The Three Key Ingredients Of Leadership You Need

When even a Stanford University professor like Jeffrey Pfeffer concludes that “the leadership industry has failed,” some critics are tempted to ditch the whole idea of leadership, as so much overblown nonsense. This would be a mistake.

In a time of accelerating disruption, the art and science of enabling change is more important than ever. Three sets of tools are available to those aspiring to induce change: inspiration, information and power, as shown in Figure 1. Leaders need to master all three, if they are to be effective.

The Growing Role Of Leadership In Management

Once we get beyond obsolete notions of leadership, such as leadership as a set of attributes, or as an organizational role, or as a kind of social status, or as autocratic communication, we can see that the capability to enable change is ever more central. In 21st century management, the number of people who need to be enabling change is greatly expanded, as shown in Figure 2:

·       The transition to 21st century management involves many people on an organization-wide journey for perhaps a decade, as at SRI International and Microsoft.MORE FOR YOUReclaiming Leadership In The Age Of AgileTen Reasons Why Big Firms Stick With Obsolete ManagementDrucker Forum 2020: Reinventing Your Firm And Your Government

·       The organization as a whole functions as a network where ideas can come from anywhere: the sponsors of new ideas must be able to make their voice heard.

·       Innovation plays a much larger role: many new ideas need champions to sponsor them.

·       When self-organizing teams are a central element in the structure of work, leadership within every team also becomes crucial.

Figure 2

In fact, the very reason that 21st century management has emerged is that traditionally managed firms were unable to adjust fast enough to deal with change.

The Shifting Nature Of Leadership

In 20th century management, leadership was typically transactional. Leaders worked within the existing culture, often relying on carrots and sticks, i.e. power tools. Leaders appealed to the self-interest of employees, just as the organization itself pursued the self-interest of the firm: maximizing shareholder value. Leaders and managers were seen as different kinds of people with different functions: leaders set direction, while managers were charged with getting there.

In 2019, Professor Barbara Kellerman proposed that leadership should be seen as having a service dimension while management does not. If such a bifurcated view of leadership and management were adopted, it would set organizations on a path to continuing performance conflicts.  

In 21st century management, management and leadership are fully integrated. Both management and leadership have a service function and collaborate to create value for customers and users. In effect, leadership is an aspect of management as shown in Figure 3, rather than something “above” management.

Figure 3

The Limited Contribution Of Business Schools

In the ongoing transformation of management and leadership, the contribution of business schools has been limited. One reason is that business schools spend a vast amount of time and effort on academic research that has no actionable findings, as explained in a comprehensive review by Jone L. Pearce and Laura Huang in their article, “The Decreasing Value of Our Research to Management Education”.

In a follow-up article, former business school dean Roger Martin has estimated that the cost of producing such articles with no actionable findings is around $600 million per year: The Price of Actionability. His conclusion is that such research may promote conversations among academics but is not very useful for organizations or society.

Three Sets of Tools for Effective Leadership

Leadership occurs throughout society. In education, it is called teaching. In a family, it is called parenting. In politics, it’s called campaigning. In organizations, it is also called innovation.

In 21st century management, leadership is about creating new ways for the organization to create value for customers and users and to do so with truth and integrity. Figure 1 offers a summary of the main tools that leaders can use to meet the challenge. Effective transformational leaders rely mainly on inspiration and information tools, with occasional resort to power tools in a crisis. In this way, management and leadership can lead to the emergent phenomenon of an organizational culture in which most people share common assumptions and goals.

Inspirational Tools

Inspirational tools, particularly storytelling, are useful in terms of inspiring people to think differently about the opportunities that lie ahead and embrace them for their own lives. Why storytelling?

Slides leave listeners dazed. Prose remains unread. Reasons often inspire a contrary reaction. When it comes to inspiring people to embrace some strange new ideas, storytelling isn’t just better than the other tools. It’s often the only thing that works.

At the same time, it is worth noting that most leadership stories don’t work to inspire change. The stories that most corporate executives tell are ineffective or even counterproductive, through lack of storytelling expertise. The main characteristics of leadership stories that do work are as follows:

1. The story must be authentically true; there is great danger in telling stories that omit crucial pieces of information. (e.g. “1200 happy passengers arrived in New York after the Titanic’s maiden voyage.” When listeners discover, if they don’t already know, that the Titanic sank, the pushback can be devastating.)
2. The story must be positive in tone. Negative stories are useful for getting attention, but not for inspiring change.
3. Leadership stories need to be told in a minimalist form, so as to spark a new story in the mind of the listener.

If the persuader can manage to tell the right story in the right way, the story can resonate and start to become the audience’s story, as they begin to realize that the idea in question can open up new possibilities and opportunities for their own lives. If things go well, they will start to tell their colleagues and friends the story of this exciting new idea. With luck, the change idea can start to spread in a viral fashion and be well on its way to becoming part of the culture of the organization, as explained here.

Where the persuader has authority over the audience, there is a risk that the persuader will be tempted to spurn inspiration and and start offering multiple “tellings” of the new idea, and make same point is made over and over again in different ways. The result is usually sullen compliance and underground resistance, as yet another change initiative bites the dust. It doesn’t have to be this way, if the persuader makes better use of the available inspirational tools.

The Information Tools

Information tools also play a key role in 21st century management. The decentralized structure of 21st century management in the form of networks, rather than vertical hierarchies, with multiple self-organizing teams, means that access to reliable information as to how the work is progressing is essential. Amazon has shown the way in this area by insisting that, before any activity begins, there are agreed metrics that will reveal progress in real time in terms of costs and external customer outcomes, not just outputs or internal outcomes.

When it comes to inspiring change, the timing of information is crucial. One misapprehension that is common in the leadership industry is to imagine that giving people reasons to change will by itself generate buy-in for change. Paradoxically, when people already have a contrary belief about something, giving them reasons to change is not only ineffective. It tends to be counterproductive: people become even more opposed to change, as a result of the confirmation bias.

Power Tools

In many big corporations, there is often an excessive use of power tools, partly as a result of the prevalent transactional leadership but also partly as a result of a lack of skills in the use of the inspiration and information tools. Power tools can be effective in the short run in forcing compliance change, but they lay the basis for future implementation problems.

Yet power tools are not irrelevant. There are occasions when power tools are the only solution. For instance, former CEO Curt Carlson explains how in 1998 when SRI International was transitioning to 21st century management, the use of power tools was essential to his eventual success. As Carlson told me in 2015:

“In my first month, I got a phone call. I learned that a team had moved its laboratory from one part of the company to another without telling anybody. Imagine! I called up the vice presidents and said, ‘Do you want to undo this?’ They said, ‘No, it’s too hard to undo.’ So I called a meeting that brought everyone together. I explained that from now on, we weren’t going to behave that way. If anybody did this again, the entire management chain would have to go somewhere else. We couldn’t behave this way. It sounds like really crazy stuff, because that’s what it was: really crazy stuff. When an organization has been in decline for a long time, it becomes quite dysfunctional. There was all kind of madness and team-destroying behavior going on. Every week it was something else.”

Most of the heavy lifting for change at SRI was eventually done through inspiration. As he explained to me in 2015, he visited all the teams. He held forums where they brought people together. He went to lunch with different staff in the cafeteria every day he was at SRI. It didn’t take long for everyone to know that if Carlson sat down with them they were going to have a discussion about their value proposition. At its heart, value creation is continuous iteration, based on the core principles of active learning.

For leadership to succeed in 21^st century management, eventually all of the organizational tools for changing minds will need to be put in play.