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Faced with increasing competitive pressure and the growing demands of anxious shareholders, companies are struggling to sharpen their strategic evaluations and organizational effectiveness. Since trends no longer predict the future, historical views of the business are inadequate. Executives need to draw information and talent from across the organization in order to steer the enterprise in the right direction.
Traditional managerial skills by themselves cannot produce decisions that lead to future success. What's needed is leadership, and many companies are working to find it, develop it, and nurture it. Leadership competency, they're learning, is within the reach of all levels of the organization.
Not really, not any more. Today the roles are different enough that it's time to consider whether all leadership requirements can or should be filled through managerial authority.
For example: Managers initiate, administer, and maintain; leaders originate, innovate, and take risks. The good manager keeps an eye on the bottom line and knows the cost of everything; the good leader keeps an eye on the future and knows the value of everything. The manager asks "how?" and "when?" The leader challenges tradition, asking "why?" The manager improves the efficiency of accepted business practices; the leader uses his or her own ideas and talent to implement new solutions.
A successful leader, in short, is more like a high-velocity entrepreneur than a classic good soldier. It's common wisdom that entrepreneurs seldom make effective managers. An organization requires both, but although managers abound, leaders who thrive on innovation are in short supply.
Or are they? Usually, organizations look to senior management for leadership. But in companies that are truly competitive, leadership is cultivated among people at all levels. Herman Miller, the furniture company, promotes "roving leadership," in which people step forward and take charge, as needed, in their areas of competence, regardless of their place in the organization chart. William L. Gore & Associates prides itself on having no organization chart at all. Everyone is an "associate" and project leaders emerge through discussion and consensus.
Semco, SA, a Brazilian manufacturer of industrial equipment, has reduced its management levels from 12 to three by stripping away managerial practices that feed the ego but hurt the balance sheet and draw attention away from operational outcomes. Executives from other nations, representing such firms as Alcoa, Mercedes Benz, Goodyear, and Yashica, have flown to Sao Paulo to see what they could learn from Semco.
Leaders can be anywhere, and savvy companies are finding ways to seek them out and clear a path for them. Sometimes they are easy to locate: other people are already following them. At other times, leadership capacity has to be developed on the job.
Suppose a manager is the "boss" of a leader? Well, first of all, organizational correctness demands that no one think of himself or herself as a "boss" anymore. Terms such as team leader, facilitator, or coach are more acceptable. This shift is not just a semantic device; it means that supervisors need to be careful not to squash leadership initiative and new behaviors.
This can be tricky, because leaders tend to be heretical, challenging the way things have always been done and championing ideas that managers may think are too risky. But leadership requires taking risks. Leaders think like fighter pilots: they constantly learn and adjust, balancing the known with the new.
Does all this mean that middle managers can never be leaders? Not at all. With the right coaching and role models, they can make a vital contribution to leadership.
These days, no one person can be expected to have all the answers, even in a relatively small business, professional partnership, or family-run company. And soliciting ideas is not enough; those who come up with the breakthrough ideas need to act on them, or they will never develop leadership behaviors.
"We're successful-we don't need to change."
"We'll just downsize to get through the economic crisis, and then we'll return to normal."
"We're a prisoner of our own success. Our innovative processes are now mindless routines and the vision and values have become dogma. There's no use trying to change."
All these excuses are based on myths. Success, for example, no longer begets success. In fact, if it leads to complacency or (worse) arrogance, even for a moment, it will beget failure. Just ask NASA, Lloyd's, Levi Strauss, Nissan, and Hyundai. Nearly half the companies that used to be comfortably ensconced in the Fortune 500 are no longer there.
As for transforming a seemingly intractable organization, it can be done. Denial is just a stage in reinvention. And once transformed, the organization will not "go back to where we were before"
In one mature company's business and organizational renewal effort, four multidisciplinary teams of up to 15 people work on a critical issue for two and a half days, then convene in a large room with the sponsor who assigned the task and present their solutions. The sponsor and his or her leadership team must make on-the-spot, yes-or-no decisions. If the decision is no, they have to defend their rationale. If it is yes, the teams are not only empowered, but required to implement their own solutions. A champion from the leadership team coaches the other teams as they lead the transformation.
At first, many in the company considered this a dangerously radical approach. Now it is standard operating procedure throughout the company-and, needless to say, profitable.
Leaders can implement align-accelerate-transformation and change even in the midst of economic downturns, growth, or upheaval. One utility in the northeast USA, finding itself in a fundamentally new competitive environment, realized that it needed to reinvent its Electric T & D Systems, which were completely out of sync with the company's process improvement direction and also cost far too much. In the middle of reengineering the major processes, companywide reorganization threw everything-from budget authorities to reporting structures-into uncertainty.
The project team forged right ahead, making in-course corrections, and discovered that disequilibrium actually accelerated the transformation. Time-wasting practices and turf wars were abandoned, and radical new solutions were generated and implemented in record time.
When organizations have access to the same customers and suppliers, the difference in performance is realized through their leadership. And when cultivated systematically and deliberately, leadership is within reach, and can grow, in all aspects of the organization.