected to business results in the minds of the employees. A transformation that is not connected to specific business results will soon turn into a corporate program and lose effectiveness.

Accepting Chaos and Risk

Leading a transformation will from time to time involve accepting chaos and taking risks. Leading a transformation is a recipe for living in unpredictability. You are looking for leaders in the organization who can tolerate if not thrive in chaos and risk.

Often members of management will be uncomfortable with these conditions. These managers will try to intercede to reduce these unpleasant conditions by stopping the transformation. The leaders of the transformation cannot allow this to occur, and if it does, not to let it persist. If it does persist, the leaders will be taken off course and the transformation will slow or stop.

Strategic execution involves chaos and risk. Leaders assist others in getting past the chaos and responding appropriately to risk. Ironically, managers are often upset at taking actions that are perceived to be high risk, when actually a larger risk comes from NOT taking action. John Kotter has written a number of excellent books on transformation. One of his primary assertions is that the role of leaders is to create a sense of urgency. That is, to have managers see that doing nothing is a greater risk to the business than taking the risks associated with the transformation. Involvement comes when managers see that there is greater risk to the business from not acting rather than the transformation. This is a critical role for leaders since if managers are left to their own resources and views, they will act in a way that is in their own best interest rather than what is best for the business.

Willing to Share Power

You are looking for leaders who are comfortable with power. You do not want people who will let the power of leadership roles “go to their head”. You want individuals who are committed to the future and transformation, not their own glory. Leading a transformation will require sharing power. In some cases this is sharing power with hourly employees and may include sharing power with union leaders. The benefit of the sharing of power is that teams comprised of hourly employees are often able to implement changes much faster than the normal “management chain of command”. The sharing of power by leaders is often upsetting to middle managers who see their positions threatened by the different order.

Leaders have to decide if it is worth upsetting middle managers to achieve a business result or is maintaining the “normal order” of greater importance. The upset middle managers will often argue that the leader is losing power as a result of this power sharing. The irony is that the opposite actually occurs. The leader gains credibility and power by sharing with a broader range of employees in service of business results.

Encouraging Others to Get the Glory

Leading a transformation involves creating inspired actions in others to produce outstanding business results. You are looking for leaders who will actively encourage others to excel and “look good”. This includes having others excel, gain notoriety, and be rewarded.

You want to be cautious of prospective leaders who are concerned with personally “looking good” and getting all the credit. These people will not be effective, as this trait will severely hamper their effectiveness in transformation. You do not want people who will be torn by the choice to go for business results or personally be in the limelight. You want to confront the unfortunate reality that many bright skilled people cannot lead because of their own desires for personal recognition. While these people are charming and talented, they miss a key ingredient for leadership. I have seen many of these type people selected for leadership positions, and usually it does not work out well. Even if they start off well, they are not able to sustain the changes and the transformation does not persist.

Relationship to Results

There is a unique relationship between business leaders and results. As you look to spot leaders, this one attribute must stand out. Each prospective leader is unique, and yet you want results orientation to be central to the person. Many things drive leaders, as each person has their unique experience and history that leads them to be willing to “give themselves over” to the demands of being a leader. Results are what are important to leaders. Leaders are not concerned with perks, privileges and special relationships. Leaders want results. Period. End of conversation, or as the Brits so elegantly word it, “Full Stop”.

In developing the leaders in your business, it is important to remember that the leaders’ reason for being is to mobilize people to achieve results. Leaders achieve results by seeing that people in the organization are inspired to act in a way that produces results. In particular, acting in whatever ways that are required to have the organization achieve the promised level of results. Anything that distracts a leader from that mission and passion is a disservice to the leader and the organization.

Managers who are concerned with their own comfortable life and want to make sure that they have all of the perks, privileges and special relationships are likely not being real leaders. Further, they are probably doing a disservice to the organization by taking up a position that needs a leader. They are not only not doing what is needed, they usually are actively blocking and undermining those who are trying to provide leadership and do what is right for the organization. Often, I hear these people described as good people who are well intended and just not capable of doing what is needed. It is as if they are actors who have lost the plot but are expected to regain it in the next act. In reality, they are not focused, but the hope is that they will regain it “any day now”. While it is true that caterpillars will turn into butterflies with the passage of time, it is not true that these unfocused and self-serving people will turn into leaders with the passage of time.

Organizations achieve results that were otherwise not going to occur because of the being and actions of leaders. Leadership is required when the results that are wanted and needed will not occur absent some intervention. The intervention that produces the results is the role of the leader and the evidence that a leader was there. If the results are not being accomplished, then the leader is not getting the job done. While that statement may seem harsh or judgmental, I invite you to think along with me as to what that statement makes available and possible to a person who is committed to being a leader. It puts in stark relief the reason for being of a leader and a measure that is most valuable.

There is a strong tendency to tell excuses when an organization or team fails to deliver the expected results. While there are always extenuating circumstances, I am going to encourage you to work from a factual perspective that the result was achieved or it was not. Being factual makes a huge difference. If we say the reason for being of a leader is to produce results that were otherwise not going to happen, we then see that what the leader is always and ONLY about is producing results. Business leaders are not Renaissance people who are fully developed in every aspect of life. No, they are men and women who have devoted their careers to learning how to accomplish unexpected results through others. It is a finely-honed skill that wants to be cherished, developed and protected.

Perhaps the biggest threat to leaders getting results is reasonableness. Leaders are frequently told that they are unreasonable. In a normal business setting when someone is told that they are “unreasonable”, it is very seldom a compliment. It usually is a critique or criticism and tied to a request that the person stop asking for what they are asking, or doing what they are doing. The “pinch” is that being reasonable and listening to all the good reasons will only produce what is already going to happen, and nothing more. Anything other than that which was already going to happen will require someone interfering with what is perceived as reasonable, or in more convention language, disrupting the status quo. A leader must remain vigilant in guarding against becoming reasonable or being convinced to stop being “unreasonable”.

The question then is how this trait of reasonableness occurs for or shows up for the leader. Occasionally it is self-induced. This comes from having some doubt or question about some element of the result and what will be required to achieve it. Generally, reasonableness is presented by those around the leader. Worst of all, it may come from a consultant and/or project manager who is supposed to be supporting the leader.

Maintaining Focus on Achieving Results

The leaders you are looking for are passionate about business results. They had rather get results than eat or sleep. This attribute is important since the leaders will keep reminding employees of the business results that the transformation will accomplish. The leaders will need to continually connect the transformational actions to the business results, as employees have a tendency to let the two become disconnected.

At MB, Tom Stephens continually discussed the need for financial results that were to come from the transformation. He continually reinforced that the reason for the transformation was to create a substantial improvement in business performance. In addition, the company sponsored business literacy training for all employees. These training courses were designed by and delivered by employees from within the operations. Some of the trainers were hourly workers and union members. You can imagine how much more credible financial information about the operation is when it is provided and taught by a colleague.

Conclusion

Identifying the prospective leaders to assist in the transformation is the place to start the preparation. It is important to be candid about these prospective leaders, and not to have hope. Someone’s potential is not usually a good conversation to have about leaders. Either “they do or they do not” is far better than potential.

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7 Leadership Hurdles Executives Must Overcome to Transform a Business

The starting point for talking about business transformation is leadership. Leadership is the lifeblood of transformation. Transformation simply will not happen without leadership. This leadership begins with executives and senior managers. For this leadership to be successful, there are 7 hurdles which executives must overcome for success.

They involve understanding and accepting the following:

  1. Importance of Personal Involvement

  2. Leadership and Management are Different

  3. Embrace Feeling Odd or Strange

  4. Commit to Being a Team

  5. Engage and Unleash Informal Leaders

  6. Importance of Inspiring and Mobilizing People

  7. Prepare Your Team for a Breakdown

#1: Importance of Personal Involvement

The first obstacle they must overcome is understanding the importance of their personal involvement during the entire transformation, not just at the beginning. Too often executives assume they can begin a transformation and then delegate it to others. That assumption is a fatal flaw which will doom the transformation. Along the way somethings will happen which requires immediate intervention by the executives, which they will not see if not intimately involved. Using the analogy of leadership being the lifeblood of transformation, executives delegating and moving on to other things will result in the transformation “bleeding out” and dying at some point.

#2: Leadership and Management are Different

The second hurdle in changing the mindset of executives is regarding the differences in leadership and management. Leadership and management are NOT the same thing. Both are important, but distinct. Leadership provides courage to think differently and to challenge existing approaches, methods, strategies and techniques. Leadership demonstrates the willingness to explore new approaches and ideas. It encourages others to actively participate in the pursuit of breakthroughs for the business. Leaders encourage others to aspire to excel and to think innovatively. Transformations require leaders and leadership, not just more of the same management techniques which are already embedded in the organization. Commitment and courage are required for an executive to confront that they have been managing, not leading the organization. Those who do confront this can become excellent leaders. It is not that they give up their management capabilities, but instead expand their capabilities as executives by becoming leaders as well as managers. Executives who are committed to being leaders, not just managers, in the transformation is a crucial step.

This second hurdle is not easily overcome, as I’ve discovered the hard way. While most managers say they want those things from others in the organization, their actions often contradict their words. Most managers rely on being in control and having processes that inadvertently restrict change and innovation. Executives will say they want the organization to transform without appreciating how much they will need to change personally in order for the transformation to be successful. Saying the organization needs to change does not mean that “I also need to change”. Instead, what the executives are often thinking is “I want others in the organization to change and I will manage this transformation using my preferred management approaches and techniques”. While this is understandable, it is a recipe for failure.

#3: Embrace Feeling Odd or Strange

A third hurdle is that transformation feels odd or strange to executives. This is because most of their prior work in strategy was based on management principles of control and tight process to reduce surprises and variation. Again, designing transformation must be done primarily from a context of leadership in which the unexpected is expected. Transformative changes are not linear and tidy. Instead there will be periods of rapid acceleration, unexpected breakdowns, and stunning accomplishments … none of which fit in a tidy, linear package. By definition transformation is not easily controlled or predictable. This is why transformations require leadership. What makes this third hurdle difficult is that many managers say they want change and transformations, their actions often contradict their words. Most managers have gotten into their positions by being in control and having processes that work in stable situations, but inadvertently restrict change and innovation during transformation.

#4: Commit to Being a Team

A fourth hurdle is for executives to commit to collectively being a team that is accountable for the transformation. That is, being an executive team rather than a collection of individual executives who are each doing their own thing. Most executives understand that they are accountable for their specific function or business, but only give lip service to being accountable as an executive team for the overall performance of the business. While this is common in many organizations, it will not work in transformation. There must be a team of executives who hold themselves collectively accountable for design and execution of the transformation. Absent this alignment, the difficult challenges which the transformation is designed to change will be avoided and sub optimized. There are many reasons why three of four transformations fail, and I have found this to be a primary reason for the failures.

#5: Engage and Unleash Informal Leaders

A fifth hurdle is for executives to understand that the success of the transformation requires engaging and unleashing informal leaders through the organization. There are people in the organization who are capable and willing to step up to be leaders when allowed and asked to do so. The emergence of other leaders to form a cadre of leaders is essential for success in for transformation. Successful transformations happen because of the brilliance, commitment, and coordinated actions of people throughout the organization. People create and innovate in ways the executives could never imagine. Those inspired actions of others occur because of leadership coming throughout the organization. This inspiring action requires a cadre of leaders who are empowered and engaged to be and do things not normally done in that organization. Without a cadre of leaders, transformation will fail. Research data has consistently shown that most transformations fail to achieve the desired results. For example, a McKinsey survey reported that “transformations are three times more likely to fail as to succeed”.

#6: Importance of Inspiring and Mobilizing People

A sixth hurdle is for the executives to appreciate the importance of inspiring and mobilizing people through the organization. This inspiration reflects the quality of executive leadership as is the level of mobilizing people to participate in the transformation. Mobilizing an organization for transformational change cannot be mandated. Instead it is generated by leadership and may include participation in planning transformational actions, changing mindsets, etc. The importance of mobilizing an organization was described in a report by McKinsey & Company:

Notably, employee engagement as early as the planning process emerges as a key success factor. Indeed, in successful transformations executives say that identifying underlying mindsets that would need to change was the approach most often used. Moreover, three-quarters of the respondents whose companies broke down their change process into clearly defined smaller initiatives and whose transformations were “extremely successful” say that staff members were entirely or very able to participate in shaping those change initiatives. Collaboration and co-creation also are important: nearly a quarter of the extremely successful transformations were planned by groups of 50 or more, compared with just 6 percent of the unsuccessful transformations

In our practice, we also find that companies which are successful in transformation engage a cadre of employees to become informal leaders. As an example, employees are involved in identifying the mindsets which need to change and challenging the organization’s historical approaches to implementing change. These employees have important, needed perspectives on how best to design and implement transformation in the organization. This cadre of informal leaders provide valuable perspectives about what is required to drive change.

This idea of expanding the group involved in designing the transformation beyond those normally involved in strategy development often initially appears as a paradox to executives. From a typical management perspective these are not people who should be included in these meetings and this work. However, from a leadership perspective it makes “perfect sense”. Often without their unique perspectives, the discussions about transformation design devolves into how the organization has historically approached change. While it seems intuitive that had those previous change initiatives been successful, it is unlikely that a transformation would be needed at this time. Yet that logic is overlooked, and the group contemplating the transformation revert back to the comfortable and familiar approaches. Involving others in deliberations about design does not make the executive less powerful or take away accountability, but in fact often increases the credibility and effectiveness of the executives as leaders. The executives must be accountable even when a larger group is involved in developing the architecture.

#7: Prepare Your Team for a Breakdown

A seventh hurdle is for executives to remember that transformation projects and team invariably encounter breakdowns. In reality, these breakdowns are needed if breakthroughs are to occur. However, for those in the midst of the transformational projects, identifying these breakdowns if often hard to do. This is where the executives need to step in an assure the breakdowns are acknowledged, formally declared as breakdowns and then explored using the breakdown methods. Teams will often be clever if not outright devious in finding ways to ignore the breakdowns. Ironically, the successful resolutions of breakdowns is a major source of energy and momentum in business transformations.

Conclusion

In summary, leadership is the essential “lifeblood of transformation” and must overcome seven predictable hurdles, which are:

  1. Committing to their personal involvement during the entire transformation, not just at the beginning.
  2. Changing their mindsets regarding the differences in leadership and management, and commit to being leader
  3. Persisting to overcome the initial experience of the transformation feeling odd or strange
  4. Being a team of executives rather than a collection of individuals who are each doing their own thing
  5. Engaging and unleashing informal leaders through the organization is required for success of the transformation
  6. Appreciating the importance of inspiring and mobilizing people through the organization.
  7. Acting to assure that transformation projects teams declare and resolve breakdowns.

If these 7 hurdles are successfully overcome, the probability of success is much greater.

Growing a business is a daunting task for many, if not most, executives. While growth is considered fun, and what executives dream of being engaged in, achieving sustainable growth is another story. 

Download our PDF: “Executive Challenges” and learn the Execution of Growth Strategies and Organizational Transformation.

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Are Leadership & Management the Same?

Leadership is crucial for business. Leadership is a starting point of strategy. It’s the magic elixir for achieving sustainable growth and value creation. Leadership is at the heart of engaged employees, innovation and vibrant cultures. It is what makes organizations thrive and prosper. Yet for all its importance, leadership is widely misunderstood because many people consider leadership and management to be the same. This confusion is evident as these two terms are routinely used as if they were interchangeable.

While they are both very important for a business, they are not the same. Management and leadership are different, though both are important. Most businesses will not be successful over time without the contributions of both management and leadership. But make no mistake, they are different.

Common Misconceptions

The common misconception is that leadership and management are the same. Let’s look at three examples of this confusion and misconception:

  1. Leadership is determined by position, e.g., this person is a senior executive so therefore he/she must be a leader. Since leaders are at the top of the organization, the meaning of being a leader is seen as doing whatever senior executives do.
  2. Leadership only comes from people in management positions. In this case the term management positions include supervisors and mid-managers as well as executives. In reality, many of the best leaders in an organization are not in management positions.
  3. Leadership is a title. The use of the word leadership in titles for positions and teams has proliferated. Examples of position titles are sales leader and manufacturing leader. Examples of teams using the word leadership are “Executive Leadership Team”, “Regional Leadership Team” and “Plant Leadership Team.” In each of these cases the expectations of this team is heavily focused on management, not leadership.

Evidence of the Confusion Can Be Found in Conversations

Evidence for the confusion in the differences between leadership and management is widespread and easy to find. Try this little experiment. Ask people in the organization three questions:

Question #1: “Are management and leadership the same?”

Chances are high that you will get one of two responses to this question:

  1. Yes, management and leadership are the same. “Its two words we use to describe upper levels of management”, is a common response.
  2. “No, they are not the same”. If you ask for further explanation of the differences, the answers you hear will be muddled and unconvincing. It is likely that somewhere along the way this person has heard a discussion about the differences in management and leadership, but has not integrated the essence into their thinking.

Question #2: “Who are the leaders in your organization?”

The person answering this question will likely point toward incumbents in higher level management positions within that part of the organization. There is a common misperception that senior managers are leaders while those in middle management and supervisors are not.

Question #3: “Given who you identified as leaders in your organization, please describe what makes them a leader?”

The person will describe what makes them “leaders” by discussing their management roles and / or the level of their management position. Seldom is there an appreciation that a leader’s role is to make things happen that otherwise would not have happened. That is, leaders interrupt the status quo and redirect the business to a future which is much more compelling.

These questions also help to provide a line of thinking and reasoning for organizations to determine their thoughts on leadership and management. The answers received also provide feedback about the organization. As an example, it’s a good sign if:

  • Those in the organization articulated that management and leadership are different AND both are important to the business.
  • People were identified as leaders who are not in management positions.

Other less positive feedback about the organization would be if the responses were:

  • We don’t have any leaders in this organization.
  • We only have managers, as I am not sure our organization would tolerate actual “leaders”.

While these statements are seldom accurate, they are reflective of the negative views of  leadership in the organization. Put another way, it’s an example of “I know leadership when I see it, and I’m not seeing it”.

Differences in Management & Leadership

Given the confusion in how the two terms management and leadership are used, one might think it is a new conversation. That is, a recent set of conversations which has not yet reached executive and management ranks. Hardly. This conversation burst to the forefront of business management thinking in 1977 when Abraham Zaleznik published his classic article, Managers and Leaders: Are They Different? In this article, Zaleznik left little doubt that the two roles are quite different. This article was republished as part of the Best of HBR series in 2004 by Harvard Business Review. In the introduction to this classic article, the HBR editors wrote:

The traditional view of management, back in 1977 when Abraham Zaleznik wrote this article, centered on organizational structure and processes. Managerial development at the time focused exclusively on building competence, control, and the appropriate balance of power. That view, Zaleznik argued, omitted the essential leadership elements of inspiration, vision, and human passion—which drive corporate success.

Notice that inspiration was considered a key driver of corporate success in 1977. We are clearly not dealing with a new concept. The introduction goes on to say:

The difference between managers and leaders, he wrote, lies in the conceptions they hold, deep in their psyches, of chaos and order. Managers embrace process, seek stability and control, and instinctively try to resolve problems quickly—sometimes before they fully understand a problem’s significance. Leaders, in contrast, tolerate chaos and lack of structure and are willing to delay closure in order to understand the issues more fully.

Zaleznik makes clear that in his mind managers and leaders are quite different. He points out that the differences are fundamental in both their personalities and temperament. He highlights the differences in dealing with chaos and lack of order. Managers are prone to want to quickly reduce chaos and move to an answer. Leaders on the other hand appreciate the need for chaos and prefer to dwell in the chaos in order to understand it, rather than rushing to cut it off. Employees often live in the chaos. Consequently, they appreciate leaders who do not pretend it does not exist and rush to a premature conclusion in order to reduce the discomfort brought on by “disorder and not knowing”. Conversely, managers often appear to employees as being “out of touch” and “living in make believe world” given their rush to judgement. The irony of course is that managers pride themselves in being grounded in reality and accuse leaders of being out of touch and living in make believe world, when in fact, it is them who wear those labels.

Zaleznik drives the final nail in the differences by asserting that:

…business leaders have much more in common with artists, scientists, and other creative thinkers than they do with managers. Organizations need both managers and leaders to succeed, but developing both requires a reduced focus on logic and strategic exercises in favor of an environment where creativity and imagination are permitted to flourish.

As you can see from this introduction, Zaleznik launched a full-frontal attack on the notion that management and leadership were the same. To get the sense of impact it made, consider the description from the editors of HBR.

Zaleznik’s article “caused an uproar in business schools. It argued that the theoreticians of scientific management, with their organizational 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 leadership hasn’t been the same since”.

In 1985, Warren Bennis and Bert Nanus added weight to this conversation when they stated that management typically consists of a series of contractual exchanges. They add “leadership stands in the same relationship to empowerment that management does to compliance”. They summarized their views with the classic phrase:

Managers do things right

Leaders do the right things

 

John Kotter is one of the best known thinkers and writers on management, organizational change and transformation. He has had an illustrious career as professor at Harvard Business School and co-founder of a consulting firm which bears his name. In 1990, Kotter added fuel to the fire with his classic HBR article What Leaders Really Do. The opening narrative is:

Leadership is different from management, but not for the reasons most people think. Leadership isn’t mystical and mysterious. It has nothing to do with having “charisma” or other exotic personality traits. It is not the province of a chosen few. Nor is leadership necessarily better than management or a replacement for it. Rather, leadership and management are two distinctive and complementary systems of action. Each has its own function and characteristic activities. Both are necessary for success in an increasingly complex and volatile business environment. Most U.S. corporations today are over-managed and under-led.

 

Over-Managed & Under-Led

In the quote in the previous paragraph, John Kotter asserted that North American organizations are over-managed and under-led. To be sure, Kotter was not being critical of the amazing skills of management, but instead was pointing to the lack of balance between leadership and management. Let’s look at how Kotter describes management and leadership:

Management is about coping with complexity. Its practices and procedures are largely a response to one of the most significant developments of the twentieth century: the emergence of large organizations. Without good management, complex enterprises tend to become chaotic in ways that threaten their very existence. Good management brings a degree of order and consistency to key dimensions like the quality and profitability of products.

Leadership, by contrast, is about coping with change. Part of the reason it has become so important in recent years is that the business world has become more competitive and more volatile. Faster technological change, greater international competition, the deregulation of markets, overcapacity in capital-intensive industries, an unstable oil cartel, raiders with junk bonds, and the changing demographics of the work-force are among the many factors that have contributed to this shift. The net result is that doing what was done yesterday, or doing it 5% better, is no longer a formula for success. Major changes are more and more necessary to survive and compete effectively in this new environment. More change always demands more leadership.

In modern business it is clear that for influential business thinkers, management and leadership are different. Both are important, but are also quite different.

Given the magnitude of this risk of being over-managed and under-led, one would think that this would be taken very seriously. Sadly, it is not and is frequently overlooked.

Consider the example of the experience of an energy company which was reacting to a major environmental event. This event was triggered by employees’ behaviors caused by cognitive biases in interpreting data. This company was in full press recovery mode and had a team redesigning their corporate risk profile and programs. The group talked about many potential physical risks. Some seemed real and threatening. Others were more obscure and seemingly unlikely. However, the single biggest cause of the event was never addressed; the people element. Further, the overbearing on management on their people during the critical moments appeared to contribute to the problem. The biggest positive influence that could have occurred was if the company would have stood up and pointed out the organizational culture and the stifling level of being over-managed and under-led. Of course, this did not happen, with the predictable consequences.

 

Tangible Evidence of Leadership vs. Management

Vineet Nayar offers three tests to understand the differences in leadership vs. management:

Test #1: Counting Value vs. Creating Value

The first question is, are you counting value or creating value? Nayar asserts that leaders create value while managers count it. Leaders give clear guidance on how an employee can add value and then takes additional actions to add that value. This allows the leader to generate value above and beyond what team can achieve. Also, leaders set an example and assures people are in action. Nayar asserts that managers only count value at best and can reduce value by micromanaging those who are potentially creating value at worst.

Test #2: Circles of Influence vs. Circles of Power

Leaders have followers while managers have subordinates. Managers create circles of power while leaders create circles of influence. Nayar points out that the quickest way to assess which role you are playing is to ask, “How many people outside of my formal authority and reporting hierarchy come to me for advice?” Nayar asserts that the larger the number who come from outside, the more likely that you are perceived as being a leader.

Test #3: Leading People vs. Managing Work

Management is designed to control a group of people or entities to accomplish a specific goal. Leadership is the influencing, motivating and enabling others to contribute toward organizational success. Nayar writes “Influence and inspiration separate leaders from managers, not power and control.”

“Management Team” or “Leadership Team”?

Perhaps the confusion between management and leadership is most evident in the practice of renaming management teams as leadership teams. After observing the roles expected of the so-called leadership team, typically one would find that the actual purpose of the group is to manage. There is little, if any, intent to provide leadership nor is there any action which reflects leadership. As a consequence, many of these so called “leaders” aren’t leaders at all. They are managers. They have no interest in being leaders and offer little capability to lead. They are often capable managers, but not leaders.

Risks of Confusing Leadership & Management

The risks of confusing leadership and management are only as great as the risk of not identifying and adapting to challenges with customers and threats in the external environment. For most organizations that risk is huge. Yet in spite of this risk, management in these organizations is focused on maintaining the current approaches. Keeping the same approaches means that the trajectory of the business will remain the same. Of course, these managers look for ways to tweak the organization in order to increase the velocity. However, tweaking business approaches in the face of the need for large scale change is not likely to achieve the desired results. This tweaking could mean hurling the organization continuously faster toward a cliff or at least in the wrong direction. Leadership, in contrast, sees the oncoming challenges and enables those in the organization to explore other possibilities. This intense effort continues until a viable opportunity is determined.

Management Is Critically Important

In some organizations there is the belief that leadership is better and more important than management. This belief fails to appreciate the enormous contributions made by management to the modern business organization. We take global corporations for granted. We overlook that the sheer concept of a global corporation would not be possible were it not for the amazing advancements in management.

My grandfather worked on railroads as a conductor in the caboose. His view of the world was shaped by the view from the back of the train. His world experience was essentially one day’s train ride from Memphis, TN. If as a boy I tried to tell him about the emergence of the internet and new technologies, or how corporations would be able to effectively serve customers around the world … he would have thought me crazy. His response would have been akin to “Boy, you’ve been out in the sun for too long…”. Yet those remarkable accomplishments are possible due to advances in management practices. Of course, leadership was blended in to enable some of those advancements in what we today see as management practices.

The evidence for leadership being better than management can be found with an internet search. A Google search entered as “Are management and leadership the same?”, there are many sites which infer that leadership is better than management. This is inaccurate and unfortunate. Management is very much needed. The capabilities of companies to manage complex business on a global scale is truly amazing. This incredible capability is often taken for granted. It was not that long ago when managing a business with more than one location was thought difficult, if not impossible.

Reflect on this final analogy for the amazing contributions of management.

The American comedian Louis CK talks about how the general populous takes the amazing technology around them for granted. He gives example of being on an airplane when the person sitting next to him turns to complain about the speed of Wi-Fi on an airplane. Louis CK says we have no appreciation of the miracle of flying on airplane. He says “You are sitting in a chair in the sky!!!” Louis CK points out that rather than being in awe of this experience, people take it for granted and somehow assume that it is “their right”. He says the evidence for this is how frequently people come back from a flight with complaints about the slightest alteration in expectations and inconveniences.

This is a wonderful analogy for how people experience management. The advances in management capabilities are truly amazing. The importance of management must be acknowledged while at the same time recognizing that leadership is a different capability. Both are essential for business success!

Management and leadership are both very important. Yet they are different. To reiterate, management and leadership are NOT the same. Some individuals are capable of being effective both as a manager and a leader. Many are not.

Leadership is not given by the level of a person’s position in the organization. Being in an executive, management or supervisory position does NOT infer that one is a leader. Not being in a management or supervisory position does not mean that a person is not a leader. Some of the most inspiring leaders in an organization are not in management positions. These non-managerial employees bring heart to the organization and reinforce the culture.

Conclusion

Leadership and management are both important but are distinct capabilities. Many companies have well developed management capabilities and processes. Yet these came companies often do not have such well-developed leadership capabilities and processes. This shortage shows up when facing the need for growth and change.

Growing a business is a daunting task for many, if not most, executives. While growth is considered fun, and what executives dream of being engaged in, achieving sustainable growth is another story. 

Download our PDF: “Executive Challenges” and learn the Execution of Growth Strategies and Organizational Transformation.

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Fingerprints of Organizational Transformation

I frequently hear the question, “How do I know that we are doing the right things to execute our growth strategies and transform our organization?” What a great question! To have the insight to craft such a question, one has to be aware that executing strategies and transforming organizations requires something “out of the ordinary”. Success in creating value through growth strategies and transformation requires an exceptional approach. Simply doing more of the same is unlikely to be successful, so something out of the ordinary is required. This level of change requires strong leadership. It will not happen simply through good management. Strong leadership must be actively involved.

This brings us to the question of “how do I know we are doing the right things?”

The answers center around:

* “Are you being a leader?”

* “Can your leadership fingerprints be seen on the execution actions and change efforts?”

Leadership is not a position, role or title. It is a state of being by a person who is committed to exceptional results / value creation and knows that success will require intense involvement of others. Thinking about how to involve others brings us to the fingerprints, or more specifically the thumbprints of transformation. We at KingChapman have used the term “Thumbprint” to refer to the important elements for success in organizational transformation. We began asking “when we look back at successful transformations, what evidence do we see which identifies successful practices?” This is akin to how forensic scientists look for evidence of fingerprints at a crime scene. Fingerprints are the chemical traces of the impressions from the frictional ridges of the hand which are transferred onto a surface. The best surfaces are hard, like glass or wood.

Importance of “Prints”

So why has fingerprint been the gold standard for identification for well over one hundred years? It is because human fingerprints are quite detailed, difficult to alter and change little during the life of an individual. This makes fingerprints a good identifier of identity over the long term. Thumbprints are particularly effective as identification. As an example, the Texas Bankers Association developed a fraud prevention program called the Thumbprint Signature Program.

Under this program people who wanted to cash a check were asked to place an impression of their thumbprint on the face of the check using a small inkless touchpad. This program found that few who were intentionally seeking to commit check fraud would leave their thumbprint. Of course, those who did left a positive identification which could be turned over to the police for further investigation and prosecution.

The term thumbprint is also used to say that it has a distinctive identifying characteristic. Harper Collins Dictionary adds “If you say that something such as a project has someone’s thumbprint on it, you mean that it has features that make it obvious that they have been involved with it”. It is in this light that we refer to our Transformational Thumbprint.

KingChapman’s Transformational Thumbprint

The elements in the Thumbprint initially came from our team asking, “what factors have we seen in the successful transformations in which we were involved?” At first, we were simply making note of these factors, without trying to draw inference to what drove success. Then, over time we observed that when we were able to get the client to include these elements, the projects were more successful. Additionally, we have collaborated with other consultants and have learned from their experiences as well.

KingChapman’s Transformational Thumbprint include:

1. Strong Leadership

2. Communicating a Clear and Compelling Business Case for Change

3. Achieving a New Context

4. Establishing Urgency for Action

5. Selecting Aspirational Outcomes

6. Inventing a Compelling Future for the Business

7. Rigorously Assessing Current Conditions and Performance

8. Formulating Strategies to Create Value and Achieve the Invented Future

9. Creating Scorecards with Clear Metrics & Milestones

10. Building an Accountability Structure for Leading the Transformation

11. Implementing Transformational Strategies via Breakthrough Projects

12. Just-In-Time Training in Producing Breakthroughs

13. Communicating, Communicating, Communicating

14. Enrolling Stakeholders

15. Changing Mindsets

16. Assuring Frontline Employees Feel Ownership of the Transformation

17. Choosing the Best Talent

18. Building Capabilities in the Organization

19. Sustaining Energy for Involvement & Transformation

20. Delivering Results & Not Accepting Excuses

21. Sharing Learning Throughout the Organization

22. Evaluating Results Achieved and Planning Next Steps

Conclusion

The ‘Thumbprint’ represents the features that confirm leaders have been involved in executing strategies which transform organizations. None of these features is beyond the wit of man to implement. Successful implementation of these features requires commitment, passion and time.

 

Just as police investigators search for fingerprints at a crime scene, we were interested in identifying the “fingerprints” left behind by a successful organizational transformation.

Download our whitepaper:
“Transformational Thumbprint” and learn more about the 22 critical success factors for implementing organizational transformation.

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