New challenges to leadership

New challenges to leadership

This brief text offers some thoughts on what is involved in leading complicated organisations. There are three sections. The first of these considers the changing nature of the leader's task. We suggest that in the knowledge economy, this applies hard criteria to defined things, and enables emergent direction-setting in those critical areas where renewal and the less-than-clear task are dominant. We suggest that what is needed is less personal 'leadership' than the creation of what has been called the 'leaderful' organisation: a structure which has learned to talk about the key issues.

We have discussed the two 'arms' of management: the specified and the less-than-clear. We have shown that whilst the specified component is heavily, roundly managed, the 'unspecified' component is not. The knowledge economy flows from handling the unspecified. The specified will be increasingly commoditised. How is one to manage for issues which have yet to be' defined? Essentially, through a process of recursion. Senior staff have to set a general area - "over there, not over here", "we shall be a lead innovator; or we shall be a fast follower" - and the rest of the organisation have to fill in the blanks. This suggests two tasks. One of these consists of knowledge managing, of idea-crystalising dialog, which is needed for blanks to be filled and general directions to become increasingly strong. The other is a toolkit of measures which predispose the organisation to self-assemble in one way, rather than in the very many others that are open to it.

Complex structures operate less through formal direction than from bottom up examples and exploration that adds up to a recognised trend. "You can tell where the supertanker has been by looking at the wake." Personal advantage through apposite criteria, reward to risk taking of the right kind, the need to justify project plans in terms of the 'big picture', personnel selection, corporate heroes are all examples of such a tool kit. Where the overall use of these is coherent, then the organisation will be predisposed to move in the direction which this coherence suggests. This does not just happen, however, but has to be organised. What will work depends on the details of the structure in question: on what kinds of people work within it, on the state of maturity, of the 'specified' or less than clear sources of added value within it.

The second section notes how plural organisations are and will remain. No one style or process is enough. The third reviews a major survey of how both leaders and the led perceive leadership, and the various categories of leader which appear to exist.

The new tasks of leadership

Most forms of governance place senior managers in a position in which they are responsible for carrying out several parallel, quite distinct and often superficially contradictory roles. They are tasked with keeping the show on the road, reconciling shareholder, state, customer, employee, supplier and partner interests, creating future potential and selecting and overseeing people and the human fabric that they weave. The paper on strategy suggests the complexities which are innate to organisations of any scale and reach.

Few of these roles are new. Some of these are chiefly concerned with the intensification of traditional pressures. Others, such as the professionalisation of the workforce, are new to many industries. The de-integration of commerce, the inter-linking of what it does with far more stakeholders and the frequent lack of clarity as to the boundaries of the firm all challenge some industrial sectors in novel ways. What is clearly new to all forms of leadership - in politics as much as in commerce - is the shift away from performance as the sole guarantor of success to the need to "get it right".

Chapter One discussed the distinction between 'specified' - clear, defined - activities, and those critical areas of renewal where the key consists of finding options and clarifying a way of thinking about the issues. "Specified" tasks can be run on traditional grounds, perhaps with more complex criteria. The role of outsourcing, virtual teams, partnership and geographical diffusion is relatively easy to manage where th eissue under development is clear.

What can be achieved is striking. Boeing designed their new 777 aircraft with 230 teams of around 40 people in each of them. They worked with three major customers, 500 suppliers and a network that deployed 1,700 workstations in 12 countries. According to the management consultants McKinsey, Boeing was able to manage the entire process from concept to metal bending in around two-thirds of the time that previous experience with linear management systems had led them to expect.

This said, it is the less specified, socially-intensive steps that realise complex options on which the knowledge economy is increasingly founded. Less specified tasks require completely different forms of motivation, time scales, criteria and managerial approach.

Managers of the 'unspecified' need to unify the thoughts of people with a wide range of skills and outlooks. Senior staff (or their delegates) create a way of thinking that challenges the organisation to achieve more or less loosely-defined conceptual tasks. Research signposts, for example, can be used to assert that 'by 2005, our industry will have had to overcome the following hurdles'. These provide a powerful focus for debate, however valid the statements themselves may or may not be. Scenario and strategic planning play similar roles, as do aspirational or horizon-scanning statements and speeches.

These general statements need to state what they exclude: is the firm is to be an innovator, then it is not to be a follower or an integrator. Often, it is important to indicate what kind of innovation or other issue is at stake. It may mean that the firm is a research-focused organisation, or a fisher for ideas in the commercial milieu. Second, such statements must have a recognisable business model in them. Worthiness is all very well, but - as with the dot.com failed revolution - the economics must be there. Third, the statements must lead to action: to better sceening critieria, to the winnowing of responses from the organisation, to better future statements. The aim should be to refine a shared model of how things work, what the firm will exclude and what it will address; and why it will do this.

This said, assessments suggest that only around five percent of teams are currently capable of outperforming individuals who are managed from above. So-called 'silo management', in which people are maintained in relative ignorance of the reason why they perform a task, but are given highly specified work to do, performs at least as well as creative teams which are assembled for specific projects. It does not innovate or correct its tendencies to make mistakes, however, and it is limited in what it can do by what a single individual can know, particularly when embedded in the demands of line management. It is, perhaps, a style for an established activity within a stable industry or within labour-intensive industries, and may be particularly suited for the industrialising nations. It cannot deliver the goods where huge amounts of knowledge must be marshalled, or complex structures mastered as they change and mutate.

As indicated in the introduction, two leadership information loops are at play. One, assisted by analysis, lays out general, sensible directions. Opinion is taken and the view of how the operating environment works gradually shifts and adapts to changing awareness and knowledge. Second, a host of tools are used to predispose the organisation to behave in appropriate ways. Where it is not possible to give orders (even given that the subject of those orders is clear to senior staff) the organisation has to be equipped with criteria, culture, people and processes such thatthe right 'kinds of thing' go forward and th einnapropriate is blocked. Such criteria will vary between business divisions and activities with the same leadership envelope. How one is to treat a group of self-motivated innovators is quite different from appropriate inducements and checks elsewhere.

Setting direction in a multi-cultural environment.

The many forces which we have described suggest that firms needs to spend more time defining how the operating environment operates, what options this and prospective change may offer, and what can be done about this. They need to do this internally, and often with partners, regulators and others. Achieving this is an iterative process that demands time, skills, resource and high quality attention. It diverts attention away from maintaining the status quo.

Small companies and large ones have different and sometimes complementary skills. Figure 1 suggests, however, that small companies and large both feel themselves weak in respect of oversight, human skill development and innovation. Further, small firms believe themselves to be worse at almost all activities except order servicing, which is known objectively to be one of the easiest activities for large firms to automate and outsource. The knowledge economy is most certainly not going to consist of a web of small, entrepreneurial companies, but of agile, oversight-deploying firms that have generated a sufficient surplus (and level of experience) to allow them time to steer the engines of change.

Figure 1: Self-assessment by small and large European companies

The last decade have focused firms upon 'getting themselves right'. They have stripped themselves down for a highly specific set of tasks, and usually applied a common style to all that they do. More recently, the idea of the 'balanced scorecard' has suggested that whilst a homogenous approach is sensible, a uni-dimensional focus is not. Firms need to take account of regulators and customers, shareholders and interest groups, partners and employees. This said, a common standard tends to be imposed.

Projects need different styles at different stages in their life cycle. The initial stage, of thinking through an idea and finding ways to express it to decision taking structures and potential partners, regulators and others, tends to be long on creative analysis, synthesis and experiment and short on both hard data and defined goals. Indeed, it is inventing the goals and finding the data. There follows a second stage, in which the vague ideas that emerge from the first are transformed into an implementation plan and into contractual relationships, and in which significant amounts of money start to be spent. This stage, in its turn, becomes an implementation project, overseen against a project plan by hard-eyed scrutineers. Finally, the completed project passes into routine, where further refinement is applied and productivity is pursued.

Each of these require a different 'culture': differing ways of interacting and different criteria. The people who thrive in these situations may be innately different, and certainly need quite different forms of direction. The knowledge economy is, therefore, concerned with a number of different things:

Developing an oversight of the pertinent operating environment, such that a framework exists in which to validate potential forms of renewal. In particular, noting technological and market-based 'systems busters' which may change the nature of the industry. The US giant company GE have instituted the 'DYB' program: that is, in a creative way, to Destroy Your Business (because if you do not, someone else, somewhere in the global economy will certainly be planning to do so.)
Developing machinery to reach out to sources of knowledge and capability so as to put flesh on the bones of this potential. This might be as much working with an industry regulator so as to define paths forward as with internal or external interests.
Developing systems of management which license but rein in the styles of operation that are distinctive to the various stages of implementation of new projects.
Developing systems that allow a balanced approach to be taken to the shifting ground in each part of the portfolio of activities: allowing gradual innovation in established parts of the business as well as driving them for best practice, taking into account stakeholder concerns and the like.
Developing the habit of working in networks and partnerships, taking a realistic view of what can (and cannot) be achieved in frameworks in which motives are usually spectacularly mixed.

These skills are plainly necessary in order to cope with a fast-changing, low barrier world. The capacity to deploy them already proves a major source of competitive advantage in many fields: in entertainment, in science, in venture capital. Membership of a knowledge network is earned, for others will work with a firm when it has proved the equivalent of good citizenship and has engendered trust. Members of a network have to contribute to well as extract value from the network. The skills that are involved are often human-focused, requiring protracted and personal contact. These are not easily created across impersonal IT systems alone, and knowledge networks have tended to remain rooted within a context or even around a physical location, such as Hollywood or the City of London. Indeed, it may be a major source of strength for the industrial world that this is so, in the face of billions of educated people with considerable access to technology.

Steering what might be called 'multi-cultural' companies can be very difficult. Reward structures need to differ, people need to be given distinct and often incompatible tasks. A more fundamental problem can be illustrated by the following consideration.

Most companies have a set of innate tensions, as between imposing common disciplines from central control or allowing diversity. Equally, the firm can respond to external imperatives (often to the disadvantage of the internal socio-technical balances that have served in the past) or can focus upon these, sometimes at the expense of agility, regulatory compliance or customer satisfaction. Figure 2 expresses these dilemmas, and identifies both four healthy outcomes that arises from accepting any one of these. Inset, however, are the symptoms of uncritical acceptance of any one of these as the sole guiding principle.

Figure 2: Four cultures that arise from solutions to two key dilemmas, and four set of symptoms of pathologies that may arise.

This said, it is far easier to manage for one thing than for many. A simple imperative - to cut costs and never mind any other considerations - is easy to propagate and clear for individuals to interpret. Mixed messages are far harder to handle. The figure shows some gradients in which managerial signals of increasing intensity are fed to the organisation, seeking faster reaction from it. The gradients express the equal ease with which single or mixed messages can be expected to have their affect.

Figure 3: Mixed imperatives creates contours of equally easy organisational response

A firms that finds itself at location A may wish to move to location B. A light push 'up' and a strong push to the 'left' would appear appropriate to a perceptive management. Unfortunately, due to the tendency of the corporate social system to simplify issues and to take them out of context, the locus will tend to follow the contour gradient, ending at, perhaps, C. Change (often on many more than two dimensions) therefore requires active steering, not a single push.

Worse, an activity in the upper right (an advertising project team, perhaps) would have a quite different innate 'culture' from any of the other quadrants. The measures that steered from A to B would have a pathological affect upon it, taking it into the unfortunate areas on Figure 2!

Management is, therefore, a matter of deploying experience in diversity, and recipes which have this or that style (enthusiasm, the hard line, coaching.) is bound to be inadequate in some area or other. The next section shows how idiosyncratic such issues of local 'fit' can be.

Styles of leadership: a UK survey

McKinsey have, for many years, worked with chief executive officers. A survey of American CEOs gave their prescriptions for success. These were remarkably uniform: to set clear domains of activity, to create personal accountability for equally clear targets within these, to minimise central interference and to drive the firm for low cost and high share of the market. CEOs seemed to feel that change was best created bottom-up, that they would know a good thing when they saw it and that if they gave conceptual direction, everyone else would stop thinking. Many readers will recognise the style. It appears to suit the 'silo management' style, described above, but does not seem likely to create overall managed migration.

CEOs are, like the rest of humanity, susceptible to fashion. McKinsey's report documented the fashion of the 1985-95 period. Many business leaders are wondering what to do now for an encore and how to cope in a world of knowledge-intensive activity, having already pared costs, often jettisoned the company's higher brain functions and focused upon doing one thing very well. As a whole, the US appears to be solving the problem, but often by large companies drawing upon small start-ups for their ideas. This may well be a satisfactory solution: only time will tell.

There are, of course, other styles of leadership, many of them currently out of fashion, although widely practised. The Industrial Society is Europe's largest training group. It has completed a study on the concomitants of leadership, drawing on a sample of around a thousand UK managers and those managed. Such studies may be criticised in two ways: they measure what people believe is effective, not what yields whatever results one deems to measure efficacy; and they tend to notice whatever the experimenters set them up to note. The book has another weakness, which is that it discounts 'implicit' leadership, in which the goals of the organisation are embedded in criteria, targets and procedures. The focus is placed firmly upon personal, rather than impersonal, interaction.

The Industrial Society's study does, however, contain an illuminating review of the literature on leaders and followers, who are not always the same thing as junior and senior staff. Indeed, around four-fifths of the examples of leadership that were cited involved people who were not in positions of authority. A large portion of those who were in positions of formal authority indicated that their chief frustration was their inability to induce people to do what they wanted, leading to friction and HR problems. The literature review points up a significant disparity between the emotional drivers which take many people to power and the human skills required of the job, notably in today's environment. Previous samples of managers - both from the US and the UK - have been assessed in ways which isolate the chief emotional components that drive their career goals. An overwhelming element within an equally large fraction of these shows a strong desire for personal dominance. Unless skilfully masked, however, this desire is the exact antithesis of what is needed for efficacy.

We have already noted that management may be thought to exist along an axis which has two extremes, neither of which is incorrect but both of which are fitted to circumstance. At one end of this axis, managers encourage people to pool what they know in order to clarify issues and create as yet unknown possibilities. At the other end, managers define the problem and the tasks needed to solve it, and allocate these tasks as they see fit. The first style is suited to those tasks in which virtually everything is unclear: the terrain of knowledge management. Its products require analysis and clarity. It requires team play, spontaneity, recursive clarification; it places great stress upon an overarching sense of direction, of process, of passing the baton. The second style is best suited to line management or project management, in which virtually everything is clear and where the problems are essentially operations. This requires compliance, oversight, accountability, formal targets, formal criteria, formal assessment; it needs diligence and application from a compliant workforce who are prepared to take orders and to operate in 'silos'.

The 'liberating leader' is, perhaps, a title for the style which is appropriate to the synthesising, knowledge-managing end of the managerial axis. Analysis of the elements of this showed up nine contributory sub-styles.

Protector: promotes individual self-esteem, stands up for others' interests, minimises friction.
Tutor: encourages forward-looking human development, treats mistakes as opportunities to learn.
Mentor: defines a role for the individual, but shows consistency and integrity in a personal role.
Teamplayer: makes explicit statements about targets, progress, performance.
Director: decision-taking order-giver, who inspires fear but who enforces performance.
Listener: notes, works around individual capacities and weaknesses.
Innovator: encourages new approaches, communicates oversight and general purpose.
Delegator: creates an environment in which sensible, local risk-taking appears possible.
Networker: keeps in touch with the wider world, maintains the context of a team.

Of these, the "Protector" was by far the most powerful explanatory variable characteristic of leadership. The others are organised in descending order. "Director" and those below it explained only around 3% of the variance in the sample: they were essentially - perhaps worryingly - trivial components.

The upper part of this continuum is chiefly focused upon sorting out people, while the lower part is, perhaps, more concerned with sorting ideas. The explanations that accompanied this investigation are, for the most part, highly people-oriented: no interviewee seems to have set much store by management as the custodians of financial probity or safety. External influences - customers, the environment, regulators - are allocated to the least powerful component, that of the "Networker". Readers can make up their own minds as to whether this reflects perceived sources of weakness in management rather than an analysis of the overall sources of excellent management.

An attempt to carry out such an analysis produced the following as the key concomitants of leadership:

Communicating an inspirational view of the future.
Supporting other people.
Promoting understanding.
Understanding before making judgments.
Valuing individual differences.
Promoting a sense of direction.
Promoting the self-esteem of others.

The views of the sample were assessed by age, gender, industry and job level. There was no obvious age-related trend, except that the young valued "Director" and "Tutor" while older people tended to prefer the styles concerned with networks, knowledge and inclusivity. Gender differences were stark: 93% of the variance was explained by women preferring a participative style (Protector, Innovator, Networker, Listener) while men rejected this approach.

Industrial differences were revealing. Manufacturing and utilities sectors preferred the order-giving "Director" style, although utilities supplemented this with affection for "Teamplayer". Technologists, by contrast, disliked "Director", but liked "Mentor": evidence of preference for a closed little world, set apart from the rest? Public-sector and government sources focused on "Delegator", which retailing, by contrast, found unacceptable, but without having much of an alternative to offer. Professionals hated both "Director" and "Teamplayer", but vaguely enjoyed "Delegator". Those in training and education, surprisingly, were negative about "Listener" but the most positive of all about "Director" and "Mentor". The finance industry did not like any managerial style at all.

Job roles showed similar differences. Nobody admitted to liking the "Director" style. Senior managers disliked "Mentor", but saw "Innovator" and "Networker" as their preferred style. Lesser managers showed the same, but less pronounced, pattern. Project managers were also unhappy with "Mentor", but team leaders, by contrast, were highly positive about it, as were administrators. These last also advocated "Innovator" and "Delegator". Technical staff hated all styles, but hated "Mentor" the most (which fits unhappily with this as the preferred style of the technology-based industries!) Sales people very much approved of "Innovator" and very much disliked "Delegator", the strongest measures in the survey. Personnel were equivocal about all styles, and professionals, as indicated earlier, chiefly negative.

Conclusions

What does this tell us? Chiefly, that if human society is the most complex grouping in the known universe, then the management of parts of this must be about many solutions and many syndromes, not one. We have tended to bend people to fit the limits of our own capacities, as re-engineering tended to bend companies to fit into the limitations of information technology. Knowledge-managing companies will, however, need to find their innate skills and capabilities, deploying these in ways which cannot be predicted and which cannot be constrained by belt-and-braces limits. The military, confronted with the need to liberate local choice while avoiding rogue operators, have tended to adopt a series of concentric domains. In the subsidiary centre, the infantryman can make his own choices. He knows exactly when to delegate upwards, however, and has been trained to do so. New command structures drop into place as new conditions are detected and new issues raised. We suspect that this 'fractal' management may be the style of the future. It is very far from the 'set the criteria and push for the results' model of the past decade.

The figure states the obvious. The two most important axes that define demands on leadership are, first, the scale of the activity and second, the degree to which the work undertaken is safely specified or worryingly unspecified. Small businesses addressing an unchanging world have a very different set of needs from large activities for which the world is constantly changing, and within which success stems from the implementation adaptive responses the the knowledge economy. Grand prescriptions (Excellence! Seven Great Secrets!) from the Airport Bookshelf School of Management miss this essential point.

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