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The Essential Guide to Leadership

eight Unique Perspectives on Becoming a Stronger Leader The Essential Guide to Leadership

In this Special Article Collection:

1 Be a Better Leader, Have a Richer Life by Stewart D. Friedman

15 Managing Oneself by Peter F. Drucker

31 Putting Leadership Back Into Strategy by Cynthia A. Montgomery

41 Seven Transformations of Leadership by David Rooke and William R. Torbert

59 Leader’s Framework for Decision Making by David J. Snowden and Mary E. Boone

71 How Successful Leaders Think by Roger Martin

85 Managing Multicultural Teams by Jeanne Brett, Kristin Behfar, and Mary C. Kern

99 What Great Managers Do by Marcus Buckingham

© 2009 Harvard Business School Publishing. All rights reserved.

www.hbr.org

MANAGING YOURSELF

Traditional thinking pits work and the rest of our lives Be a Better Leader, against each other. But taking smart steps to integrate work, Have a Richer Life home, community, and self will make you a more productive leader and a more by Stewart D. Friedman fulfilled person. •

Included with this full-text Harvard Business Review article:

3 Article Summary The Idea in Brief—the core idea The Idea in Practice—putting the idea to work

5 Be a Better Leader, Have a Richer Life

13 Further Reading A list of related materials, with annotations to guide further exploration of the article’s ideas and applications

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The Idea in Brief The Idea in Practice Life’s a zero-sum game, right? The more you Total Leadership helps you mitigate a range of problems that stem from making trade-offs strive to win in one dimension (e.g., your among the different dimensions of your life: work), the more the other three dimensions • Feeling unfulfilled because you’re not doing what you love (your self, your home, and your community) • Feeling inauthentic because you’re not acting according to your values must lose. Not according to Friedman. You • Feeling disconnected from people who matter to you don’t have to make trade-offs among life’s • Feeling exhausted by trying to keep up with it all domains. Nor should you: trading off can To tackle such problems using Total Leadership, take these steps: leave you feeling exhausted, unfulfilled, or isolated. And it hurts the people you care 1. REFLECT • Joining a club with coworkers could help about most. For each of the four domains of your life— you forge closer friendships with them. work, home, community, and self, reflect on • Preparing for the week ahead on Sunday To excel in all dimensions of life, use how important each is to you, how much evenings could help you sleep better and Friedman’s Total Leadership process. First, time and energy you devote to each, and how go into the new week refreshed. articulate who and what matters most in satisfied you are in each. Are there discrepan- 3. CHOOSE EXPERIMENTS your life. Then experiment with small cies between what is important to you and changes that enhance your satisfaction and Narrow the list of experiments you’ve how you spend your time and energy? What is performance in all four domains. For ex- brainstormed to the three most promising. your overall life satisfaction? ample, exercising three mornings a week They should: gives you more energy for work and im- 2. BRAINSTORM POSSIBILITIES • Improve your satisfaction and performance proves your self-esteem and health, which Based on the insights you’ve achieved during in all four dimensions of your life. makes you a better parent and friend. your four-way reflection, brainstorm a long list • Have effects viewed as positive by the peo- of small experiments that may help you move ple who matter to you in every dimension Friedman’s research suggests that people closer to greater satisfaction in all four do- of your life. who focus on the concept of Total Leader- mains. These are new ways of doing things • Be the most costly—in regret and missed ship have a 20%–39% increase in satisfaction that would carry minimal risk and let you see opportunities—if you don’t do them. in all life domains, and a 9% improvement results quickly. For example: • Position you to practice skills you most in job performance—even while working want to develop and do more of what you shorter weeks. • Turning off cell phones during family din- ners could help you sharpen your focus on want to be doing. the people who matter most to you. 4. MEASURE PROGRESS • Exercising several times a week could give Develop a scorecard for each experiment you more energy. you’ve chosen. For example:

Experiment: Exercise three mornings a week with spouse. Life How I Will Dimension Experiment’s Goals Measure Success Implementation Steps Work Improved alertness No caffeine to get • Get doctor’s feedback on and productivity through the day; more exercise plan. productive sales calls • Join gym. Home Increased closeness Fewer arguments • Set alarm earlier on exercise with spouse with spouse days. • Tell coworkers, family, and Community Greater strength to partic- Three 10K fundraising friends about my plan, how ipate in athletic fundrais- walks completed by I need their help, and how it ing events with friends end of year will benefit them. Self Improved self-esteem Greater confidence OPYRIGHT © 2008 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. OPYRIGHT © 2008 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. C

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Traditional thinking pits work and the rest of our lives against each other. But taking smart steps to integrate work, home, community, and self will make you a more productive leader and a more fulfilled person.

MANAGING YOURSELF Be a Better Leader, Have a Richer Life

by Stewart D. Friedman

In my research and coaching work over the past Scoring four-way wins starts by taking a two decades, I have met many people who feel clear view of what you want from and can unfulfilled, overwhelmed, or stagnant because contribute to each domain of your life, now they are forsaking performance in one or more and in the future, with thoughtful consider- aspects of their lives. They aren’t bringing their ation of the people who matter most to you leadership abilities to bear in all of life’s and the expectations you have for one an- domains—work, home, community, and self other. This is followed by systematically de- (mind, body, and spirit). Of course, there will al- signing and implementing carefully crafted ways be some tension among the different experiments—doing something new for a roles we play. But, contrary to the common short period to see how it affects all four wisdom, there’s no reason to assume that it’s domains. If an experiment doesn’t work out, a zero-sum game. It makes more sense to you stop or adjust, and little is lost. If it does pursue excellent performance as a leader in all work out, it’s a small win; over time these add four domains—achieving what I call “four-way up so that your overall efforts are focused wins”—not trading off one for another but increasingly on what and who matter most. finding mutual value among them. Either way, you learn more about how to lead This is the main idea in a program called in all parts of your life. Total Leadership that I teach at the Wharton This process doesn’t require inordinate risk. School and at companies and workshops On the contrary, it works because it entails around the world. “Total” because it’s about realistic expectations, short-term changes that the whole person and “Leadership” because are in your control, and the explicit support it’s about creating sustainable change to of those around you. Take, for instance, benefit not just you but the most important Kenneth Chen, a manager I met at a work- people around you. shop in 2005. (All names in this article are OPYRIGHT © 2008 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. OPYRIGHT © 2008 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. C

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pseudonyms.) His professional goal was to While hundreds of leaders at all levels go become CEO, but he had other goals as well, through this program every year, you don’t which on the face of it might have appeared need a workshop to identify worthwhile conflicting. He had recently moved to Phila- experiments. The process is pretty straightfor- delphia and wanted to get more involved ward, though not simple. In the sections that with his community. He also wished to follow, I will give you an overview of the strengthen bonds with his family. To further process and take you through the basics of all of these goals, he decided to join a city- designing and implementing experiments to based community board, which would not produce four-way wins. only allow him to hone his leadership skills (in support of his professional goal) but also The Total Leadership Process have benefits in the family domain. It would The Total Leadership concept rests on three give him more in common with his sister, a principles: teacher who gave back to the community • Be real: Act with authenticity by clarify- every day, and he hoped his fiancée would ing what’s important. participate as well, enabling them to do some- • Be whole: Act with integrity by respecting thing together for the greater good. He would the whole person. feel more spiritually alive and this, in turn, • Be innovative: Act with creativity by would increase his self-confidence at work. experimenting with how things get done. Now, about three years later, he reports You begin the process by thinking, writing, that he is not only on a community board and talking with peer coaches to identify with his fiancée but also on the formal succes- your core values, your leadership vision, and sion track for CEO. He’s a better leader in all the current alignment of your actions and aspects of his life because he is acting in ways values—clarifying what’s important. Peer that are more consistent with his values. He coaching is enormously valuable, at this stage is creatively enhancing his performance in and throughout, because an outside per- all domains of his life and leading others to spective provides a sounding board for your improve their performance by encouraging ideas, challenges you, gives you a fresh way to them to better integrate the different parts of see the possibilities for innovation, and helps their lives, too. hold you accountable to your commitments. Kenneth is not alone. Workshop partici- You then identify the most important pants assess themselves at the beginning and people—“key stakeholders”—in all domains the end of the program, and they consistently and the performance expectations you have report improvements in their effectiveness, as of one another. Then you talk with them: If well as a greater sense of harmony among the you’re like most participants, you’ll be sur- once-competing domains of their lives. In a prised to find that what, and how much, your study over a four-month period of more than key stakeholders actually need from you is 300 business professionals (whose average age different from, and less than, what you Stewart D. Friedman (friedman@ was about 35), their satisfaction increased by thought beforehand. wharton.upenn.edu) is Practice an average of 20% in their work lives, 28% in These insights create opportunities for you Professor of Management at the their home lives, and 31% in their community to focus your attention more intelligently, University of Pennsylvania’s Wharton lives. Perhaps most significant, their satisfac- spurring innovative action. Now, with a firmer School in Philadelphia. He is the found- tion in the domain of the self—their physical grounding in what’s most important, and a ing director of Wharton’s Leadership and emotional health and their intellectual more complete picture of your inner circle, you Program and of its Work/Life Integra- and spiritual growth—increased by 39%. But begin to see new ways of making life better, tion Project, and the former head of they also reported that their performance not just for you but for the people around you. Ford Motor’s Leadership Development improved: at work (by 9%), at home (15%), in The next step is to design experiments and Center. He is the author of numerous the community (12%), and personally (25%). then try them out during a controlled period books and articles on leadership Paradoxically, these gains were made even of time. The best experiments are changes development, work/life integration, as participants spent less time on work and that your stakeholders wish for as much as, if and the dynamics of change, including more on other aspects of their lives. They’re not more than, you do. Total Leadership: Be a Better Leader, Have working smarter—and they’re more fo- a Richer Life, forthcoming from Harvard cused, passionate, and committed to what Designing Experiments Business Press. they’re doing. To pursue a four-way win means to produce a

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change intended to fulfill multiple goals that At first blush, conceiving of experiments benefit each and every domain of your life. that produce benefits for all the different In the domain of work, typical goals for an realms may seem a formidable task. After all, experiment can be captured under these if it were easy, people wouldn’t be feeling so broad headings: taking advantage of new much tension between work and the rest of opportunities for increasing productivity, their lives. But I’ve found that most people re- reducing hidden costs, and improving the alize it’s not that hard once they approach the work environment. Goals for home and com- challenge systematically. And, like a puzzle, it munity tend to revolve around improving rela- can be fun, especially if you keep in mind that tionships and contributing more to society. experiments must fit your particular circum- For the self, it’s usually about improving stances. Experiments can and do take myriad health and finding greater meaning in life. forms. But having sifted through hundreds As you think through the goals for your of experiment designs, my research team and experiment, keep in mind the interests and I have found that they tend to fall into nine opinions of your key stakeholders and anyone general types. Use the nine categories de- else who might be affected by the changes scribed in the exhibit “How Can I Design an you are envisioning. In exploring the idea of Experiment to Improve All Domains of My joining a community board, for instance, Ken- Life?” to organize your thinking. neth Chen sought advice from his boss, who One category of experiment involves had served on many boards, and also from the changes in where and when work gets done. company’s charitable director and the vice One workshop participant, a sales director president of talent. In this way, he got their for a global cement producer, tried working support. His employers could see how his online from his local public library one day participation on a board would benefit the a week to free himself from his very long company by developing Kenneth’s leadership commute. This was a break from a company skills and his social network. culture that didn’t traditionally support em- Some experiments benefit only a single ployees working remotely, but the change domain directly while having indirect benefits benefited everyone. He had more time for in the others. For example, setting aside three outside interests, and he was more engaged mornings a week to exercise improves your and productive at work. health directly but may indirectly give you Another category has to do with regular more energy for your work and raise your self-reflection. As an example, you might keep self-esteem, which in turn might make you a a record of your activities, thoughts, and feel- better father and friend. Other activities— ings over the course of a month to see how such as running a half-marathon with your various actions influence your performance kids to raise funds for a charity sponsored by and quality of life. Still another category your company—occur in, and directly bene- focuses on planning and organizing your fit, all four domains simultaneously. Whether time—such as trying out a new technology the benefits are direct or indirect, achieving a that coordinates commitments at work with four-way win is the goal. That’s what makes those in the other domains. the changes sustainable: Everyone benefits. Conversations about work and the rest of The expected gains need not accrue until life tend to emphasize segmentation: How sometime in the future, so keep in mind that do I shut out the office when I am with my some benefits may not be obvious—far-off family? How can I eliminate distractions and career advancements, for instance, or a con- concentrate purely on work? But, in some tact who might ultimately offer valuable cases, it might be better to make boundaries connections. between domains more permeable, not Identify possibilities. Open your mind to thicker. The very technologies that make it what’s possible and try to think of as many po- hard for us to maintain healthy boundaries tential experiments as you can, describing in a among domains also enable us to blend them sentence or two what you would do in each. in ways—unfathomable even a decade ago— This is a time to let your imagination run free. that can render us more productive and more Don’t worry about all the potential obstacles fulfilled. These tools give us choices. The at this point. challenge we all face is learning how to use harvard business review • april 2008 page 7

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How Can I Design an Experiment to Improve All Domains of My Life?

Our research has revealed that most (smoking, drinking) about different aspects of life, you successful experiments combine • Make time for reading a novel demonstrate respect for the whole components of nine general catego- • Engage in activities that improve person. ries. Thinking about possibilities in emotional and spiritual health Examples this way will make it easier for you to (yoga, meditation, etc.) • Have weekly conversations about conceive of the small changes you can religion with spouse make that will mutually benefit your Appreciating and Caring • Describe your vision to others work, your home, your community, Having fun with people (typically, by • Mentor a new employee and yourself. Most experiments are doing things with coworkers outside a hybrid of some combination of work), caring for others, and appreci- Time Shifting and “Re-Placing” these categories. ating relationships as a way of bond- Working remotely or during different ing at a basic human level to respect hours to increase flexibility and thus Tracking and Reflecting the whole person, which increases better fit in community, family, and Keeping a record of activities, trust. personal activities while increasing thoughts, and feelings (and perhaps Examples efficiency; questioning traditional distributing it to friends, family, and • Join a book group or health club assumptions and trying new ways to coworkers) to assess progress on per- with coworkers get things done. sonal and professional goals, thereby • Help your son complete his home- Examples increasing self-awareness and main- work • Work from home taining priorities. • Devote one day a month to com- • Take music lessons during your Examples munity service lunch hour • Record visits to the gym along • Do work during your commute with changes in energy levels Focusing and Concentrating • Track the times of day when you Being physically present, psychologi- Delegating and Developing feel most engaged or most le- cally present, or both when needed to Reallocating tasks in ways that in- thargic pay attention to stakeholders who crease trust, free up time, and develop matter most. Sometimes this means skills in yourself and others; working Planning and Organizing saying no to opportunities or obliga- smarter by reducing or eliminating Taking actions designed to better tions. Includes attempts to show more low-priority activities. use time and prepare and plan for the respect to important people encoun- Examples future. tered in different domains and the • Hire a personal assistant Examples need to be accessible to them. • Have a subordinate take on some • Use a PDA for all activities, not Examples of your responsibilities just work • Turn off digital communication • Share your schedule with some- devices at a set time Exploring and Venturing one else • Set aside a specific time to focus Taking steps toward a new job, career, • Prepare for the week on Sunday on one thing or person or other activity that better aligns evening • Review e-mail at preset times dur- your work, home, community, and self ing the day with your core values and aspirations. Rejuvenating and Restoring Examples Attending to body, mind, and spirit so Revealing and Engaging • Take on new roles at work, such as that the tasks of daily living and work- Sharing more of yourself with others— a cross-functional assignment ing are undertaken with renewed and listening—so they can better sup- • Try a new coaching style power, focus, and commitment. port your values and the steps you • Join the board of your child’s day Examples want to take toward your leadership care center • Quit unhealthy physical habits vision. By enhancing communication

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them wisely, and smart experiments give you the plan because she believed that the focus an opportunity to increase your skill in doing required by the training and the physical out- so. The main point is to identify possibilities let it provided would make Lim a better that will work well in your unique situation. father. The family also had a strong tradition All effective experiments require that you of athleticism, and Joanne herself was an question traditional assumptions about how accomplished athlete. Lim was training with things get done, as the sales director did. It’s his boss and other colleagues, and all agreed easier to feel free to do this, and to take inno- that it would be a healthy endeavor that vative action, when you know that your goal would improve professional communication is to improve performance in all domains and (as they thought there would be plenty of that you’ll be gathering data about the impact time to bond during training). of your experiment to determine if indeed But as her delivery date approached, it is working—for your key stakeholders and Joanne became apprehensive, which she for you. expressed to Lim as concern that he might get Whatever type you choose, the most useful injured. Her real concern, though, was that experiments feel like something of a stretch: he was spending so much time on an activity not too easy, not too daunting. It might be that might drain his energy at a point when something quite mundane for someone else, the family needed him most. One adjustment but that doesn’t matter. What’s critical is that that Lim made to reassure Joanne of his you see it as a moderately difficult challenge. commitment to their family was to initiate Choose a few, get started, and adapt. another experiment in which he took the steps Coming up with possibilities is an exercise in needed to allow him to work at home on unbounded imagination. But when it comes Thursday afternoons. He had to set up some time to take action, it’s not practical to try out new technologies and agree to send a monthly Typically, two more than three experiments at once. Typi- memo to his boss summarizing what he was cally, two turn out to be relatively successful accomplishing on those afternoons. He also experiments turn out to and one goes haywire, so you will earn some bought a baby sling, which would allow him be relatively successful small wins, and learn something useful about to keep his new son with him while at home. leadership, without biting off more than you In the end, not only were Joanne and their and one goes haywire. can chew. Now the priority is to narrow the baby on hand to cheer Lim on while he ran list to the three most-promising candidates by the marathon, but she ended up joining him reviewing which will: for the second half of the race to give him a • Give you the best overall return on your boost when she saw his energy flagging. His investment business unit’s numbers improved during the • Be the most costly in regret and missed period when he was training and working at opportunities if you don’t do it home. So did the unit’s morale—people began • Allow you to practice the leadership skills to see the company as more flexible, and they you most want to develop were encouraged to be more creative in how • Be the most fun by involving more of they got their own work done—and word got what you want to be doing around. Executives throughout the firm began •Move you furthest toward your vision of to come up with their own ideas for ways to how you want to lead your life pay more attention to other sides of their em- Once you choose and begin to move down ployees’ lives and so build a stronger sense of the road with your experiment, however, be community at work. prepared to adapt to the unforeseen. Don’t The investment in a well-designed experi- become too wedded to the details of any one ment almost always pays off because you experiment’s plan, because you will at some learn how to lead in new and creative ways in point be surprised and need to adjust. An ex- all parts of your life. And if your experiments ecutive I’ll call Lim, for example, chose as one turn out well—as they usually, but not always, experiment to run the Chicago Marathon. He do—it will benefit everyone: you, your busi- had been feeling out of shape, which in turn ness, your family, and your community. diminished his energy and focus both at work and at home. His wife, Joanne, was pregnant Measuring Progress with their first child and initially supported The only way to fail with an experiment is to harvard business review • april 2008 page 9

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fail to learn from it, and this makes useful met- the top of the page, write a brief description of rics essential. No doubt it’s better to achieve it. Then record your goals for each domain in the results you are after than to fall short, but the first column. In the middle column, de- hitting targets does not in itself advance you scribe your results metrics: how you will mea- toward becoming the leader you want to be. sure whether the goals for each domain have Failed experiments give you, and those around been achieved. In the third column, describe you, information that helps create better ones your action metrics—the plan for the steps you in the future. will take to implement your experiment. As The exhibit “How Do I Know If My Experi- you begin to implement your plan, you may ment Is Working?” shows how Kenneth Chen find that your initial indicators are too broad measured his progress. He used this simple or too vague, so refine your scorecard as you go chart to spell out the intended benefits of his along to make it more useful for you. The experiment in each of the four domains and main point is to have practical ways of measur- how he would assess whether he had realized ing your outcomes and your progress toward these benefits. To set up your own scorecard, them, and the approach you take only needs to use a separate sheet for each experiment; at work for you and your stakeholders.

How Do I Know If My Experiment Is Working? Using this tool, an executive I’ll call Kenneth Chen systematically set out in detail his various goals, the metrics he would use to measure his progress, and the steps he would take in conducting an experiment that would further those goals—joining the board of a nonprofit organiza- tion. Kenneth’s work sheet is merely an example: Every person’s experiments, goals, and metrics are unique.

A Sample Scorecard:

EXPERIMENT’S GOALS HOW I WILL MEASURE SUCCESS IMPLEMENTATION STEPS

To fulfill the expectation that executives will give Collect business cards from everyone I meet on ❏ Meet with my manager, who back to the local community the board and during board meetings, and keep has sat on many boards and can track of the number of professionals I meet provide support and advice Work To establish networks with other officers in my company and other professionals in the area After each meeting, regularly record the ❏ Meet with the director of leadership skills of those I would like to To learn leadership skills from other board my company’s foundation to emulate members and from the organization I join determine my real interests and to help assess what relation- To join a board that can involve my fiancée, Celine See whether Celine gets involved in the board ship our firm has with various community organizations To have something to discuss with my sister Record the number of conversations my sister Home (a special-education instructor) and I have about community service for the next ❏ Discuss my course of action three months and see whether they have with my fiancée and see brought us closer whether joining a board interests her To provide my leadership skills to a nonprofit Record what I learn about each nonprofit ❏ organization organization I research Sign up to attend the Decem- Community ber 15 overview session of the To get more involved in giving back to the Record the number of times I attend board Business on Board program community meetings ❏ Assess different opportunities To feel good about contributing to others’ welfare Assess how I feel about myself in a daily journal within the community and then reach out to organizations To see others grow as a result of my efforts Assess the effect I have on others in terms of I’m interested in Self potential number of people affected To become more compassionate ❏ Apply for membership to Ask for feedback from others about whether I’ve a community board become more compassionate

Visit richerlife.tools.hbr.org for further work sheets and for blank versions to download. For a more comprehensive offering of online tools, videos, and blogs, go to www.totalleadership.org. page 10 harvard business review • april 2008

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Workshop participants have used all kinds my company and my role in it.” There’s noth- of metrics: cost savings from reduced travel, ing small about that. He felt he was missing a number of e-mail misunderstandings averted, sense of purpose. degree of satisfaction with family time, hours Ismail designed practical steps that would spent volunteering at a teen center, and so allow him to move toward his large goal over on. Metrics may be objective or subjective, time. His first experiments were small and qualitative or quantitative, reported by you or achievable. He introduced a new method that by others, and frequently or intermittently both his colleagues and his wife could use to observed. When it comes to frequency, for in- communicate with him. He began to hold stance, it helps to consider how long you’ll be sacrosanct time for his family and his church. able to remember what you did. For example, As he looked for ways to free up more time, if you were to go on a diet to get healthier, in- he initiated delegation experiments that had crease energy, and enhance key relationships, the effect of flattening his organization’s food intake would be an important metric. structure. These small wins crossed over But would you be able to remember what you several domains, and eventually he did indeed ate two days ago? transform his company and his own role in it. When I spoke with him 18 months after he’d Small Wins for Big Change started, he acknowledged that he’d had a Experiments shouldn’t be massive, all- hard time coping with the loss of control over encompassing shifts in the way you live. tactical business matters, but he described his Highly ambitious designs usually fail because experiments as “a testament to the idea of they’re too much to handle. The best experi- winning the small battles and letting the war ments let you try something new while mini- be won as a result.” He and his leadership mizing the inevitable risks associated with team both felt more confident about the You can say to people: change. When the stakes are smaller, it’s firm’s new organizational structure. easier to overcome the fear of failure that • • • “Let’s just try this. If it inhibits innovation. You start to see results, People try the Total Leadership program for a doesn’t work, we’ll go and others take note, which both inspires you variety of reasons. Some feel unfulfilled be- to go further and builds support from your cause they’re not doing what they love. Some back to the old way or try key stakeholders. don’t feel genuine because they’re not acting Another benefit of the small-wins approach according to their values. Others feel discon- something different.” to experiments is that it opens doors that nected, isolated from people who matter to would otherwise be closed. You can say to them. They crave stronger relationships, built people invested in the decision, “Let’s just try on trust, and yearn for enriched social net- this. If it doesn’t work, we’ll go back to the old works. Still others are just in a rut. They want way or try something different.” By framing to tap into their creative energy but don’t an experiment as a trial, you reduce resistance know how (and sometimes lack the courage) because people are more likely to try some- to do so. They feel out of control and unable to thing new if they know it’s not permanent fit in all that’s important to them. and if they have control over deciding My hunch is that there are more four-way whether the experiment is working according wins available to you than you’d think. They to their performance expectations. are there for the taking. You have to know But “small” is a relative term—what might how to look for them and then find the sup- look like a small step for you could seem like port and zeal to pursue them. By providing a a giant leap to me, and vice versa. So don’t get blueprint for how you can be real, be whole, hung up on the word. What’s more, this isn’t and be innovative as a leader in all parts about the scope or importance of the changes of your life, this program helps you perform you eventually make. Large-scale change is better according to the standards of the most grounded in small steps toward a big idea. So important people in your life; feel better in all while the steps in an experiment might be the domains of your life; and foster greater small, the goals are not. Ismail, a successful harmony among the domains by increasing 50-year-old entrepreneur and CEO of an engi- the resources available to you to fit all the neering services company, described the goal parts of your life together. No matter what for his first experiment this way: “Restructure your career stage or current position, you harvard business review • april 2008 page 11

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can be a better leader and have a richer life— if you are ready and willing to rise to the challenge.

Reprint R0804H To order, see the next page or call 800-988-0886 or 617-783-7500 or go to www.hbr.org

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M ANAGING YOURSELF Be a Better Leader, Have a Richer Life

Further Reading BOOK time, encourage employees to identify their Total Leadership: Be a Better Leader, Have a concerns and goals outside the office. 2) Take Richer Life time to learn about employees’ personal by Stewart D. Friedman situations. Not only does this build trust, it Harvard Business Press also creates opportunities to learn about June 2008 other talents that employees could bring to Product no. 3285 your business. 3) Continually experiment with how work gets done. Streamlining This book, on which the article is based, offers work processes can improve performance additional ideas on how to perform well as a and give employees more time to pursue leader, not by trading off one life domain for personal goals. another, but by finding mutual value among all four—work, home, community, and self. Success That Lasts The author shows you how to achieve by Laura Nash and Howard Stevenson these “four-way wins” as a leader who can: Harvard Business Review Be real—act with authenticity by clarifying April 2004 what’s important; Be whole—act with Product no. 659X integrity by respecting the whole person; These authors provide another process for and Be innovative—act with creativity by determining what matters most to you, a step experimenting to find new solutions. The you take before designing experiments for book includes more than 30 hands-on tools change. First, imagine life satisfaction as to help you produce stronger business re- consisting of four categories: happiness, sults, find clearer purpose in what you do, feel achievement, significance (positively affect- more connected to the people who matter ing those you care about), and legacy (help- most, and generate sustainable change. ing others find future success). Second, assess ARTICLES the various categories of satisfaction you’ve Work and Life: The End of the Zero-Sum already experienced. Third, notice patterns: Game Are some categories meager? Others too by Stewart D. Friedman, Perry Christensen, full? Are the patterns in line with your and Jessica DeGroot goals? Fourth, identify which categories Harvard Business Review need attention and which show “just enough” July 2000 success so that you can focus your efforts on a Product no. 4452 different category. Not only do successful leaders pay attention to all dimensions of their lives—they encour- age their employees to do the same. Leaders To Order who treat employees’ work and personal lives as complementary, not competing, priorities discover that employees respond with greater For Harvard Business Review reprints and effort and loyalty. To create a work environ- subscriptions, call 800-988-0886 or ment that supports all domains of employees’ 617-783-7500. Go to www.hbr.org lives: 1) Clarify what’s important. Be explicit about your unit’s priorities and your expecta- For customized and quantity orders of tions for employees’ performance, but give Harvard Business Review article reprints, employees great autonomy over how to call 617-783-7626, or e-mail achieve the goals you’ve laid out. At the same [email protected] page 13

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BEST OF HBR 1999

Success in the knowledge economy comes to those who Managing Oneself know themselves—their strengths, their values, and how they best perform. by Peter F. Drucker •

Included with this full-text Harvard Business Review article:

17 Article Summary The Idea in Brief—the core idea The Idea in Practice—putting the idea to work

19 Managing Oneself

29 Further Reading A list of related materials, with annotations to guide further exploration of the article’s ideas and applications

Reprint R0501K page 15

B EST OF HBR 1999 Managing Oneself

The Idea in Brief The Idea in Practice We live in an age of unprecedented oppor- To build a life of excellence, begin by asking yourself these questions: tunity: If you’ve got ambition, drive, and smarts, you can rise to the top of your cho- “What are my strengths?” “What are my values?” sen profession—regardless of where you To accurately identify your strengths, use What are your ethics? What do you see as your started out. But with opportunity comes re- feedback analysis. Every time you make a key most important responsibilities for living a sponsibility. Companies today aren’t man- decision, write down the outcome you ex- worthy, ethical life? Do your organization’s aging their knowledge workers’ careers. pect. Several months later, compare the actual ethics resonate with your own values? If not, Rather, we must each be our own chief ex- results with your expected results. Look for your career will likely be marked by frustration ecutive officer. patterns in what you’re seeing: What results and poor performance. are you skilled at generating? What abilities do Simply put, it’s up to you to carve out your you need to enhance in order to get the re- “Where do I belong?” place in the work world and know when to sults you want? What unproductive habits are Consider your strengths, preferred work style, change course. And it’s up to you to keep preventing you from creating the outcomes and values. Based on these qualities, in what yourself engaged and productive during a you desire? In identifying opportunities for im- kind of work environment would you fit in work life that may span some 50 years. provement, don’t waste time cultivating skill best? Find the perfect fit, and you’ll transform To do all of these things well, you’ll need to areas where you have little competence. In- yourself from a merely acceptable employee cultivate a deep understanding of yourself. stead, concentrate on—and build on—your into a star performer. What are your most valuable strengths and strengths. most dangerous weaknesses? Equally im- “What can I contribute?” portant, how do you learn and work with “How do I work?” In earlier eras, companies told businesspeople others? What are your most deeply held val- In what ways do you work best? Do you pro- what their contribution should be. Today, you ues? And in what type of work environment cess information most effectively by reading have choices. To decide how you can best en- can you make the greatest contribution? it, or by hearing others discuss it? Do you hance your organization’s performance, first accomplish the most by working with other ask what the situation requires. Based on your The implication is clear: Only when you op- people, or by working alone? Do you per- strengths, work style, and values, how might erate from a combination of your strengths form best while making decisions, or while you make the greatest contribution to your and self-knowledge can you achieve true— advising others on key matters? Are you in organization’s efforts? and lasting—excellence. top form when things get stressful, or do you function optimally in a highly predict- able environment? OPYRIGHT © 2004 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. OPYRIGHT © 2004 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. C

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Success in the knowledge economy comes to those who know themselves—their strengths, their values, and how they best perform.

BEST OF HBR 1999 Managing Oneself

by Peter F. Drucker

We live in an age of unprecedented opportunity: tions, so unusual both in their talents and If you’ve got ambition and smarts, you can rise to their accomplishments as to be considered the top of your chosen profession, regardless of outside the boundaries of ordinary human ex- where you started out. istence. Now, most of us, even those of us with But with opportunity comes responsibility. modest endowments, will have to learn to Companies today aren’t managing their employ- manage ourselves. We will have to learn to de- ees’ careers; knowledge workers must, effec- velop ourselves. We will have to place our- tively, be their own chief executive officers. It’s up selves where we can make the greatest contri- to you to carve out your place, to know when to bution. And we will have to stay mentally alert change course, and to keep yourself engaged and and engaged during a 50-year working life, productive during a work life that may span which means knowing how and when to some 50 years. To do those things well, you’ll change the work we do. need to cultivate a deep understanding of your- self—not only what your strengths and weak- What Are My Strengths? nesses are but also how you learn, how you work Most people think they know what they are with others, what your values are, and where you good at. They are usually wrong. More often, can make the greatest contribution. Because only people know what they are not good at—and when you operate from strengths can you even then more people are wrong than right. achieve true excellence. And yet, a person can perform only from strength. One cannot build performance on History’s great achievers—a Napoléon, a da weaknesses, let alone on something one can- Vinci, a Mozart—have always managed them- not do at all. selves. That, in large measure, is what makes Throughout history, people had little them great achievers. But they are rare excep- need to know their strengths. A person was OPYRIGHT © 2004 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. OPYRIGHT © 2004 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. C

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born into a position and a line of work: The gance is causing disabling ignorance and over- peasant’s son would also be a peasant; the ar- come it. Far too many people—especially peo- tisan’s daughter, an artisan’s wife; and so on. ple with great expertise in one area—are But now people have choices. We need to contemptuous of knowledge in other areas or know our strengths in order to know where believe that being bright is a substitute for we belong. knowledge. First-rate engineers, for instance, The only way to discover your strengths is tend to take pride in not knowing anything through feedback analysis. Whenever you about people. Human beings, they believe, are make a key decision or take a key action, write much too disorderly for the good engineering down what you expect will happen. Nine or 12 mind. Human resources professionals, by con- months later, compare the actual results with trast, often pride themselves on their igno- your expectations. I have been practicing this rance of elementary accounting or of quantita- method for 15 to 20 years now, and every time tive methods altogether. But taking pride in I do it, I am surprised. The feedback analysis such ignorance is self-defeating. Go to work on showed me, for instance—and to my great sur- acquiring the skills and knowledge you need to prise—that I have an intuitive understanding fully realize your strengths. of technical people, whether they are engi- It is equally essential to remedy your bad neers or accountants or market researchers. It habits—the things you do or fail to do that in- also showed me that I don’t really resonate hibit your effectiveness and performance. Such with generalists. habits will quickly show up in the feedback. Feedback analysis is by no means new. It For example, a planner may find that his beau- was invented sometime in the fourteenth cen- tiful plans fail because he does not follow tury by an otherwise totally obscure German through on them. Like so many brilliant peo- theologian and picked up quite independently, ple, he believes that ideas move mountains. some 150 years later, by John Calvin and Igna- But bulldozers move mountains; ideas show tius of Loyola, each of whom incorporated it where the bulldozers should go to work. This into the practice of his followers. In fact, the planner will have to learn that the work does steadfast focus on performance and results not stop when the plan is completed. He must that this habit produces explains why the insti- find people to carry out the plan and explain it tutions these two men founded, the Calvinist to them. He must adapt and change it as he church and the Jesuit order, came to dominate puts it into action. And finally, he must decide Europe within 30 years. when to stop pushing the plan. Practiced consistently, this simple method At the same time, feedback will also reveal will show you within a fairly short period of when the problem is a lack of manners. Man- time, maybe two or three years, where your ners are the lubricating oil of an organization. strengths lie—and this is the most important It is a law of nature that two moving bodies in thing to know. The method will show you contact with each other create friction. This is what you are doing or failing to do that de- as true for human beings as it is for inanimate prives you of the full benefits of your objects. Manners—simple things like saying strengths. It will show you where you are not “please” and “thank you” and knowing a per- particularly competent. And finally, it will son’s name or asking after her family—enable show you where you have no strengths and two people to work together whether they cannot perform. like each other or not. Bright people, espe- Several implications for action follow from cially bright young people, often do not un- feedback analysis. First and foremost, concen- derstand this. If analysis shows that some- trate on your strengths. Put yourself where one’s brilliant work fails again and again as your strengths can produce results. soon as cooperation from others is required, it Peter F. Drucker is the Marie Rankin Second, work on improving your strengths. probably indicates a lack of courtesy—that is, Clarke Professor of Social Science and Analysis will rapidly show where you need to a lack of manners. Management (Emeritus) at Claremont improve skills or acquire new ones. It will also Comparing your expectations with your re- Graduate University in Claremont, Cali- show the gaps in your knowledge—and those sults also indicates what not to do. We all fornia. This article is an excerpt from his can usually be filled. Mathematicians are born, have a vast number of areas in which we have book Management Challenges for the but everyone can learn trigonometry. no talent or skill and little chance of becom- 21st Century (HarperCollins, 1999). Third, discover where your intellectual arro- ing even mediocre. In those areas a person—

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and especially a knowledge worker—should who had been his admirers held President not take on work, jobs, and assignments. One Eisenhower in open contempt. He never ad- should waste as little effort as possible on im- dressed the questions, they complained, but proving areas of low competence. It takes far rambled on endlessly about something else. more energy and work to improve from in- And they constantly ridiculed him for butcher- competence to mediocrity than it takes to im- ing the King’s English in incoherent and un- prove from first-rate performance to excel- grammatical answers. lence. And yet most people—especially most Eisenhower apparently did not know that teachers and most organizations—concen- he was a reader, not a listener. When he was trate on making incompetent performers into Supreme Commander in Europe, his aides mediocre ones. Energy, resources, and time made sure that every question from the press should go instead to making a competent per- was presented in writing at least half an hour son into a star performer. before a conference was to begin. And then Eisenhower was in total command. When he How Do I Perform? became president, he succeeded two listeners, Amazingly few people know how they get Franklin D. Roosevelt and Harry Truman. Both things done. Indeed, most of us do not even men knew themselves to be listeners and both know that different people work and perform enjoyed free-for-all press conferences. Eisen- differently. Too many people work in ways that hower may have felt that he had to do what his are not their ways, and that almost guarantees two predecessors had done. As a result, he nonperformance. For knowledge workers, How never even heard the questions journalists do I perform? may be an even more important asked. And Eisenhower is not even an extreme question than What are my strengths? case of a nonlistener. Like one’s strengths, how one performs is A few years later, Lyndon Johnson destroyed It takes far more energy unique. It is a matter of personality. Whether his presidency, in large measure, by not know- personality be a matter of nature or nurture, it ing that he was a listener. His predecessor, to improve from surely is formed long before a person goes to John Kennedy, was a reader who had assem- incompetence to work. And how a person performs is a given, bled a brilliant group of writers as his assis- just as what a person is good at or not good at tants, making sure that they wrote to him be- mediocrity than to is a given. A person’s way of performing can be fore discussing their memos in person. Johnson slightly modified, but it is unlikely to be com- kept these people on his staff—and they kept improve from first-rate pletely changed—and certainly not easily. Just on writing. He never, apparently, understood performance to as people achieve results by doing what they one word of what they wrote. Yet as a senator, are good at, they also achieve results by work- Johnson had been superb; for parliamentari- excellence. ing in ways that they best perform. A few com- ans have to be, above all, listeners. mon personality traits usually determine how Few listeners can be made, or can make a person performs. themselves, into competent readers—and vice Am I a reader or a listener? The first thing versa. The listener who tries to be a reader will, to know is whether you are a reader or a lis- therefore, suffer the fate of Lyndon Johnson, tener. Far too few people even know that whereas the reader who tries to be a listener there are readers and listeners and that peo- will suffer the fate of Dwight Eisenhower. They ple are rarely both. Even fewer know which will not perform or achieve. of the two they themselves are. But some ex- How do I learn? The second thing to know amples will show how damaging such igno- about how one performs is to know how one rance can be. learns. Many first-class writers—Winston When Dwight Eisenhower was Supreme Churchill is but one example—do poorly in Commander of the Allied forces in Europe, he school. They tend to remember their school- was the darling of the press. His press confer- ing as pure torture. Yet few of their classmates ences were famous for their style—General remember it the same way. They may not have Eisenhower showed total command of what- enjoyed the school very much, but the worst ever question he was asked, and he was able to they suffered was boredom. The explanation is describe a situation and explain a policy in two that writers do not, as a rule, learn by listening or three beautifully polished and elegant sen- and reading. They learn by writing. Because tences. Ten years later, the same journalists schools do not allow them to learn this way,

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they get poor grades. was America’s top troop commander. Yet when Schools everywhere are organized on the as- he was proposed for an independent command, sumption that there is only one right way to General George Marshall, the U.S. chief of learn and that it is the same way for everybody. staff—and probably the most successful picker But to be forced to learn the way a school of men in U.S. history—said, “Patton is the best teaches is sheer hell for students who learn dif- subordinate the American army has ever pro- ferently. Indeed, there are probably half a duced, but he would be the worst commander.” dozen different ways to learn. Some people work best as team members. There are people, like Churchill, who learn Others work best alone. Some are exception- by writing. Some people learn by taking copi- ally talented as coaches and mentors; others ous notes. Beethoven, for example, left behind are simply incompetent as mentors. an enormous number of sketchbooks, yet he Another crucial question is, Do I produce re- said he never actually looked at them when he sults as a decision maker or as an adviser? A composed. Asked why he kept them, he is re- great many people perform best as advisers ported to have replied, “If I don’t write it down but cannot take the burden and pressure of immediately, I forget it right away. If I put it making the decision. A good many other peo- into a sketchbook, I never forget it and I never ple, by contrast, need an adviser to force them- have to look it up again.” Some people learn by selves to think; then they can make decisions doing. Others learn by hearing themselves talk. and act on them with speed, self-confidence, A chief executive I know who converted a and courage. small and mediocre family business into the This is a reason, by the way, that the num- leading company in its industry was one of ber two person in an organization often fails those people who learn by talking. He was in when promoted to the number one position. Do not try to change the habit of calling his entire senior staff into The top spot requires a decision maker. Strong his office once a week and then talking at them decision makers often put somebody they trust yourself—you are for two or three hours. He would raise policy into the number two spot as their adviser— unlikely to succeed. Work issues and argue three different positions on and in that position the person is outstanding. each one. He rarely asked his associates for But in the number one spot, the same person to improve the way you comments or questions; he simply needed an fails. He or she knows what the decision should audience to hear himself talk. That’s how he be but cannot accept the responsibility of actu- perform. learned. And although he is a fairly extreme ally making it. case, learning through talking is by no means Other important questions to ask include, an unusual method. Successful trial lawyers Do I perform well under stress, or do I need a learn the same way, as do many medical diag- highly structured and predictable environ- nosticians (and so do I). ment? Do I work best in a big organization or Of all the important pieces of self-knowledge, a small one? Few people work well in all understanding how you learn is the easiest to kinds of environments. Again and again, I acquire. When I ask people, “How do you have seen people who were very successful in learn?” most of them know the answer. But large organizations flounder miserably when when I ask, “Do you act on this knowledge?” they moved into smaller ones. And the re- few answer yes. And yet, acting on this knowl- verse is equally true. edge is the key to performance; or rather, not The conclusion bears repeating: Do not try acting on this knowledge condemns one to to change yourself—you are unlikely to suc- nonperformance. ceed. But work hard to improve the way you Am I a reader or a listener? and How do I perform. And try not to take on work you can- learn? are the first questions to ask. But they not perform or will only perform poorly. are by no means the only ones. To manage yourself effectively, you also have to ask, Do I What Are My Values? work well with people, or am I a loner? And if To be able to manage yourself, you finally you do work well with people, you then must have to ask, What are my values? This is not a ask, In what relationship? question of ethics. With respect to ethics, the Some people work best as subordinates. Gen- rules are the same for everybody, and the test eral George Patton, the great American military is a simple one. I call it the “mirror test.” hero of World War II, is a prime example. Patton In the early years of this century, the most

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highly respected diplomat of all the great pow- tion. The results of either strategy may be ers was the German ambassador in London. pretty much the same. At bottom, there is a He was clearly destined for great things—to conflict between a value system that sees the become his country’s foreign minister, at least, company’s contribution in terms of helping if not its federal chancellor. Yet in 1906 he physicians do better what they already do and a abruptly resigned rather than preside over a value system that is oriented toward making dinner given by the diplomatic corps for Ed- scientific discoveries. ward VII. The king was a notorious womanizer Whether a business should be run for short- and made it clear what kind of dinner he term results or with a focus on the long term is wanted. The ambassador is reported to have likewise a question of values. Financial ana- said, “I refuse to see a pimp in the mirror in the lysts believe that businesses can be run for morning when I shave.” both simultaneously. Successful businesspeo- That is the mirror test. Ethics requires that ple know better. To be sure, every company you ask yourself, What kind of person do I has to produce short-term results. But in any want to see in the mirror in the morning? conflict between short-term results and long- What is ethical behavior in one kind of orga- term growth, each company will determine its nization or situation is ethical behavior in an- own priority. This is not primarily a disagree- other. But ethics is only part of a value sys- ment about economics. It is fundamentally a tem—especially of an organization’s value value conflict regarding the function of a busi- system. ness and the responsibility of management. To work in an organization whose value sys- Value conflicts are not limited to business tem is unacceptable or incompatible with one’s organizations. One of the fastest-growing pas- own condemns a person both to frustration toral churches in the United States measures and to nonperformance. success by the number of new parishioners. Consider the experience of a highly success- Its leadership believes that what matters is ful human resources executive whose com- how many newcomers join the congregation. pany was acquired by a bigger organization. The Good Lord will then minister to their After the acquisition, she was promoted to do spiritual needs or at least to the needs of a the kind of work she did best, which included sufficient percentage. Another pastoral, evan- selecting people for important positions. The gelical church believes that what matters is executive deeply believed that a company people’s spiritual growth. The church eases should hire people for such positions from the out newcomers who join but do not enter into outside only after exhausting all the inside pos- its spiritual life. sibilities. But her new company believed in Again, this is not a matter of numbers. At first looking outside “to bring in fresh blood.” first glance, it appears that the second church There is something to be said for both ap- grows more slowly. But it retains a far larger proaches—in my experience, the proper one is proportion of newcomers than the first one to do some of both. They are, however, funda- does. Its growth, in other words, is more solid. mentally incompatible—not as policies but as This is also not a theological problem, or only values. They bespeak different views of the re- secondarily so. It is a problem about values. In lationship between organizations and people; a public debate, one pastor argued, “Unless different views of the responsibility of an orga- you first come to church, you will never find nization to its people and their development; the gate to the Kingdom of Heaven.” and different views of a person’s most impor- “No,” answered the other. “Until you first tant contribution to an enterprise. After sev- look for the gate to the Kingdom of Heaven, eral years of frustration, the executive quit—at you don’t belong in church.” considerable financial loss. Her values and the Organizations, like people, have values. To values of the organization simply were not be effective in an organization, a person’s val- compatible. ues must be compatible with the organiza- Similarly, whether a pharmaceutical com- tion’s values. They do not need to be the same, pany tries to obtain results by making constant, but they must be close enough to coexist. Oth- small improvements or by achieving occa- erwise, the person will not only be frustrated sional, highly expensive, and risky “break- but also will not produce results. throughs” is not primarily an economic ques- A person’s strengths and the way that per-

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son performs rarely conflict; the two are com- doing it. This is the way it should be struc- plementary. But there is sometimes a conflict tured. This is the way the relationships should between a person’s values and his or her be. These are the kind of results you should ex- strengths. What one does well—even very well pect from me, and in this time frame, because and successfully—may not fit with one’s value this is who I am.” system. In that case, the work may not appear Successful careers are not planned. They to be worth devoting one’s life to (or even a develop when people are prepared for oppor- substantial portion thereof). tunities because they know their strengths, If I may, allow me to interject a personal their method of work, and their values. note. Many years ago, I too had to decide be- Knowing where one belongs can transform an tween my values and what I was doing success- ordinary person—hardworking and compe- fully. I was doing very well as a young invest- tent but otherwise mediocre—into an out- ment banker in London in the mid-1930s, and standing performer. the work clearly fit my strengths. Yet I did not see myself making a contribution as an asset What Should I Contribute? manager. People, I realized, were what I val- Throughout history, the great majority of peo- ued, and I saw no point in being the richest ple never had to ask the question, What man in the cemetery. I had no money and no should I contribute? They were told what to other job prospects. Despite the continuing contribute, and their tasks were dictated ei- Depression, I quit—and it was the right thing ther by the work itself—as it was for the peas- to do. Values, in other words, are and should ant or artisan—or by a master or a mistress— be the ultimate test. as it was for domestic servants. And until very recently, it was taken for granted that most What one does well— Where Do I Belong? people were subordinates who did as they A small number of people know very early were told. Even in the 1950s and 1960s, the even very well and where they belong. Mathematicians, musi- new knowledge workers (the so-called organi- successfully—may not fit cians, and cooks, for instance, are usually zation men) looked to their company’s person- mathematicians, musicians, and cooks by the nel department to plan their careers. with one’s value system. time they are four or five years old. Physi- Then in the late 1960s, no one wanted to be cians usually decide on their careers in their told what to do any longer. Young men and teens, if not earlier. But most people, espe- women began to ask, What do I want to do? cially highly gifted people, do not really And what they heard was that the way to con- know where they belong until they are well tribute was to “do your own thing.” But this so- past their mid-twenties. By that time, how- lution was as wrong as the organization men’s ever, they should know the answers to the had been. Very few of the people who believed three questions: What are my strengths? How that doing one’s own thing would lead to con- do I perform? and, What are my values? And tribution, self-fulfillment, and success achieved then they can and should decide where they any of the three. belong. But still, there is no return to the old an- Or rather, they should be able to decide swer of doing what you are told or assigned to where they do not belong. The person who do. Knowledge workers in particular have to has learned that he or she does not perform learn to ask a question that has not been well in a big organization should have learned asked before: What should my contribution to say no to a position in one. The person who be? To answer it, they must address three dis- has learned that he or she is not a decision tinct elements: What does the situation re- maker should have learned to say no to a deci- quire? Given my strengths, my way of per- sion-making assignment. A General Patton forming, and my values, how can I make the (who probably never learned this himself) greatest contribution to what needs to be should have learned to say no to an indepen- done? And finally, What results have to be dent command. achieved to make a difference? Equally important, knowing the answer to Consider the experience of a newly ap- these questions enables a person to say to an pointed hospital administrator. The hospital opportunity, an offer, or an assignment, “Yes, I was big and prestigious, but it had been will do that. But this is the way I should be coasting on its reputation for 30 years. The

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new administrator decided that his contribu- tention to it. Typical is the person who was tion should be to establish a standard of ex- trained to write reports in his or her first as- cellence in one important area within two signment because that boss was a reader. Even years. He chose to focus on the emergency if the next boss is a listener, the person goes on room, which was big, visible, and sloppy. He writing reports that, invariably, produce no re- decided that every patient who came into the sults. Invariably the boss will think the em- ER had to be seen by a qualified nurse within ployee is stupid, incompetent, and lazy, and he 60 seconds. Within 12 months, the hospital’s or she will fail. But that could have been emergency room had become a model for all avoided if the employee had only looked at the hospitals in the United States, and within an- new boss and analyzed how this boss performs. other two years, the whole hospital had been Bosses are neither a title on the organiza- transformed. tion chart nor a “function.” They are individu- As this example suggests, it is rarely possi- als and are entitled to do their work in the way ble—or even particularly fruitful—to look they do it best. It is incumbent on the people too far ahead. A plan can usually cover no who work with them to observe them, to find more than 18 months and still be reasonably out how they work, and to adapt themselves to clear and specific. So the question in most what makes their bosses most effective. This, cases should be, Where and how can I achieve in fact, is the secret of “managing” the boss. results that will make a difference within the The same holds true for all your coworkers. next year and a half? The answer must bal- Each works his or her way, not your way. And ance several things. First, the results should each is entitled to work in his or her way. What be hard to achieve—they should require matters is whether they perform and what “stretching,” to use the current buzzword. But their values are. As for how they perform— also, they should be within reach. To aim at each is likely to do it differently. The first secret The first secret of results that cannot be achieved—or that can of effectiveness is to understand the people be only under the most unlikely circum- you work with and depend on so that you can effectiveness is to stances—is not being ambitious; it is being make use of their strengths, their ways of understand the people foolish. Second, the results should be mean- working, and their values. Working relation- ingful. They should make a difference. Fi- ships are as much based on the people as they you work with so that nally, results should be visible and, if at all are on the work. possible, measurable. From this will come a The second part of relationship responsibil- you can make use of their course of action: what to do, where and how ity is taking responsibility for communication. strengths. to start, and what goals and deadlines to set. Whenever I, or any other consultant, start to work with an organization, the first thing I Responsibility for Relationships hear about are all the personality conflicts. Very few people work by themselves and Most of these arise from the fact that people achieve results by themselves—a few great art- do not know what other people are doing and ists, a few great scientists, a few great athletes. how they do their work, or what contribution Most people work with others and are effec- the other people are concentrating on and tive with other people. That is true whether what results they expect. And the reason they they are members of an organization or inde- do not know is that they have not asked and pendently employed. Managing yourself re- therefore have not been told. quires taking responsibility for relationships. This failure to ask reflects human stupidity This has two parts. less than it reflects human history. Until re- The first is to accept the fact that other peo- cently, it was unnecessary to tell any of these ple are as much individuals as you yourself are. things to anybody. In the medieval city, every- They perversely insist on behaving like human one in a district plied the same trade. In the beings. This means that they too have their countryside, everyone in a valley planted the strengths; they too have their ways of getting same crop as soon as the frost was out of the things done; they too have their values. To be ground. Even those few people who did effective, therefore, you have to know the things that were not “common” worked alone, strengths, the performance modes, and the val- so they did not have to tell anyone what they ues of your coworkers. were doing. That sounds obvious, but few people pay at- Today the great majority of people work

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with others who have different tasks and re- one’s coworkers: those whose work one de- sponsibilities. The marketing vice president pends on as well as those who depend on one’s may have come out of sales and know every- own work. thing about sales, but she knows nothing about the things she has never done—pricing, The Second Half of Your Life advertising, packaging, and the like. So the When work for most people meant manual la- people who do these things must make sure bor, there was no need to worry about the sec- that the marketing vice president understands ond half of your life. You simply kept on doing what they are trying to do, why they are trying what you had always done. And if you were to do it, how they are going to do it, and what lucky enough to survive 40 years of hard work results to expect. in the mill or on the railroad, you were quite If the marketing vice president does not un- happy to spend the rest of your life doing derstand what these high-grade knowledge nothing. Today, however, most work is knowl- specialists are doing, it is primarily their fault, edge work, and knowledge workers are not not hers. They have not educated her. Con- “finished” after 40 years on the job, they are versely, it is the marketing vice president’s re- merely bored. sponsibility to make sure that all of her co- We hear a great deal of talk about the workers understand how she looks at midlife crisis of the executive. It is mostly marketing: what her goals are, how she works, boredom. At 45, most executives have reached and what she expects of herself and of each the peak of their business careers, and they one of them. know it. After 20 years of doing very much the Even people who understand the impor- same kind of work, they are very good at their tance of taking responsibility for relationships jobs. But they are not learning or contributing often do not communicate sufficiently with or deriving challenge and satisfaction from their associates. They are afraid of being the job. And yet they are still likely to face an- thought presumptuous or inquisitive or stu- other 20 if not 25 years of work. That is why pid. They are wrong. Whenever someone goes managing oneself increasingly leads one to to his or her associates and says, “This is what begin a second career. I am good at. This is how I work. These are There are three ways to develop a second ca- my values. This is the contribution I plan to reer. The first is actually to start one. Often this concentrate on and the results I should be ex- takes nothing more than moving from one pected to deliver,” the response is always, kind of organization to another: the divisional “This is most helpful. But why didn’t you tell controller in a large corporation, for instance, me earlier?” becomes the controller of a medium-sized hos- And one gets the same reaction—without pital. But there are also growing numbers of exception, in my experience—if one continues people who move into different lines of work by asking, “And what do I need to know about altogether: the business executive or govern- your strengths, how you perform, your values, ment official who enters the ministry at 45, for and your proposed contribution?” In fact, instance; or the midlevel manager who leaves knowledge workers should request this of ev- corporate life after 20 years to attend law eryone with whom they work, whether as sub- school and become a small-town attorney. ordinate, superior, colleague, or team member. We will see many more second careers un- And again, whenever this is done, the reaction dertaken by people who have achieved mod- is always, “Thanks for asking me. But why est success in their first jobs. Such people didn’t you ask me earlier?” have substantial skills, and they know how to Organizations are no longer built on force work. They need a community—the house is but on trust. The existence of trust between empty with the children gone—and they people does not necessarily mean that they need income as well. But above all, they like one another. It means that they under- need challenge. stand one another. Taking responsibility for re- The second way to prepare for the second lationships is therefore an absolute necessity. It half of your life is to develop a parallel career. is a duty. Whether one is a member of the orga- Many people who are very successful in their nization, a consultant to it, a supplier, or a dis- first careers stay in the work they have been tributor, one owes that responsibility to all doing, either on a full-time or part-time or con-

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sulting basis. But in addition, they create a par- prise to build and to run model schools. He is, allel job, usually in a nonprofit organization, however, still working nearly full-time as the that takes another ten hours of work a week. lead counsel in the company he helped found They might take over the administration of as a young lawyer. their church, for instance, or the presidency of There is another reason to develop a second the local Girl Scouts council. They might run major interest, and to develop it early. No one the battered women’s shelter, work as a chil- can expect to live very long without experienc- dren’s librarian for the local public library, sit ing a serious setback in his or her life or work. on the school board, and so on. There is the competent engineer who is passed Finally, there are the social entrepreneurs. over for promotion at age 45. There is the com- These are usually people who have been very petent college professor who realizes at age 42 successful in their first careers. They love their that she will never get a professorship at a big work, but it no longer challenges them. In university, even though she may be fully quali- many cases they keep on doing what they have fied for it. There are tragedies in one’s family been doing all along but spend less and less of life: the breakup of one’s marriage or the loss their time on it. They also start another activ- of a child. At such times, a second major inter- ity, usually a nonprofit. My friend Bob Buford, est—not just a hobby—may make all the dif- for example, built a very successful television ference. The engineer, for example, now knows company that he still runs. But he has also that he has not been very successful in his job. founded and built a successful nonprofit orga- But in his outside activity—as church trea- nization that works with Protestant churches, surer, for example—he is a success. One’s fam- and he is building another to teach social en- ily may break up, but in that outside activity trepreneurs how to manage their own non- there is still a community. profit ventures while still running their origi- In a society in which success has become so There is one prerequisite nal businesses. terribly important, having options will become People who manage the second half of their increasingly vital. Historically, there was no for managing the second lives may always be a minority. The majority such thing as “success.” The overwhelming ma- half of your life: You may “retire on the job” and count the years jority of people did not expect anything but to until their actual retirement. But it is this mi- stay in their “proper station,” as an old English must begin doing so long nority, the men and women who see a long prayer has it. The only mobility was downward working-life expectancy as an opportunity mobility. before you enter it. both for themselves and for society, who will In a knowledge society, however, we expect become leaders and models. everyone to be a success. This is clearly an im- There is one prerequisite for managing the possibility. For a great many people, there is second half of your life: You must begin long at best an absence of failure. Wherever there before you enter it. When it first became clear is success, there has to be failure. And then it 30 years ago that working-life expectancies is vitally important for the individual, and were lengthening very fast, many observers equally for the individual’s family, to have an (including myself) believed that retired peo- area in which he or she can contribute, make ple would increasingly become volunteers for a difference, and be somebody. That means nonprofit institutions. That has not happened. finding a second area—whether in a second If one does not begin to volunteer before one career, a parallel career, or a social venture— is 40 or so, one will not volunteer once past 60. that offers an opportunity for being a leader, Similarly, all the social entrepreneurs I for being respected, for being a success. know began to work in their chosen second en- The challenges of managing oneself may terprise long before they reached their peak in seem obvious, if not elementary. And the an- their original business. Consider the example swers may seem self-evident to the point of ap- of a successful lawyer, the legal counsel to a pearing naïve. But managing oneself requires large corporation, who has started a venture to new and unprecedented things from the indi- establish model schools in his state. He began vidual, and especially from the knowledge to do volunteer legal work for the schools worker. In effect, managing oneself demands when he was around 35. He was elected to the that each knowledge worker think and behave school board at age 40. At age 50, when he had like a chief executive officer. Further, the shift amassed a fortune, he started his own enter- from manual workers who do as they are told

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to knowledge workers who have to manage mobile. The need to manage oneself is there- themselves profoundly challenges social struc- fore creating a revolution in human affairs. ture. Every existing society, even the most indi- vidualistic one, takes two things for granted, if Reprint R0501K only subconsciously: that organizations out- To order, see the next page live workers, and that most people stay put. or call 800-988-0886 or 617-783-7500 But today the opposite is true. Knowledge or go to www.hbr.org workers outlive organizations, and they are

page 28 harvard business review • january 2005

B EST OF HBR 1999 Managing Oneself

Further Reading ARTICLES The Post-Capitalist Executive: An How to Play to Your Strengths Interview with Peter F. Drucker by Laura Morgan Roberts, by T. George Harris Gretchen Spreitzer, Jane Dutton, Harvard Business Review Robert Quinn, Emily Heaphy, and May–June 1993 Brianna Barker Product no. 93302 Harvard Business Review January 2005 Drucker explores the importance of self- Product no. R0501G management in the world of work. Corpora- tions once built to last like the pyramids are Like Drucker, the authors of this article em- now more like tents, he says. Thus individuals phasize the importance of understanding need to take responsibility for their own ca- and leveraging your strengths. They present reers. Instead of assuming a traditional career a feedback tool called the Reflective Best Self trajectory up the corporate ladder, think in (RBS) exercise, which offers a feedback expe- terms of a succession of professional assign- rience distinct from performance reviews ments or projects. (that typically focus on problem areas). RBS enables you to tap into talents you may not In today’s organizations, competence is mea- be aware of and use them to enhance your sured less in terms of subject matter and career potential. more in terms of abilities—for example, em- pathy and stamina under pressure. So it’s up To begin the exercise, solicit comments from to you to help others understand what you’re family, friends, colleagues, and teachers— able to contribute to the overall project. asking for specific examples of times when your unique strengths generated especially Drucker also notes that your role as an exec- important benefits. Next, search for common utive or manager has changed. You no themes among the feedback, organizing longer manage a workforce; you manage in- them in a table to develop a clear picture of dividuals with a variety of skills. Your job, your strong suits. Then write a self-portrait: a then, is to combine these skills in a variety of description of yourself that distills what configurations to create the best results for you’ve learned from your feedback. Finally, your company. redesign your personal job description so you can better shape the positions you choose to play—both now and in the next phase of your career.

To Order

For Harvard Business Review reprints and subscriptions, call 800-988-0886 or 617-783-7500. Go to www.hbr.org

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A CEO must be the steward of a living strategy that defines Putting Leadership what the firm is and what it will become. Back into Strategy

by Cynthia A. Montgomery

Reprint R0801C page 31

A CEO must be the steward of a living strategy that defines what the firm is and what it will become.

Putting Leadership Back into Strategy

by Cynthia A. Montgomery

Strategy is not what it used to be—or what it what in its own right could be a very good could be. In the past 25 years it has been pre- thing. Most notably, strategy has been nar- sented, and we have come to think of it, as rowed to a competitive game plan, divorcing an analytical problem to be solved, a left-brain it from a firm’s larger sense of purpose; the exercise of sorts. This perception, combined CEO’s unique role as arbiter and steward of with strategy’s high stakes, has led to an era strategy has been eclipsed; and the exagger- of specialists—legions of MBAs and strategy ated emphasis on sustainable competitive consultants—armed with frameworks and advantage has drawn attention away from techniques, eager to help managers analyze the fact that strategy must be a dynamic tool their industries or position their firms for for guiding the development of a company strategic advantage. over time. This way of thinking about strategy has To redress these issues, we need to think generated substantial benefits. We now know about strategy in a new way—one that recog- far more than before about the role market nizes the inherently fluid nature of competi- forces play in industry profitability and the tion and the attendant need for continuous, importance of differentiating a firm from its not periodic, leadership. competitors. These gains have come in large part from the infusion of economics into the The Road to Here study of strategy. That merger added much- Fifty years ago strategy was taught as part of needed theory and empirical evidence to the general management curriculum in busi- strategy’s underpinnings, providing consider- ness schools. In the academy as well as in prac- able rigor and substance. But the benefits tice, it was identified as the most important have not come without costs. A host of unin- duty of the chief executive officer—the person tended consequences have developed from with overarching responsibility for setting a OPYRIGHT © 2007 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. OPYRIGHT © 2007 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. C

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Putting Leadership Back into Strategy

company’s course and seeing the journey Watching over strategy day in and day out through. This vital role encompassed both is not only a CEO’s greatest opportunity to formulation and implementation: thinking outwit the competition; it is also his or her and doing combined. greatest opportunity to shape the firm itself. Although strategy had considerable breadth then, it didn’t have much rigor. The ubiquitous Strategy and Being SWOT model taught managers to assess a com- In “How to Evaluate Corporate Strategy,” an pany’s internal strengths and weaknesses and article that appeared in this magazine in the opportunities and threats in its external 1963, the Harvard Business School lecturer environment, but the tools for doing so were Seymour Tilles proposed that of all the ques- pedestrian by any measure. tions a chief executive is required to answer, Advances over the next few decades not one predominates: What kind of company do only refined the tools but spawned a new you want yours to be? He elaborated: industry around strategy. Corporate-planning If you ask young men what they want to departments emerged and introduced formal accomplish by the time they are 40, the systems and standards for strategic analysis. answers you get fall into two distinct catego- Consulting firms added their own frame- ries. There are those—the great majority— works, among them the Boston Consulting who will respond in terms of what they want Group’s influential growth-share matrix to have. This is especially true of graduate and McKinsey’s 7-S framework. Academics students of business administration. There are weighed in, unleashing the power of eco- some men, however, who will answer in nomic analysis on problems of strategy and terms of the kind of men they hope to be. competition. These are the only ones who have a clear idea It has been a heady period, and the strategy of where they are going. tool kit is far richer because of it. That said, The same is true of companies. For far too something has been lost along the way. While many companies, what little thinking goes on gaining depth, strategy has lost breadth and about the future is done primarily in money stature. It has become more about formula- terms. There is nothing wrong with financial tion than implementation, and more about planning. Most companies should do more of getting the idea right at the outset than living it. But there is a basic fallacy in confusing a fi- with a strategy over time. nancial plan with thinking about the kind of The teaching of strategy has both led and company you want yours to become. It is like followed suit. At many top business schools, saying, “When I’m 40, I’m going to be rich.” It general management departments have been leaves too many basic questions unanswered. replaced by strategy groups made up of ex- Rich in what way? Rich doing what? perts who delve into the economics of com- As strategy has striven to become a science, petitive advantage but rarely acknowledge we have allowed this fundamental point to slip the unique role leaders play in the process away. We need to reinstate it. of formulating and implementing strategy. In 1996 Adam Brandenburger and Barry When the head of the strategy group at one Nalebuff got close to this idea in their book major business school was asked recently to Co-opetition, which recognized that in order describe the common denominator among to claim value, firms must first create value. faculty members in his department, he re- This requires bringing something new to the plied, “We are a group of economists with a world, something customers want that is lively interest in business.” An honest man different from or better than what others and a telling comment. are providing. Pulled apart and set on its own in this way, To press their point, Brandenburger and strategy both gains and loses. In terms of Nalebuff urged managers to consider the analytical precision, it is a big plus; organiza- world with their firm versus the world with- tionally, it is not. What we have lost sight of is out it. The difference (if there is one) is the Cynthia A. Montgomery is the that strategy is not just a plan, not just an firm’s unique added value—what would be Timken Professor of Business Adminis- idea; it is a way of life for a company. Strategy lost to the world if the firm disappeared. tration and head of the strategy unit at doesn’t just position a firm in its external Tilles might have described this as the firm’s Harvard Business School in Boston. landscape; it defines what a firm will be. purpose, or its raison d’être. To say that a firm

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should have a clear sense of purpose may dock—and define the nature of the work that sound exceedingly philosophical. It is in fact must be done. In “Unleashing the Power of exceedingly practical. Learning,” a 1997 interview with HBR, John In the strategy portion of the Owner/Presi- Browne, then the CEO of British Petroleum, dent Management executive program at Har- put it this way: “A business has to have a clear vard Business School, the notion of added purpose. If the purpose is not crystal clear, value is core to everything we do. Early in the people in the business will not understand module, executives are asked to respond to what kind of knowledge is critical and what the following questions: they have to learn in order to improve perfor- • If your company were shuttered, to mance.…What do we mean by purpose? Our whom would it matter and why? purpose is who we are and what makes us • Which of your customers would miss you distinctive. It’s what we as a company exist the most and why? to achieve, and what we’re willing and not • How long would it take for another firm willing to do to achieve it.” to step into that void? The most viable statements of purpose are When the questions are presented, class- easy to grasp and true to a company’s distinc- rooms that minutes earlier were bursting tiveness. Pixar, one of the world’s most inno- with conversation fall silent—not because the vative animation firms, says that it exists “to questions are complex but because they are combine proprietary technology and world- so basic and yet so difficult. Managers long class creative talent to develop computer- accustomed to describing their companies by animated feature films with memorable the industries they are in and the products characters and heartwarming stories that they make often find themselves unable to appeal to audiences of all ages.” No films say what is truly distinctive about their for mature audiences only. Lots of pushing firms. For these leaders the challenge is a the envelope. And who wouldn’t recognize matter not of unearthing an existing purpose IKEA’s intent to offer customers “a wide but of forging one. range of well-designed, functional home The questions are as relevant to large multi- furnishing products at prices so low that business companies as they are to focused as many people as possible will be able to owner-led ones. As private equity firms pro- afford them”? Sitting at the hub of the strat- liferate and supply chains open up around the egy wheel, purpose aligns all the functional world, nothing is more important for complex pieces and draws the company into a logi- corporate entities than a clear sense of pur- cally consistent whole. Well understood, it pose, a clear sense of why they matter. A serves as both a constraint on activity and a board chairman at one such firm made the guide to behavior. As Michael Porter has point bluntly when he asked, “What hot dish argued, an effective strategy says not only is this company bringing to the table?” He what a firm will do but also, implicitly, what was issuing the same challenge. it will not do. Sam Palmisano, the CEO of IBM, is well Forging a compelling organizational pur- aware of the importance of this sort of reflec- pose is a close corporate equivalent to soul- tion. In 2003 he hosted a 72-hour online Val- searching. It does require the kind of careful ues Jam in which he asked IBM’s nearly analysis and left-brain thinking that MBAs 320,000 employees to weigh in on these have honed for a generation. Equally impor- questions: If our company disappeared to- tant to the task, however, is the right-brain night, how different would the world be activity in which managers are almost univer- tomorrow? Is there something about our sally less well schooled. Creativity and insight company that makes a unique contribution are key, as is the ability to make judgments to the world? (See “Leading Change When about a host of issues that can’t be resolved Business Is Good,” HBR December 2004.) through analysis alone. In my experience, few leaders allow them- Articulating and tending to a purpose- selves to think about strategy at this level. driven strategy so that it fills this role is Purpose should be at the heart of strategy. no easy task. It is a human endeavor in the It should give direction to every part of the deepest sense of the term. Keeping all the firm—from the corporate office to the loading parts of a company in proper balance while harvard business review • january 2008 page 35

Putting Leadership Back into Strategy

moving the enterprise forward is extraordi- Just as complete contracts are difficult to narily difficult. Even when they have substan- write with one’s trading partners, so too com- tial talent and a deep appreciation for the plete strategies are difficult to specify in all job, some CEOs ultimately don’t get it right. their particulars. There will always be some Their legacies serve as sobering reminders of choices that are not obvious. There will al- the complexities and the responsibilities of ways be countless contingencies, good and stewardship. (Witness BP’s recent travails— bad, that cannot be fully anticipated. There the deficiencies in investments and operating will always be limits to communication and practices that compromised workers’ safety, mutual understanding. As Oscar Wilde threatened the environment, and contrib- quipped, “Only the shallow know them- uted to Browne’s abrupt departure from the selves.” At heart, most strategies, like most company in 2007.) On the other hand, it is people, involve some mystery. exactly these challenges that make the Interpreting that mystery is an abiding triumphs so rewarding. responsibility of the chief strategist, the CEO. Sometimes this entails clarifying a point or Strategy and the Strategist helping an organization translate an idea into In most popular portrayals the strategist’s practice, such as what “best in class” will job would seem to be finished once a carefully mean in that company and how it will be articulated strategy has been made ready for measured. Other times it entails much more: implementation. The idea has been formed, refashioning an element of the strategy, add- the next steps specified, the problem solved. ing a previously missing piece, or reconsider- But don’t be fooled. The job of the strategist ing a commitment that no longer serves the never ends. No matter how compelling a strat- company well. Whether you call this strategy egy is, or how clearly defined, it is unlikely to implementation or strategy reformulation (the be a sufficient guide for a firm that aspires to a boundaries blur), it is arduous work and can’t long and prosperous life. be separated from leadership of the firm. Ryanair provides a case in point. During its early years the Irish airline entered the Dublin–London market with full service priced at less than half the fares of incum- The Missing Dimension bents British Airways and Aer Lingus. Over the past few decades strategy has become a plan that positions a company in Ryanair’s leaders didn’t anticipate the ferocity its external landscape. That’s not enough. Strategy should also guide the develop- with which its competitors would respond. ment of the company—its identity and purpose—over time. When the resulting fare war brought Ryanair to its knees, its leaders didn’t simply urge The Prevailing Approach: What Is Missing: the airline to try harder. They revamped the Strategy as Strategy as a strategy and transformed the company into a a Set Solution Dynamic Process no-frills player with a true low-cost business model. This involved changing the airline’s A long-term sustainable fleet as well as its cost, fare, and route struc- Goal Creation of value competitive advantage tures. “Yes, Aer Lingus attacked us,” Michael O’Leary, Ryanair’s CEO since 1994, has said, CEO as chief strategist; the job The CEO and strategy consultants Leadership “but we exposed ourselves.” Reborn, Ryanair cannot be outsourced went on to become a major airline and one of the world’s most profitable. Unchanging plan that derives from Organic process that is adaptive, Form an analytical, left-brain exercise holistic, and open-ended When confronted with challenges, the CEO must recognize the strategic significance of

Intense period of formulation issues being raised and opportunities being Time followed by prolonged period Everyday, continuous, unending contemplated and see them through the lens Frame of implementation of the whole, even as those with narrower responsibilities may be seeing the same issues Fostering competitive Defending an established Ongoing parochially. While faithfully translating pur- advantages and developing strategy through time Activity pose into practice, the CEO must also remain the company through time open to the idea that the purpose itself may

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need to change. The judgments made at these role of the strategist would be limited and moments of transition can make or break a easy to separate from the leadership of a firm. leader or a firm. If this were so, the strategist wouldn’t have to Lou Gerstner, Palmisano’s legendary prede- be concerned with how the organization gets cessor, faced such a moment when he became from here to there—the execution challenge CEO of a troubled IBM in 1993. To resurrect writ large—or how it will capitalize on the the company, he concluded, a radical shift in learning it accumulates along the way. its mind-set was necessary. This required tak- But this is not so. Great firms—Toyota, ing a fearless moral inventory of the business, Nike, and General Electric, to name a few— realistically evaluating the firm’s core capabili- evolve and change. So do great strategies. ties, and shedding everything else. After mak- This is not to say that continuity has no value. ing this assessment, Gerstner announced that It is not to say that great resources and great IBM would no longer concern itself with the advantages aren’t built over the long term. It invention of technology but instead would is, however, to acknowledge that the world, focus on application. The company would both inside and outside the firm, changes move beyond its long history of creating com- not only in big, discontinuous leaps but in puter hardware in order to provide integrated frequent, smaller ones as well. information technology services and solu- An ancient Greek legend provides a pow- tions. “History,” Gerstner has written, “shows erful metaphor for this process. According to that truly great and successful companies go the legend, the ship that the hero Theseus through constant and sometimes difficult sailed back to Athens after slaying the Mino- self-renewal of the base business.” taur in Crete was rebuilt over time, plank The CEO is the one who chooses a com- by plank. As each plank decayed, it was pany’s identity, who has responsibility for replaced by another, until every plank in the declining certain opportunities and pursuing ship had been changed. Was it then still the others. In this sense he or she serves as the same ship? If not, at what point—with which guardian of organizational purpose, watch- plank—did the ship’s identity shift? ing over the entity, guiding its course, bring- This metaphor captures the evolution of ing it back to the center time and time again, most companies. Corporate identities are even as the center itself evolves.1 This is why changed not only by cataclysmic restructur- the job of the strategist cannot be outsourced. ings and grand pronouncements but also by This is why the job of the strategist is never decision after decision, year after year, cap- done, and why the vigil the CEO keeps must tain after captain. An organic conception of be a constant one. strategy recognizes that whatever constitutes strategic advantage will eventually change. It Strategy and Becoming recognizes the difference between defending What, after all, is the strategist trying to a firm’s added value as established at any achieve? The conventional wisdom would say given moment and ensuring that a firm is a sustainable long-term competitive advan- adding value over time. Holding too strongly tage. I challenge this view. Although critically to one competitive advantage or one purpose important, competitive advantage is not the may result in the firm’s being controlled by a ultimate goal. That way of thinking mistakes perception of value long after that value has the means for the end and sends managers diminished in significance. It encourages man- off on an unachievable quest. agers to see their strategies as set in concrete Competitive advantage is essential to strat- and, when spotting trouble ahead, to go into egy. But it is only part of a bigger story, one defensive mode, hunkering down and protect- frame in a motion picture. The very notion ing the status quo. that there is a strategic holy grail—a strategy Apple Computer was caught in this trap for brilliantly conceived, carefully implemented, most of the 1990s. The company stubbornly and valiantly defended through time—is dan- stuck to its original strategy of producing gerous. It is akin to the complete-contract high-end differentiated personal computers, view, in which all the thinking is done at the convinced that it was adding value even as the beginning and the key job of the strategist is intensely competitive marketplace told it oth- to get that analysis right. If this were so, the erwise. By the summer of 1997 Apple’s share

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Putting Leadership Back into Strategy

price was at a 10-year low, its market share the company. He or she must keep one eye on had plummeted to about 3%, and industry how the company is currently adding value pundits were trumpeting the company’s de- and the other eye on changes, both inside and mise. The strategy had performed so poorly outside the company, that either threaten its that there was little left to defend. Only after position or present some new opportunity for Steve Jobs returned as CEO, reclaimed the adding value. Guiding this never-ending pro- The need to create and best of what Apple once was (a passionate de- cess, bringing perspective to the midst of re-create reasons for a sign company that believed technology could action and purpose to the flow—not solving change the world), and took the firm into the strategy puzzle once—is the crowning company’s continued new businesses (digital audio players, cell responsibility of the CEO. existence sets the phones, and retailing) with distinctive prod- ucts did the company attract a new mass of 1. Kenneth R. Andrews, in The Concept of Corporate Strategy strategist apart from passionately loyal customers and generate (Irwin, 1971), described one of the roles of the CEO as the “architect of organization purpose.” I prefer the term handsome returns. Plank by plank the com- every other individual in “guardian of organizational purpose,” because it encom- pany changed its identity while remaining in passes both formulation and implementation, and because the company. many respects the same. Fittingly, in January it implies a more ongoing responsibility. 2007 it dropped “Computer” from its name and became simply Apple Inc. Reprint R0801C The need to create and re-create reasons To order, see the next page for a company’s continued existence sets the or call 800-988-0886 or 617-783-7500 strategist apart from every other individual in or go to www.hbrreprints.org

page 38 harvard business review • january 2008

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www.hbrreprints.org

Leaders are made, not born, and how they develop is Seven Transformations critical for organizational change. of Leadership

by David Rooke and William R. Torbert

Included with this full-text Harvard Business Review article:

43 Article Summary The Idea in Brief—the core idea The Idea in Practice—putting the idea to work

45 Seven Transformations of Leadership

57 Further Reading A list of related materials, with annotations to guide further exploration of the article’s ideas and applications

Reprint R0504D page 41

Seven Transformations of Leadership

The Idea in Brief The Idea in Practice Every company needs transformational SEVEN TYPES OF ACTION LOGIC leaders—those who spearhead changes that elevate profitability, expand market Type Characteristics Strengths Weaknesses share, and change the rules of the game in their industry. But few executives under- Opportunist Wins any way possible. Good in emergencies and in Few people want to follow stand the unique strengths needed to be- Self-oriented; manipula- pursuing sales. them for the long term. come such a leader. Result? They miss the tive; “might makes right.” opportunity to develop those strengths. Diplomat Avoids conflict. Wants to Supportive glue on teams. Can’t provide painful feed- They and their firms lose out. belong; obeys group norms; back or make the hard deci- doesn’t rock the boat. sions needed to improve How to avoid this scenario? Recognize that performance. great leaders are differentiated not by their personality or philosophy but by their Expert Rules by logic and exper- Good individual contributor. Lacks emotional intelli- action logic—how they interpret their tise. Uses hard data to gain gence; lacks respect for own and others’ behavior and how they consensus and buy-in. those with less expertise. maintain power or protect against threats. Achiever Meets strategic goals. Pro- Well suited to managerial Inhibits thinking outside the motes teamwork; juggles work. box. Some leaders rely on action logics that managerial duties and re- hinder organizational performance. Oppor- sponds to market demands tunists, for example, believe in winning any to achieve goals. way possible, and often exploit others to score personal gains. Few people follow Individualist Operates in unconven- Effective in venture and Irritates colleagues and them for long. Other types prove potent tional ways. Ignores rules consulting roles. bosses by ignoring key or- change agents. In particular, Strategists be- he/she regards as irrelevant. ganizational processes and lieve that every aspect of their organization people. is open to discussion and transformation. Strategist Generates organizational Generates transformations None Their action logic enables them to chal- and personal change. over the short and long lenge perceptions that constrain their orga- Highly collaborative; weaves term. nizations and to overcome resistance to visions with pragmatic, change. They create compelling, shared vi- timely initiatives; challenges sions and lead the pragmatic initiatives existing assumptions. needed to realize those visions. Alchemist Generates social transfor- Leads societywide change. None Though Strategists are rare, you can de- mations (e.g., Nelson Man- velop their defining strengths. How? Diag- dela). Reinvents organiza- nose your current action logic and work to tions in historically upgrade it. The payoff? You help your com- significant ways. pany execute the changes it needs to excel. CHANGING YOUR ACTION LOGIC TYPE To change your action logic type, experiment with new interpersonal behaviors, forge new kinds of relationships, and seize advantage of work opportunities. For example: OPYRIGHT © 2006 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. OPYRIGHT © 2006 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. C

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Seven Transformations of Leadership

The Idea in Practice (continued)

To advance from. . . Take these steps Expert to Achiever Focus more on delivering results than on perfecting your knowledge: •Become aware of differences between your assumptions and those of others. For example, practice new conversational strategies such as “You may be right, but I’d like to understand what leads you to believe that.” •Participate in training programs on topics such as effective delegation and leading high-performing teams Achiever to Individualist Instead of accepting goals as givens to be achieved: •Reflect on the worth of the goals themselves, with the aim of improving future goals •Use annual leadership development planning to thoughtfully set the highest-impact goals Individualist to Strategist Engage in peer-to-peer development: • Establish mutual mentoring with members of your professional network (board members, top managers, industry leaders) who can challenge your assumptions and practices, as well as those of your company and industry. Example: One CEO of a dental hygiene company envisioned introducing af- fordable dental hygiene in developing countries. He explored the idea with colleagues across the country, eventually proposing an ed- ucational and charitable venture that his parent company agreed to fund. He was promoted to a new vice presidency for international ventures within the parent company.

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

Seven Transformations of Leadership

by David Rooke and William R. Torbert

Most developmental psychologists agree that derstand their own action logic can improve what differentiates leaders is not so much their ability to lead. But to do that, it’s impor- their philosophy of leadership, their personal- tant first to understand what kind of leader ity, or their style of management. Rather, it’s you already are. their internal “action logic”—how they inter- pret their surroundings and react when their The Seven Action Logics power or safety is challenged. Relatively few Our research is based on a sentence-completion leaders, however, try to understand their own survey tool called the Leadership Develop- action logic, and fewer still have explored the ment Profile. Using this tool, participants are possibility of changing it. asked to complete 36 sentences that begin They should, because we’ve found that lead- with phrases such as “A good leader…,” to ers who do undertake a voyage of personal un- which responses vary widely: derstanding and development can transform “…cracks the whip.” not only their own capabilities but also those “…realizes that it’s important to achieve of their companies. In our close collabora- good performance from subordinates.” tion with psychologist Susanne Cook-Greu- “…juggles competing forces and takes ter—and our 25 years of extensive survey- responsibility for her decisions.” based consulting at companies such as Deut- By asking participants to complete sen- sche Bank, Harvard Pilgrim Health Care, tences of this type, it’s possible for highly Hewlett-Packard, NSA, Trillium Asset Man- trained evaluators to paint a picture of how agement, Aviva, and Volvo—we’ve worked participants interpret their own actions and with thousands of executives as they’ve tried the world around them; these “pictures” show to develop their leadership skills. The good which one of seven developmental action logics— news is that leaders who make an effort to un- Opportunist, Diplomat, Expert, Achiever, In- OPYRIGHT © 2005 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. OPYRIGHT © 2005 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. C

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Seven Transformations of Leadership

dividualist, Strategist, or Alchemist—currently Ellison (now CEO of Oracle). Ellison describes functions as a leader’s dominant way of think- his managerial style at the start of his career as ing. Leaders can move through these categories “management by ridicule.” “You’ve got to be as their abilities grow, so taking the Leadership good at intellectual intimidation and rhetori- Development Profile again several years later cal bullying,” he once told Matthew Symonds can reveal whether a leader’s action logic of the Economist. “I’d excuse my behavior by has evolved. telling myself I was just having ‘an open and Over the past 25 years, we and other re- honest debate.’ The fact is, I just didn’t know searchers have administered the sentence- any better.” completion survey to thousands of managers Few Opportunists remain managers for long, and professionals, most between the ages of 25 unless they transform to more effective action and 55, at hundreds of American and Euro- logics (as Ellison has done). Their constant fire- pean companies (as well as nonprofits and fighting, their style of self-aggrandizement, and governmental agencies) in diverse industries. their frequent rule breaking is the antithesis of What we found is that the levels of corporate the kind of leader people want to work with and individual performance vary according to for the long term. If you have worked for an action logic. Notably, we found that the three Opportunist, you will almost certainly re- types of leaders associated with below-average member it as a difficult time. By the same to- corporate performance (Opportunists, Diplo- ken, corporate environments that breed oppor- mats, and Experts) accounted for 55% of our tunism seldom endure, although Opportunists sample. They were significantly less effective at often survive longer than they should because implementing organizational strategies than they provide an exciting environment in which the 30% of the sample who measured as younger executives, especially, can take risks. Achievers. Moreover, only the final 15% of As one ex-Enron senior staffer said, “Before the managers in the sample (Individualists, Strate- fall, those were such exciting years. We felt we gists, and Alchemists) showed the consistent could do anything, pull off everything, write capacity to innovate and to successfully trans- our own rules. The pace was wild, and we all form their organizations. just rode it.” Of course, Enron’s shareholders To understand how leaders fall into such dis- and pensioners would reasonably feel that tinct categories and corporate performance, they were paying too heavily for that staffer’s let’s look in more detail at each leadership adventure. style in turn, starting with the least productive (and least complex). The Diplomat The Diplomat makes sense of the world The Opportunist around him in a more benign way than the Our most comforting finding was that only 5% Opportunist does, but this action logic can of the leaders in our sample were character- also have extremely negative repercussions if ized by mistrust, egocentrism, and manipula- the leader is a senior manager. Loyally serving tiveness. We call these leaders Opportunists, a the group, the Diplomat seeks to please title that reflects their tendency to focus on higher-status colleagues while avoiding con- personal wins and see the world and other flict. This action logic is focused on gaining people as opportunities to be exploited. Their control of one’s own behavior—more than on approach to the outside world is largely deter- gaining control of external events or other mined by their perception of control—in people. According to the Diplomat’s action other words, how they will react to an event logic, a leader gains more enduring acceptance David Rooke ([email protected]) is depends primarily on whether or not they and influence by cooperating with group a partner at Harthill Consulting in think they can direct the outcome. They treat norms and by performing his daily roles well. Hewelsfield, England. William R. other people as objects or as competitors who In a support role or a team context, this Torbert ([email protected]) is a profes- are also out for themselves. type of executive has much to offer. Diplo- sor at Boston College’s Carroll School of Opportunists tend to regard their bad be- mats provide social glue to their colleagues Management in Massachusetts. They havior as legitimate in the cut and thrust of an and ensure that attention is paid to the are coauthors of Action Inquiry: The eye-for-an-eye world. They reject feedback, ex- needs of others, which is probably why the Secret of Timely and Transforming ternalize blame, and retaliate harshly. One can great majority of Diplomats work at the most Leadership (Berrett-Koehler, 2004). see this action logic in the early work of Larry junior rungs of management, in jobs such as

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frontline supervisor, customer service repre- managers who grow into more effective sentative, or nurse practitioner. Indeed, research action logics—like that of the Strategist—have a into 497 managers in different industries greater chance of being promoted. showed that 80% of all Diplomats were at Diplomats are much more problematic in junior levels. By contrast, 80% of all Strate- top leadership roles because they try to ignore gists were at senior levels, suggesting that conflict. They tend to be overly polite and

Seven Ways of Leading Different leaders exhibit different kinds of tive for organizational leadership are the dividualist, for example, you can work, action logic—ways in which they interpret Opportunist and Diplomat; the most effec- through both formal and informal mea- their surroundings and react when their tive, the Strategist and Alchemist. Knowing sures, to develop the strengths and power or safety is challenged. In our re- your own action logic can be the first step characteristics of a Strategist. search of thousands of leaders, we observed toward developing a more effective leader- seven types of action logics. The least effec- ship style. If you recognize yourself as an In-

% of research sample at Action Logic Characteristics Strengths this action logic

Opportunist Wins any way possible. Self-oriented; Good in emergencies and manipulative; “might makes right.” in sales opportunities. 5%

Diplomat Avoids overt conflict. Wants to belong; Good as supportive glue obeys group norms; rarely rocks the within an office; helps bring 12% boat. people together.

Expert Rules by logic and expertise. Seeks Good as an individual rational efficiency. contributor. 38%

Achiever Meets strategic goals. Effectively Well suited to managerial achieves goals through teams; juggles roles; action and goal 30% managerial duties and market oriented. demands.

Individualist Interweaves competing personal and Effective in venture and company action logics. Creates unique consulting roles. 10% structures to resolve gaps between strategy and performance.

Strategist Generates organizational and personal Effective as a transforma- transformations. Exercises the power tional leader. 4% of mutual inquiry, vigilance, and vulnerability for both the short and

long term. pyright © 2005 Harvard All rights reserved. Corporation. Business School Publishing Co

Alchemist Generates social transformations. Inte- Good at leading society-wide grates material, spiritual, and societal transformations. 1% transformation.

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friendly and find it virtually impossible to give When subordinates talk about a my-way-or- challenging feedback to others. Initiating the-highway type of boss, they are probably change, with its inevitable conflicts, represents talking about someone operating from an Ex- a grave threat to the Diplomat, and he will pert action logic. Experts tend to view collabo- avoid it if at all possible, even to the point of ration as a waste of time (“Not all meetings are self-destruction. a waste of time—some are canceled!”), and Consider one Diplomat who became the in- they will frequently treat the opinion of people terim CEO of an organization when his prede- less expert than themselves with contempt. cessor died suddenly from an aneurysm. When Emotional intelligence is neither desired nor the board split on the selection of a permanent appreciated. As Sun Microsystems’ CEO Scott successor, it asked the Diplomat to carry on. McNealy put it: “I don’t do feelings; I’ll leave Our Diplomat relished his role as a ceremonial that to Barry Manilow.” figurehead and was a sought-after speaker at It comes as no surprise, then, that after un- public events. Unfortunately, he found the successfully pleading with him to scale back more conflictual requirements of the job less in the face of growing losses during the dot- to his liking. He failed, for instance, to replace com debacle of 2001 and 2002, nearly a dozen a number of senior managers who had serious members of McNealy’s senior management ongoing performance issues and were resist- team left. ing the change program his predecessor had initiated. Because the changes were controver- The Achiever sial, the Diplomat avoided meetings, even For those who hope someday to work for a planning business trips for the times when the manager who both challenges and supports senior team would meet. The team members them and creates a positive team and interde- Initiating change, with were so frustrated by the Diplomat’s attitude partmental atmosphere, the good news is that that they eventually resigned en masse. He “re- a large proportion, 30%, of the managers in its inevitable conflicts, solved” this crisis by thanking the team pub- our research measured as Achievers. While represents a grave threat licly for its contribution and appointing new these leaders create a positive work environ- team members. Eventually, in the face of ment and focus their efforts on deliverables, to the Diplomat, and he mounting losses arising from this poor man- the downside is that their style often inhibits agement, the board decided to demote the thinking outside the box. will avoid it if at all Diplomat to his former role as vice president. Achievers have a more complex and inte- possible, even to the point grated understanding of the world than do The Expert managers who display the three previous ac- of self-destruction. The largest category of leader is that of Ex- tion logics we’ve described. They’re open to perts, who account for 38% of all professionals feedback and realize that many of the ambigu- in our sample. In contrast to Opportunists, ities and conflicts of everyday life are due to who focus on trying to control the world differences in interpretation and ways of relat- around them, and Diplomats, who concen- ing. They know that creatively transforming or trate on controlling their own behavior, Ex- resolving clashes requires sensitivity to rela- perts try to exercise control by perfecting their tionships and the ability to influence others in knowledge, both in their professional and per- positive ways. Achievers can also reliably lead a sonal lives. Exercising watertight thinking is team to implement new strategies over a one- extremely important to Experts. Not surpris- to three-year period, balancing immediate and ingly, many accountants, investment analysts, long-term objectives. One study of ophthal- marketing researchers, software engineers, mologists in private practice showed that those and consultants operate from the Expert ac- who scored as Achievers had lower staff turn- tion logic. Secure in their expertise, they over, delegated more responsibility, and had present hard data and logic in their efforts to practices that earned at least twice the gross gain consensus and buy-in for their proposals. annual revenues of those run by Experts. Experts are great individual contributors Achievers often find themselves clashing because of their pursuit of continuous im- with Experts. The Expert subordinate, in par- provement, efficiency, and perfection. But as ticular, finds the Achiever leader hard to take managers, they can be problematic because because he cannot deny the reality of the they are so completely sure they are right. Achiever’s success even though he feels supe-

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rior. Consider Hewlett-Packard, where the re- larger organization because of her unique, un- search engineers tend to score as Experts and conventional ways of operating. Eventually, the lab managers as higher-level Achievers. At the CEO was called in (not for the first time) to one project meeting, a lab manager—a de- resolve a problem created by her failure to ac- cided Achiever—slammed her coffee cup on knowledge key organizational processes and the table and exclaimed, “I know we can get 18 people who weren’t on her team. features into this, but the customers want de- Many of the dynamics created by different livery some time this century, and the main action logics are illustrated by this story and its eight features will do.” “Philistine!” snorted one outcome. The CEO, whose own action logic engineer, an Expert. But this kind of conflict was that of an Achiever, did not see how he isn’t always destructive. In fact, it provides much could challenge Sharon to develop and move of the fuel that has ignited—and sustained— beyond creating such problems. Although am- the competitiveness of many of the country’s bivalent about her, he decided to retain her most successful corporations. because she was delivering and because the or- ganization had recently lost several capable, if The Individualist unconventional, managers. The Individualist action logic recognizes that So Sharon stayed, but only for a while. Even- neither it nor any of the other action logics are tually, she left the company to set up an off- “natural”; all are constructions of oneself and shoring consultancy. When we examine in the the world. This seemingly abstract idea enables second half of this article how to help execu- the 10% of Individualist leaders to contribute tives transform their leadership action logics, unique practical value to their organizations; we’ll return to this story to see how both they put personalities and ways of relating Sharon and the CEO might have succeeded in into perspective and communicate well with transforming theirs. people who have other action logics. What sets Individualists apart from Achiev- The Strategist ers is their awareness of a possible conflict Strategists account for just 4% of leaders. between their principles and their actions, or What sets them apart from Individualists is between the organization’s values and its im- their focus on organizational constraints and plementation of those values. This conflict be- perceptions, which they treat as discussable comes the source of tension, creativity, and a and transformable. Whereas the Individualist growing desire for further development. masters communication with colleagues who Individualists also tend to ignore rules they have different action logics, the Strategist mas- regard as irrelevant, which often makes them ters the second-order organizational impact of a source of irritation to both colleagues and actions and agreements. The Strategist is also bosses. “So, what do you think?” one of our adept at creating shared visions across differ- clients asked us as he was debating whether ent action logics—visions that encourage both to let go of one of his star performers, a personal and organizational transformations. woman who had been measured as an Indi- According to the Strategist’s action logic, orga- vidualist. Sharon (not her real name) had nizational and social change is an iterative de- been asked to set up an offshore shared ser- velopmental process that requires awareness vice function in the Czech Republic in order and close leadership attention. to provide IT support to two separate and in- Strategists deal with conflict more comfort- ternally competitive divisions operating there. ably than do those with other action logics, She formed a highly cohesive team within and they’re better at handling people’s instinc- budget and so far ahead of schedule that she tive resistance to change. As a result, Strate- quipped that she was “delivering services be- gists are highly effective change agents. We fore Group Business Risk had delivered its found confirmation of this in our recent study report saying it can’t be done.” of ten CEOs in six different industries. All of The trouble was that Sharon had a reputa- their organizations had the stated objective of tion within the wider organization as a wild transforming themselves and had engaged con- card. Although she showed great political sultants to help with the process. Each CEO savvy when it came to her individual projects, filled out a Leadership Development Profile, she put many people’s noses out of joint in the which showed that five of them were Strate-

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gists and the other five fell into other action even reinvent themselves and their organiza- logics. The Strategists succeeded in generating tions in historically significant ways. Whereas one or more organizational transformations the Strategist will move from one engagement over a four-year period; their companies’ prof- to another, the Alchemist has an extraordi- itability, market share, and reputation all nary capacity to deal simultaneously with improved. By contrast, only two of the other many situations at multiple levels. The Alche- five CEOs succeeded in transforming their mist can talk with both kings and commoners. organizations—despite help from consultants, He can deal with immediate priorities yet who themselves profiled as Strategists. never lose sight of long-term goals. Strategists are fascinated with three distinct Alchemists constitute 1% of our sample, levels of social interplay: personal relation- which indicates how rare it is to find them in ships, organizational relations, and national business or anywhere else. Through an exten- and international developments. Consider sive search process, we found six Alchemists Joan Bavaria, a CEO who, back in 1985, mea- who were willing to participate in an up-close sured as a Strategist. Bavaria created one of the study of their daily actions. Though this is obvi- first socially responsible investment funds, a ously a very small number that cannot statisti- new subdivision of the investments industry, cally justify generalization, it’s worth noting which by the end of 2001 managed more than that all six Alchemists shared certain character- $3 trillion in funds. In 1982, Bavaria founded istics. On a daily basis, all were engaged in mul- Trillium Asset Management, a worker-owned tiple organizations and found time to deal with company, which she still heads. She also issues raised by each. However, they were not cowrote the CERES Environmental Principles, in a constant rush—nor did they devote hours which dozens of major companies have signed. on end to a single activity. Alchemists are typi- What sets Alchemists In the late 1990s, CERES, working with the cally charismatic and extremely aware individ- United Nations, created the Global Reporting uals who live by high moral standards. They apart from Strategists is Initiative, which supports financial, social, focus intensely on the truth. Perhaps most im- their ability to renew or and environmental transparency and account- portant, they’re able to catch unique moments ability worldwide. in the history of their organizations, creating even reinvent themselves Here we see the Strategist action logic at symbols and metaphors that speak to people’s work. Bavaria saw a unique moment in which hearts and minds. In one conservative financial and their organizations to make ethical investing a viable business, then services company in the UK, a recently ap- in historically significant established Trillium to execute her plan. Strate- pointed CEO turned up for work in a tracksuit gists typically have socially conscious business instead of his usual pinstripes but said nothing ways. ideas that are carried out in a highly collabora- about it to anyone. People wondered whether tive manner. They seek to weave together ideal- this was a new dress code. Weeks later, the ist visions with pragmatic, timely initiatives and CEO spoke publicly about his attire and the principled actions. Bavaria worked beyond the need to be unconventional and to move with boundaries of her own organization to influ- greater agility and speed. ence the socially responsible investment indus- A more celebrated example of an Alchemist try as a whole and later made the development is Nelson Mandela. Although we never for- of social and environmental accountability stan- mally profiled Mandela, he exemplifies the Al- dards an international endeavor by involving chemist action logic. In 1995, Mandela symbol- the United Nations. Many Achievers will use ized the unity of a new South Africa when he their influence to successfully promote their attended the Rugby World Cup game in which own companies. The Strategist works to create the Springboks, the South African national ethical principles and practices beyond the in- team, were playing. Rugby had been the bastion terests of herself or her organization. of white supremacy, but Mandela attended the game. He walked on to the pitch wearing the The Alchemist Springboks’ jersey so hated by black South Af- The final leadership action logic for which we ricans, at the same time giving the clenched have data and experience is the Alchemist. Our fist salute of the ANC, thereby appealing, al- studies of the few leaders we have identified as most impossibly, both to black and white Alchemists suggest that what sets them apart South Africans. As Tokyo Sexwale, ANC activ- from Strategists is their ability to renew or ist and premier of South Africa’s Gauteng prov-

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ince, said of him: “Only Mandela could wear began profiling as a Strategist. This was a an enemy jersey. Only Mandela would go highly unusual movement of three action log- down there and be associated with the Spring- ics in such a short time. We have had only two boks… All the years in the underground, in the other instances in which a leader has trans- trenches, denial, self-denial, away from home, formed twice in less than four years. prison, it was worth it. That’s all we wanted to As Jenny’s case illustrates, there are a num- see.” ber of personal changes that can support lead- ership transformation. Jenny experienced loss Evolving as a Leader of faith in the system and feelings of boredom, The most remarkable—and encouraging— irritability, burnout, depression, and even an- finding from our research is that leaders can ger. She began to ask herself existential ques- transform from one action logic to another. tions. But another indication of a leader’s We have, in fact, documented a number of readiness to transform is an increasing attrac- leaders who have succeeded in transforming tion to the qualities she begins to intuit in peo- themselves from Experts into Achievers, from ple with more effective action logics. Jenny, as Achievers into Individualists, and from Indi- we saw, was drawn to and benefited hugely vidualists into Strategists. from her Strategist peer group as well as from Take the case of Jenny, one of our clients, a mentor who exhibited the Alchemist action who initially measured as an Expert. She be- logic. This search for new perspectives often came disillusioned with her role in her com- manifests itself in personal transformations: pany’s PR department and resigned in order The ready-to-transform leader starts develop- to, as she said, “sort out what I really want to ing new relationships. She may also explore do.” Six months later, she joined a different new forms of spiritual practice or new forms of company in a similar role, and two years after centering and self-expression, such as playing a that we profiled her again and she still mea- musical instrument or doing tai chi. sured as an Expert. Her decision to resign from External events can also trigger and support the first company, take a “sabbatical,” and then transformation. A promotion, for example, join the second company had made no differ- may give a leader the opportunity to expand ence to her action logic. At that point, Jenny his or her range of capabilities. Earlier, we cited chose to join a group of peer leaders commit- the frustration of Expert research engineers at ted to examining their current leadership pat- Hewlett-Packard with the product and delivery terns and to experimenting with new ways of attitude of Achiever lab managers. Within a acting. This group favored the Strategist per- year of one engineer’s promotion to lab man- spective (and the founder of the group was ager, a role that required coordination of oth- profiled as an Alchemist), which in the end ers and cooperation across departments, the helped Jenny’s development. She learned that former Expert was profiling as an Achiever. Al- her habit of consistently taking a critical posi- though he initially took some heat (“Sellout!”) tion, which she considered “usefully objective,” from his former buddies, his new Achiever isolated her and generated distrust. As a result awareness meant that he was more focused on of the peer group’s feedback, she started a se- customers’ needs and clearer about delivery ries of small and private experiments, such as schedules. For the first time, he understood the asking questions rather than criticizing. She re- dance between engineers trying to perfect the alized that instead of seeing the faults in oth- technology and managers trying to deliver on ers, she had to be clear about what she could budget and on schedule. contribute and, in doing so, started the move Changes to a manager’s work practices and from an Expert to an Achiever. Spiritually, environment can also facilitate transformation. Jenny learned that she needed an ongoing At one company we studied, leaders changed community of inquiry at the center of her life from Achievers to Individualists partly because and found a spiritual home for continuing re- of simple organizational and process changes. flection in Quaker meetings, which later sup- At the company’s senior manager meetings, ported (and indeed signaled) her transition for example, executives other than the CEO from an Achiever to an Individualist. had the chance to lead the meetings; these op- Two years later, Jenny left the second job to portunities, which were supported by new start her own company, at which point she spirit of openness, feedback, and frank debate, harvard business review • april 2005 page 51

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fostered professional growth among many of but I’d like to understand what leads you to the company’s leaders. believe that.” In addition, those wishing to Planned and structured development inter- push Experts to the next level should consider ventions are another means of supporting rewarding Achiever competencies like timely leadership transformation. We worked with a delivery of results, the ability to manage for leading oil and gas exploration company on de- performance, and the ability to implement veloping the already high-level capabilities of a strategic priorities. pool of future senior managers; the managers Within business education, MBA programs were profiled and then interviewed by two are apt to encourage the development of the consultants who explored each manager’s ac- more pragmatic Achievers by frustrating the tion logic and how it constrained and enabled perfectionist Experts. The heavy workloads, him or her to perform current and recent roles. use of multidisciplinary and ambiguous case Challenges were discussed as well as a view studies, and teamwork requirements all pro- of the individual’s potential and a possible de- mote the development of Achievers. By con- velopmental plan. After the exercise, several trast, MSc programs, in particular disciplines managers, whose Individualist and Strategist such as finance or marketing research, tend to capabilities had not been fully understood by reinforce the Expert perspective. the company, were appreciated and engaged Still, the transition from Expert to Achiever differently in their roles. What’s more, the or- remains one of the most painful bottlenecks in ganization’s own definition of leadership talent most organizations. We’ve all heard the eternal was reframed to include the capabilities of the lament of engineers, lawyers, and other profes- Individualist and Strategist action logics. This sionals whose Expert success has saddled them in turn demanded that the company radically with managerial duties, only to estrange them revisit its competency framework to incorpo- from the work they love. Their challenge be- rate such expectations as “sees issues from mul- comes working as highly effective Achievers tiple perspectives” and “creates deep change who can continue to use their in-depth exper- without formal power.” tise to succeed as leaders and managers. Now that we’ve looked generally at some of the changes and interventions that can sup- From Achiever to Individualist port leadership development, let’s turn to Although organizations and business schools some specifics about how the most common have been relatively successful in developing transformations are apt to take place. leaders to the Achiever action logic, they have, with few exceptions, a dismal record in recog- From Expert to Achiever nizing, supporting, and actively developing This transformation is the most commonly ob- leaders to the Individualist and Strategist action served and practiced among businesspeople logics, let alone to the Alchemist logic. This is and by those in management and executive not surprising. In many organizations, the education. For the past generation or more, Achiever, with his drive and focus on the end- the training departments of large companies game, is seen as the finish line for develop- have been supporting the development of ment: “This is a competitive industry—we need managers from Experts into Achievers by run- to keep a sharp focus on the bottom line.” ning programs with titles like “Management The development of leaders beyond the by Objectives,” “Effective Delegation,” and Achiever action logic requires a very different “Managing People for Results.” These programs tack from that necessary to bring about the typically emphasize getting results through Expert-to-Achiever transformation. Interven- flexible strategies rather than through one tions must encourage self-awareness on the right method used in one right way. part of the evolving leader as well as a greater Observant leaders and executive coaches awareness of other worldviews. In both busi- can also formulate well-structured exercises ness and personal relationships, speaking and and questions related to everyday work to help listening must come to be experienced not as Experts become aware of the different assump- necessary, taken-for-granted ways of communi- tions they and others may be making. These cating predetermined ideas but as intrinsically efforts can help Experts practice new conver- forward-thinking, creative actions. Achievers sational strategies such as, “You may be right, use inquiry to determine whether they (and

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the teams and organization to which they be- point is not so much to teach the CEO a new long) are accomplishing their goals and how conversational repertoire but to make him they might accomplish them more effectively. more comfortable with how the Individualist The developing Individualist, however, begins sees and makes sense of the world around her to inquire about and reflect on the goals and what feedback may motivate her to com- themselves—with the aim of improving future mit to further learning. Such specific experi- goals. Annual development plans that set new ments with new ways of listening and talking goals, are generated through probing and can gradually dissolve the fears associated with trusting conversation, are actively supported transformational learning. through executive coaching, and are carefully reviewed at the end of the cycle can be critical To Strategist and Beyond enablers at this point. Yet few boards and CEOs Leaders who are moving toward the Strate- appreciate how valuable this time investment gist and Alchemist action logics are no longer can be, and it is all too easily sacrificed in the primarily seeking personal skills that will face of short-term objectives, which can seem make them more effective within existing or- more pressing to leaders whose action logics ganizational systems. They will already have are less developed. mastered many of those skills. Rather, they Let’s go back to the case of Sharon, the Indi- are exploring the disciplines and commit- vidualist we described earlier whose Achiever ments entailed in creating projects, teams, CEO wasn’t able to manage her. How might a networks, strategic alliances, and whole orga- coach or consultant have helped the CEO feel nizations on the basis of collaborative in- less threatened by Sharon and more capable of quiry. It is this ongoing practice of reframing supporting her development while also being inquiry that makes them and their corpora- more open to his own needs and potential? tions so successful. One way would have been to try role-playing, The path toward the Strategist and Alchemist asking the CEO to play Sharon while the coach action logics is qualitatively different from other or consultant enacts the CEO role. The role- leadership development processes. For a start, playing might have gone as follows: emergent Strategists and Alchemists are no “Sharon, I want to talk with you about your longer seeking mentors to help them sharpen future here at our company. Your completion existing skills and to guide them toward influen- of the Czech project under budget and ahead tial networks (although they may seek spiritual of time is one more sign that you have the ini- and ethical guidance from mentors). Instead, tiative, creativity, and determination to make they are seeking to engage in mutual mentoring the senior team here. At the same time, I’ve with peers who are already part of their net- had to pick up a number of pieces after you works (such as board members, top managers, that I shouldn’t have had to. I’d like to brain- or leaders within a scientific discipline). The ob- storm together about how you can approach jective of this senior-peer mentoring is not, in future projects in a way that eliminates this conventional terms, to increase the chances of hassle and gets key players on your side. Then, success but to create a sustainable community we can chat several times over the next year as of people who can challenge the emergent you begin to apply whatever new principles we leader’s assumptions and practices and those of come up with. Does this seem like a good use his company, industry, or other area of activity. of our time, or do you have a different perspec- We witnessed just this kind of peer-to-peer tive on the issue?” development when one senior client became Note that the consultant in the CEO’s role concerned that he, his company, and the indus- offers clear praise, a clear description of a limi- try as a whole were operating at the Achiever tation, a proposed path forward, and an in- level. This concern, of course, was itself a sign quiry that empowers the CEO (playing Sharon) of his readiness to transform beyond that logic. to reframe the dilemma if he wishes. Thus, in- This executive—the CEO of a dental hygiene stead of giving the CEO one-way advice about company—and his company were among the what he should do, the coach enacts a dialogic most successful of the parent company’s sub- scenario with him, illustrating a new kind of sidiaries. However, realizing that he and those practice and letting the CEO judge whether around him had been keeping their heads the enacted relationship is a positive one. The down, he chose to initiate a research project— harvard business review • april 2005 page 53

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on introducing affordable dental hygiene in part of both individuals and the organization. developing countries—that was decidedly out A leadership team at one of the companies of the box for him and for the corporation. we worked with decided to invite managers The CEO’s timing was right for such an ini- from across departments to participate in tiative, and he used the opportunity to en- time-to-market new product teams. Seen as a gage in collaborative inquiry with colleagues risky distraction, few managers volunteered, across the country. Eventually, he proposed except for some Individualists and budding an educational and charitable venture, which Strategists. However, senior management the parent company funded. The executive provided sufficient support and feedback to was promoted to a new vice presidency for ensure the teams’ early success. Soon, the international ventures within the parent first participants were promoted and leading company—a role he exercised with an in- their own cross-departmental teams. The creased sense of collaboration and a greater Achievers in the organization, seeing that feeling of social responsibility for his com- others were being promoted, started volun- pany in emerging markets. teering for these teams. Gradually, more Formal education and development processes people within the organization were experi- can also guide individuals toward a Strategist ac- encing shared leadership, mutual testing of tion logic. Programs in which participants act as one another’s assumptions and practices, and leaders and challenge their conventional as- individual challenges that contributed to sumptions about leading and organizing are their development as leaders. very effective. Such programs will be either Sadly, few companies use teams in this way. long term (one or two years) or repeated, in- Most senior manager teams operate at the tense experiences that nurture the moment-to- Achiever action logic—they prefer unambiguous moment awareness of participants, always targets and deadlines, and working with clear providing the shock of dissonance that stimu- strategies, tactics, and plans, often against tight lates them to reexamine their worldviews. Path- deadlines. They thrive in a climate of adversity breaking programs of this type can be found (“When the going gets tough, the tough get go- at a few universities and consultancies around ing”) and derive great pleasure from pulling to- the globe. Bath University in the UK, for in- gether and delivering. Typically, the team’s lead- stance, sponsors a two-year master’s degree in ers and several other members will be Achievers, responsibility and business practice in which with several Experts and perhaps one or two Indi- students work together during six one-week get- vidualists or Strategists (who typically feel ig- togethers. These programs involve small- nored). Such Achiever teams are often impatient learning teams, autobiographical writing, psy- at slowing down to reflect, are apt to dismiss chodrama, deep experiences in nature, and a questions about goals and assumptions as “end- yearlong business project that involves action less philosophizing,” and typically respond with and reflection. Interestingly, many people hostile humor to creative exercises, calling them who attend these programs report that these “off-the-wall” diversions. These behaviors will ul- experiences have had the transformative power timately limit an Achiever team’s success. of a life-altering event, such as a career or exis- The situation is worse at large, mature com- tential crisis or a new marriage. panies where senior management teams op- erate as Experts. Here, vice presidents see Leadership Teams and Leadership themselves as chiefs and their “teams” as an in- Cultures Within Organizations formation-reporting formality. Team life is be- So far, our discussion has focused on the lead- reft of shared problem-solving, decision-mak- ership styles of individuals. But we have found ing, or strategy-formulating efforts. Senior that our categories of leadership styles can be teams limited by the Diplomat action logic are used to describe teams and organizations as even less functional. They are characterized by well. Here we will talk briefly about the action strong status differences, undiscussable norms, logics of teams. and ritual “court” ceremonies that are carefully Over the long term, the most effective stage-managed. teams are those with a Strategist culture, in Individualist teams, which are more likely which the group sees business challenges as to be found in creative, consulting, and non- opportunities for growth and learning on the profit organizations, are relatively rare and

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very different from Achiever, Expert, and slightly more than two years, the team became Diplomat teams. In contrast to Achiever teams, an Individualist group with emergent Strate- they may be strongly reflective; in fact, exces- gist capabilities. The CEO, who had profiled at sive time may be spent reviewing goals, as- Achiever/Individualist, now profiled as a Strat- sumptions, and work practices. Because indi- egist, and most other team members showed vidual concerns and input are very one developmental move forward. The impact important to these teams, rapid decision of this was also felt in the team’s and organiza- making may be difficult. tion’s ethos: Once functionally divided, the But like individual people, teams can team learned to accept and integrate the di- change their style. For instance, we’ve seen verse opinions of its members. Employee sur- Strategist CEOs help Individualist senior veys reported increased engagement across the teams balance action and inquiry and so company. Outsiders began seeing the company transform into Strategist teams. Another ex- as ahead of the curve, which meant the organi- ample is an Achiever senior team in a finan- zation was better able to attract top talent. In cial services company we worked with that the third year, bottom- and top-line results was emerging from two years of harsh cost were well ahead of industry competitors. cutting during a market downturn. To adapt • • • to a changing and growing financial services The leader’s voyage of development is not an market, the company needed to become sig- easy one. Some people change little in their nificantly more visionary and innovative and lifetimes; some change substantially. Despite learn how to engage its workforce. To lead the undeniably crucial role of genetics, this transformation, the team had to start human nature is not fixed. Those who are with itself. We worked with it to help team willing to work at developing themselves and members understand the constraints of the becoming more self-aware can almost cer- Achiever orientation, which required a num- tainly evolve over time into truly transforma- ber of interventions over time. We began by tional leaders. Few may become Alchemists, working to improve the way the team dis- but many will have the desire and potential cussed issues and by coaching individual to become Individualists and Strategists. Cor- members, including the CEO. As the team porations that help their executives and lead- evolved, it became apparent that its composi- ership teams examine their action logics can tion needed to change: Two senior executives, reap rich rewards. who had initially seemed ideally suited to the group because of their achievements, had to Reprint R0504D be replaced when it became clear that they To order, see the next page were unwilling to engage and experiment or call 800-988-0886 or 617-783-7500 with the new approach. or go to www.hbrreprints.org During this reorientation, which lasted

harvard business review • april 2005 page 55

Seven Transformations of Leadership

Further Reading ARTICLES Moments of Greatness: Entering the What Makes a Leader? Fundamental State of Leadership by Daniel Goleman by Robert E. Quinn Harvard Business Review Harvard Business Review February 2000 July 2005 Product no. R0401H Product no. R0507K Upgrading your action logic—whether it’s Changing your action logic requires a signifi- from Expert to Achiever, from Achiever to Indi- cant shift in your thinking processes. In this vidualist, or from Individualist to Strategist or article, Quinn describes another strategy for Alchemist—requires emotional intelligence, changing your thinking process in order to a powerful blend of self-management and re- strengthen your leadership skills. This strategy lational skills. Goleman defines the five com- entails asking yourself a series of questions to ponents of emotional intelligence. Self- generate insights into the changes you must management skills include self-awareness make to become a more effective leader. The (knowledge of your weaknesses and willing- questions: 1) “Am I results-centered?” Have ness to discuss them), self-regulation (the abil- you articulated the results you want to ity to control your impulses and channel them achieve? 2) “Am I internally directed?” Are for good), and motivation (a passion for you willing to challenge others’ expectations achievement for its own sake). Relational in order to act consistently with your own skills include empathy (the capacity to take values? 3) “Am I other-focused?” Have you others’ feelings into account while making de- put your organization’s needs above your cisions) and social skill (the ability to build rap- own? 4) “Am I externally open?” Do you port with others, win their cooperation, and recognize signals suggesting the need for move them in the direction you desire). To personal change? boost your emotional intelligence, commit to making the changes necessary to becom- ing an effective leader, ask colleagues for feedback on your leadership, and practice the five skills.

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Wise executives tailor their approach to fit the complexity A Leader’s Framework of the circumstances they face. for Decision Making

by David J. Snowden and Mary E. Boone

Reprint R0711C page 59

Wise executives tailor their approach to fit the complexity of the circumstances they face.

A Leader’s Framework for Decision Making

by David J. Snowden and Mary E. Boone

In January 1993, a gunman murdered seven in others. Why do these approaches fail even people in a fast-food restaurant in Palatine, a when logic indicates they should prevail? suburb of Chicago. In his dual roles as an ad- The answer lies in a fundamental assumption ministrative executive and spokesperson for of organizational theory and practice: that a the police department, Deputy Chief Walter certain level of predictability and order ex- Gasior suddenly had to cope with several ists in the world. This assumption, grounded different situations at once. He had to deal in the Newtonian science that underlies scien- with the grieving families and a frightened tific management, encourages simplifications community, help direct the operations of an that are useful in ordered circumstances. extremely busy police department, and take Circumstances change, however, and as they questions from the media, which inundated become more complex, the simplifications the town with reporters and film crews. can fail. Good leadership is not a one-size- “There would literally be four people coming fits-all proposition. at me with logistics and media issues all at We believe the time has come to broaden once,” he recalls. “And in the midst of all this, the traditional approach to leadership and we still had a department that had to keep decision making and form a new perspective running on a routine basis.” based on complexity science. (For more on Though Gasior was ultimately successful in this, see the sidebar “Understanding Complex- juggling multiple demands, not all leaders ity.”) Over the past ten years, we have applied achieve the desired results when they face the principles of that science to governments situations that require a variety of decisions and a broad range of industries. Working with and responses. All too often, managers rely other contributors, we developed the Cynefin on common leadership approaches that work framework, which allows executives to see well in one set of circumstances but fall short things from new viewpoints, assimilate complex OPYRIGHT © 2007 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. OPYRIGHT © 2007 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. C

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concepts, and address real-world problems are easily discernible by everyone. Often, the and opportunities. (Cynefin, pronounced right answer is self-evident and undisputed. In ku-nev-in, is a Welsh word that signifies the this realm of “known knowns,” decisions are multiple factors in our environment and our unquestioned because all parties share an un- experience that influence us in ways we can derstanding. Areas that are little subject to never understand.) Using this approach, change, such as problems with order process- leaders learn to define the framework with ing and fulfillment, usually belong here. examples from their own organization’s his- Simple contexts, properly assessed, require tory and scenarios of its possible future. This straightforward management and monitoring. enhances communication and helps execu- Here, leaders sense, categorize, and respond. tives rapidly understand the context in which That is, they assess the facts of the situation, they are operating. categorize them, and then base their response The U.S. Defense Advanced Research on established practice. Heavily process- Projects Agency has applied the framework oriented situations, such as loan payment to counterterrorism, and it is currently a key processing, are often simple contexts. If some- component of Singapore’s Risk Assessment thing goes awry, an employee can usually and Horizon Scanning program. Over time, identify the problem (when, say, a borrower the framework has evolved through hun- pays less than is required), categorize it dreds of applications, from helping a pharma- (review the loan documents to see how partial ceutical company develop a new product payments must be processed), and respond strategy to assisting a Canadian provincial appropriately (either not accept the payment government in its efforts to engage employees or apply the funds according to the terms in policy making. of the note). Since both managers and employ- The framework sorts the issues facing ees have access to the information necessary leaders into five contexts defined by the nature for dealing with the situation in this domain, of the relationship between cause and effect. a command-and-control style for setting Four of these—simple, complicated, com- parameters works best. Directives are straight- plex, and chaotic—require leaders to diagnose forward, decisions can be easily delegated, situations and to act in contextually appropri- and functions are automated. Adhering to ate ways. The fifth—disorder—applies when best practices or process reengineering makes it is unclear which of the other four contexts sense. Exhaustive communication among is predominant. managers and employees is not usually re- Using the Cynefin framework can help ex- quired because disagreement about what ecutives sense which context they are in so needs to be done is rare. that they can not only make better decisions Nevertheless, problems can arise in simple but also avoid the problems that arise when contexts. First, issues may be incorrectly clas- their preferred management style causes sified within this domain because they have them to make mistakes. In this article, we been oversimplified. Leaders who constantly focus on the first four contexts, offering exam- ask for condensed information, regardless of ples and suggestions about how to lead and the complexity of the situation, particularly make appropriate decisions in each of them. run this risk. Since the complex domain is much more Second, leaders are susceptible to entrained prevalent in the business world than most thinking, a conditioned response that occurs David J. Snowden (snowded@mac leaders realize—and requires different, often when people are blinded to new ways of think- .com) is the founder and chief scientific counterintuitive, responses—we concentrate ing by the perspectives they acquired through officer of Cognitive Edge, an interna- particularly on that context. Leaders who past experience, training, and success. tional research network. He is based understand that the world is often irrational Third, when things appear to be going primarily in Lockeridge, England. and unpredictable will find the Cynefin smoothly, leaders often become complacent. Mary E. Boone (mary@maryboone framework particularly useful. If the context changes at that point, a leader .com) is the president of Boone Associ- is likely to miss what is happening and react ates, a consulting firm in Essex, Con- Simple Contexts: The Domain of too late. In the exhibit “The Cynefin Frame- necticut, and the author of numerous Best Practice work,” the simple domain lies adjacent to books and articles, including Managing Simple contexts are characterized by stability the chaotic—and for good reason. The most Interactively (McGraw-Hill, 2001). and clear cause-and-effect relationships that frequent collapses into chaos occur because

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success has bred complacency. This shift can longer leads to foresight after a shift in con- bring about catastrophic failure—think of text, a corresponding change in management the many previously dominant technolo- style may be called for. gies that were suddenly disrupted by more dynamic alternatives. Complicated Contexts: The Domain Leaders need to avoid micromanaging and of Experts stay connected to what is happening in order Complicated contexts, unlike simple ones, to spot a change in context. By and large, may contain multiple right answers, and line workers in a simple situation are more though there is a clear relationship between than capable of independently handling cause and effect, not everyone can see it. This any issues that may arise. Indeed, those is the realm of “known unknowns.” While with years of experience also have deep insight leaders in a simple context must sense, catego- into how the work should be done. Leaders rize, and respond to a situation, those in a should create a communication channel—an complicated context must sense, analyze, and anonymous one, if necessary—that allows respond. This approach is not easy and often dissenters to provide early warnings about requires expertise: A motorist may know that complacency. something is wrong with his car because the Finally, it’s important to remember that engine is knocking, but he has to take it to a best practice is, by definition, past practice. mechanic to diagnose the problem. Using best practices is common, and often Because the complicated context calls for appropriate, in simple contexts. Difficulties investigating several options—many of which arise, however, if staff members are discour- may be excellent—good practice, as opposed to aged from bucking the process even when best practice, is more appropriate. For exam- it’s not working anymore. Since hindsight no ple, the customary approach to engineering a

Understanding Complexity Complexity is more a way of thinking about frequently referred to as emergence. isolation. More recently, some thinkers and the world than a new way of working with • The system has a history, and the past practitioners have started to argue that mathematical models. Over a century ago, is integrated with the present; the ele- human complex systems are very different Frederick Winslow Taylor, the father of scien- ments evolve with one another and from those in nature and cannot be modeled tific management, revolutionized leadership. with the environment; and evolution in the same ways because of human unpre- Today, advances in complexity science, com- is irreversible. dictability and intellect. Consider the follow- bined with knowledge from the cognitive • Though a complex system may, in retro- ing ways in which humans are distinct from sciences, are transforming the field once spect, appear to be ordered and predict- other animals: again. Complexity is poised to help current able, hindsight does not lead to foresight • They have multiple identities and can and future leaders make sense of advanced because the external conditions and fluidly switch between them without technology, globalization, intricate markets, systems constantly change. conscious thought. (For example, a per- cultural change, and much more. In short, • Unlike in ordered systems (where the son can be a respected member of the the science of complexity can help all of us system constrains the agents), or chaotic community as well as a terrorist.) address the challenges and opportunities we systems (where there are no constraints), • They make decisions based on past face in a new epoch of human history. in a complex system the agents and the patterns of success and failure, rather A complex system has the following char- system constrain one another, especially than on logical, definable rules. acteristics: over time. This means that we cannot • They can, in certain circumstances, pur- • It involves large numbers of interacting forecast or predict what will happen. posefully change the systems in which elements. One of the early theories of complexity is they operate to equilibrium states (think • The interactions are nonlinear, and that complex phenomena arise from simple of a Six Sigma project) in order to create minor changes can produce dispropor- rules. Consider the rules for the flocking predictable outcomes. tionately major consequences. behavior of birds: Fly to the center of the Leaders who want to apply the principles • The system is dynamic, the whole is flock, match speed, and avoid collision. This of complexity science to their organizations greater than the sum of its parts, and simple-rule theory was applied to industrial will need to think and act differently than solutions can’t be imposed; rather, they modeling and production early on, and it they have in the past. This may not be easy, arise from the circumstances. This is promised much; but it did not deliver in but it is essential in complex contexts. harvard business review • november 2007 page 63

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new cell phone might emphasize feature A over their knowledge, and they are unlikely to feature B, but an alternative plan—emphasizing tolerate controversial ideas. If the context feature C—might be equally valuable. has shifted, however, the leader may need Another example is the search for oil or access to those maverick concepts. To get mineral deposits. The effort usually requires a around this issue, a leader must listen to the team of experts, more than one place will po- experts while simultaneously welcoming tentially produce results, and the location of novel thoughts and solutions from others. the right spots for drilling or mining involves Executives at one shoe manufacturer did complicated analysis and understanding of this by opening up the brainstorming pro- consequences at multiple levels. cess for new shoe styles to the entire com- Entrained thinking is a danger in compli- pany. As a result, a security guard submitted cated contexts, too, but it is the experts a design for a shoe that became one of their (rather than the leaders) who are prone to best sellers. it, and they tend to dominate the domain. Another potential obstacle is “analysis When this problem occurs, innovative sugges- paralysis,” where a group of experts hits a tions by nonexperts may be overlooked or stalemate, unable to agree on any answers dismissed, resulting in lost opportunities. The because of each individual’s entrained experts have, after all, invested in building thinking—or ego. Working in unfamiliar environments can help leaders and experts approach decision making more creatively. For instance, we put The Cynefin Framework retail marketing professionals in several mili- tary research environments for two weeks. The Cynefin framework helps leaders world of fact-based management; the The settings were unfamiliar and challenging, determine the prevailing operative context unordered world represents pattern- but they shared a primary similarity with the so that they can make appropriate based management. retail environment: In both cases, the market- choices. Each domain requires different The very nature of the fifth context— ers had to work with large volumes of data actions. Simple and complicated contexts disorder—makes it particularly difficult to from which it was critical to identify small assume an ordered universe, where recognize when one is in it. Here, multi- trends or weak signals. They discovered that cause-and-effect relationships are per- ple perspectives jostle for prominence, there was little difference between, say, ceptible, and right answers can be deter- factional leaders argue with one another, handling outgoing disaffected customers and mined based on the facts. Complex and and cacophony rules. The way out of this anticipating incoming ballistic missiles. The chaotic contexts are unordered—there is realm is to break down the situation into exercise helped the marketing group learn no immediately apparent relationship constituent parts and assign each to one how to detect a potential loss of loyalty between cause and effect, and the way of the other four realms. Leaders can and take action before a valued customer forward is determined based on emerg- then make decisions and intervene in switched to a competitor. By improving their ing patterns. The ordered world is the contextually appropriate ways. strategy, the marketers were able to retain far more high-volume business. Games, too, can encourage novel thinking. We created a game played on a fictional planet that was based on the culture of a real client organization. When the executives “landed” on the alien planet, they were asked to address problems and opportunities facing the inhabitants. The issues they encountered were disguised but designed to mirror real situations, many of which were controversial or sensitive. Because the environment seemed so foreign and remote, however, the players found it much easier to come up with fresh ideas than they otherwise might have done. Playing a metaphorical game increases man- agers’ willingness to experiment, allows them

Based on a graphic by Debera Johnson Based on a graphic to resolve issues or problems more easily

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and creatively, and broadens the range of will die. None of those experts knew a priori options in their decision-making processes. what would work. Instead, they had to let a The goal of such games is to get as many solution emerge from the materials at hand. perspectives as possible to promote unfet- And they succeeded. (Conditions of scarcity tered analysis. often produce more creative results than Reaching decisions in the complicated do- conditions of abundance.) main can often take a lot of time, and there is Another example comes from YouTube. always a trade-off between finding the right The founders could not possibly have pre- answer and simply making a decision. When dicted all the applications for streaming the right answer is elusive, however, and you video technology that now exist. Once people must base your decision on incomplete data, started using YouTube creatively, however, your situation is probably complex rather the company could support and augment the than complicated. emerging patterns of use. YouTube has become a popular platform for expressing political Complex Contexts: The Domain of views, for example. The company built on this Emergence pattern by sponsoring a debate for presiden- In a complicated context, at least one right tial hopefuls with video feeds from the site. answer exists. In a complex context, however, As in the other contexts, leaders face sev- right answers can’t be ferreted out. It’s like the eral challenges in the complex domain. Of difference between, say, a Ferrari and the primary concern is the temptation to fall Brazilian rainforest. Ferraris are complicated back into traditional command-and-control machines, but an expert mechanic can take management styles—to demand fail-safe one apart and reassemble it without changing business plans with defined outcomes. Leaders a thing. The car is static, and the whole is the who don’t recognize that a complex domain sum of its parts. The rainforest, on the other requires a more experimental mode of man- hand, is in constant flux—a species becomes agement may become impatient when they extinct, weather patterns change, an agricul- don’t seem to be achieving the results they tural project reroutes a water source—and the were aiming for. They may also find it difficult whole is far more than the sum of its parts. to tolerate failure, which is an essential aspect This is the realm of “unknown unknowns,” and of experimental understanding. If they try it is the domain to which much of contempo- to overcontrol the organization, they will rary business has shifted. preempt the opportunity for informative Most situations and decisions in organiza- patterns to emerge. Leaders who try to impose tions are complex because some major order in a complex context will fail, but those change—a bad quarter, a shift in management, who set the stage, step back a bit, allow a merger or acquisition—introduces unpre- patterns to emerge, and determine which dictability and flux. In this domain, we can un- ones are desirable will succeed. (See the derstand why things happen only in retrospect. sidebar “Tools for Managing in a Complex Instructive patterns, however, can emerge if Context.”) They will discern many opportu- the leader conducts experiments that are safe nities for innovation, creativity, and new to fail. That is why, instead of attempting business models. to impose a course of action, leaders must patiently allow the path forward to reveal Chaotic Contexts: The Domain of itself. They need to probe first, then sense, Rapid Response and then respond. In a chaotic context, searching for right an- There is a scene in the film Apollo 13 when swers would be pointless: The relationships the astronauts encounter a crisis (“Houston, between cause and effect are impossible to de- we have a problem”) that moves the situation termine because they shift constantly and no into a complex domain. A group of experts is manageable patterns exist—only turbulence. put in a room with a mishmash of materials— This is the realm of unknowables. The events bits of plastic and odds and ends that mirror of September 11, 2001, fall into this category. the resources available to the astronauts in In the chaotic domain, a leader’s immediate flight. Leaders tell the team: This is what job is not to discover patterns but to stanch the you have; find a solution or the astronauts bleeding. A leader must first act to establish

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order, then sense where stability is present establish order. However, in his role as and from where it is absent, and then respond mayor—certainly one of the most complex by working to transform the situation from jobs in the world—he was widely criticized chaos to complexity, where the identification for the same top-down leadership style that of emerging patterns can both help prevent proved so enormously effective during the future crises and discern new opportunities. catastrophe. He was also criticized afterward Communication of the most direct top-down for suggesting that elections be postponed so or broadcast kind is imperative; there’s simply he could maintain order and stability. Indeed, no time to ask for input. a specific danger for leaders following a crisis Unfortunately, most leadership “recipes” is that some of them become less successful arise from examples of good crisis manage- when the context shifts because they are not ment. This is a mistake, and not only because able to switch styles to match it. chaotic situations are mercifully rare. Though Moreover, leaders who are highly successful the events of September 11 were not immedi- in chaotic contexts can develop an overin- ately comprehensible, the crisis demanded flated self-image, becoming legends in their decisive action. New York’s mayor at the time, own minds. When they generate cultlike adora- Rudy Giuliani, demonstrated exceptional tion, leading actually becomes harder for effectiveness under chaotic conditions by them because a circle of admiring supporters issuing directives and taking action to re- cuts them off from accurate information.

Tools for Managing in a Complex Context Given the ambiguities of the complex do- the condition of the merchandise. meeting environment. Each team ap- main, how can leaders lead effectively? Participants police themselves by points a spokesperson who moves •Open up the discussion. Complex rating one another on the quality of from that team’s table to another contexts require more interactive their behavior. team’s table. The spokesperson pre- communication than any of the other •Stimulate attractors. Attractors are sents the first group’s conclusions while domains. Large group methods (LGMs), phenomena that arise when small stim- the second group listens in silence. The for instance, are efficient approaches uli and probes (whether from leaders or spokesperson then turns around to face to initiating democratic, interactive, others) resonate with people. As attrac- away from the second team, which rips multidirectional discussion sessions. tors gain momentum, they provide into the presentation, no holds barred, Here, people generate innovative ideas structure and coherence. EBay again while the spokesperson listens quietly. that help leaders with development and provides an illustrative example. In Each team’s spokesperson visits other execution of complex decisions and strat- 1995, founder Pierre Omidyar launched tables in turn; by the end of the session, egies. For example, “positive deviance” is an offering called Auction Web on his all the ideas have been well dissected a type of LGM that allows people to personal website. His probe, the first and honed. Taking turns listening in si- discuss solutions that are already work- item for sale, quickly morphed into lence helps everyone understand the ing within the organization itself, rather eBay, a remarkable attractor for people value of listening carefully, speaking than looking to outside best practices who want to buy and sell things. Today, openly, and not taking criticism personally. for clues about how to proceed. The sellers on eBay continue to provide ex- •Manage starting conditions and Plexus Institute used this approach to perimental probes that create attractors monitor for emergence. Because out- address the complex problem of hospital- of various types. One such probe, selling comes are unpredictable in a complex acquired infections, resulting in behavior a car on the site, resonated with buyers, context, leaders need to focus on creat- change that lowered the incidence by and soon automobile sales became a ing an environment from which good as much as 50%. popular attractor. things can emerge, rather than trying •Set barriers. Barriers limit or delineate • Encourage dissent and diversity. to bring about predetermined results behavior. Once the barriers are set, the Dissent and formal debate are valuable and possibly missing opportunities system can self-regulate within those communication assets in complex that arise unexpectedly. Many years boundaries. The founders of eBay, for contexts because they encourage the ago, for instance, 3M instituted a rule al- example, created barriers by establishing emergence of well-forged patterns and lowing its researchers to spend 15% of a simple set of rules. Among them are ideas. A “ritual dissent” approach, for their time on any project that interested pay on time, deliver merchandise instance, puts parallel teams to work on them. One result was a runaway success: quickly, and provide full disclosure on the same problem in a large group the Post-it Note.

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Decisions in Multiple Contexts: A Leader’s Guide Effective leaders learn to shift their decision-making styles to match changing business environments. Simple, complicated, complex, and chaotic contexts each call for different managerial responses. By correctly identifying the governing context, staying aware of danger signals, and avoiding inappropriate reactions, managers can lead effectively in a variety of situations.

THE CONTEXT’S RESPONSE TO CHARACTERISTICS THE LEADER’S JOB DANGER SIGNALS DANGER SIGNALS

gnitaepeR patterns and Sense, categorize, respond Complacency and comfort Create communication consistent events erusnE that proper processes are eriseD to make complex channels to challenge orthodoxy raelC cause-and-effect in place problems simple yatS connected without relationships evident to every- Delegate Entrained thinking micromanaging one; right answer exists Use best practices No challenge of received wisdom t’noD assume things Known knowns are simple

SIMPLE Communicate in clear, direct ways Overreliance on best practice if Fact-based management Recognize both the value and Understand that extensive context shifts the limitations of best practice interactive communication may not be necessary

trepxE diagnosis required Sense, analyze, respond Experts overconfident in their egaruocnE external and internal own solutions or in the efficacy of stakeholders to challenge expert Cause-and-effect relationships Create panels of experts past solutions opinions to combat entrained discoverable but not immediately TED Listen to conflicting advice thinking apparent to everyone; more than Analysis paralysis one right answer possible esU experiments and games to Expert panels force people to think outside the Known unknowns Viewpoints of nonexperts familiar OMPLICA

C Fact-based management excluded

Flux and unpredictability Probe, sense, respond Temptation to fall back into Be patient and allow time for habitual, command-and-control reflection No right answers; emergent Create environments and mode instructive patterns experiments that allow patterns esU approaches that to emerge noitatpmeT to look for facts encourage interaction so Unknown unknowns rather than allowing patterns to patterns can emerge Increase levels of interaction and Many competing ideas emerge communication A need for creative and innova- eriseD for accelerated resolution esU methods that can help gener- tive approaches of problems or exploitation of

COMPLEX ate ideas: Open up discussion (as opportunities Pattern-based leadership through large group methods); set barriers; stimulate attractors; encourage dissent and diversity; and manage starting conditions and monitor for emergence

High turbulence Act, sense, respond gniylppA a command-and-control teS up mechanisms (such as approach longer than needed parallel teams) to take advantage No clear cause-and-effect rela- kooL for what works instead of of opportunities afforded by a tionships, so no point in looking seeking right answers “Cult of the leader” chaotic environment for right answers ekaT immediate action to dessiM opportunity for innovation egaruocnE advisers to challenge Unknowables reestablish order (command and Chaos unabated your point of view once the crisis control) Many decisions to make and no

CHAOTIC has abated time to think edivorP clear, direct kroW to shift the context from communication High tension chaotic to complex Pattern-based leadership

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Yet the chaotic domain is nearly always their workplaces. Had Gasior misread the the best place for leaders to impel innova- context as simple, he might just have said, tion. People are more open to novelty and “Carry on,” which would have done nothing directive leadership in these situations than to reassure the community. Had he misread it they would be in other contexts. One excellent as complicated, he might have called in experts technique is to manage chaos and innovation to say it was safe—risking a loss of credibility in parallel: The minute you encounter a crisis, and trust. Instead, Gasior set up a forum appoint a reliable manager or crisis manage- for business owners, high school students, ment team to resolve the issue. At the same teachers, and parents to share concerns and time, pick out a separate team and focus its hear the facts. It was the right approach for a members on the opportunities for doing things complex context: He allowed solutions to differently. If you wait until the crisis is over, emerge from the community itself rather the chance will be gone. than trying to impose them. • • • Leadership Across Contexts Business schools and organizations equip Good leadership requires openness to change leaders to operate in ordered domains (simple on an individual level. Truly adept leaders will and complicated), but most leaders usually know not only how to identify the context must rely on their natural capabilities when they’re working in at any given time but also operating in unordered contexts (complex and how to change their behavior and their deci- chaotic). In the face of greater complexity sions to match that context. They also prepare today, however, intuition, intellect, and cha- their organization to understand the different risma are no longer enough. Leaders need contexts and the conditions for transition be- tools and approaches to guide their firms tween them. Many leaders lead effectively— through less familiar waters. though usually in only one or two domains In the complex environment of the current (not in all of them) and few, if any, prepare business world, leaders often will be called their organizations for diverse contexts. upon to act against their instincts. They will During the Palatine murders of 1993, Deputy need to know when to share power and when Chief Gasior faced four contexts at once. He to wield it alone, when to look to the wisdom had to take immediate action via the media of the group and when to take their own to stem the tide of initial panic by keeping counsel. A deep understanding of context, the the community informed (chaotic); he had to ability to embrace complexity and paradox, help keep the department running routinely and a willingness to flexibly change leader- and according to established procedure ship style will be required for leaders who (simple); he had to call in experts (compli- want to make things happen in a time of cated); and he had to continue to calm the increasing uncertainty. community in the days and weeks following the crime (complex). That last situation Reprint R0711C proved the most challenging. Parents were To order, see the next page afraid to let their children go to school, and or call 800-988-0886 or 617-783-7500 employees were concerned about safety in or go to www.hbrreprints.org

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We look for lessons in the actions of great leaders. We How Successful should instead be examining what goes on in their heads— Leaders Think particularly the way they creatively build on the tensions among conflicting by Roger Martin ideas.

Included with this full-text Harvard Business Review article:

73 Article Summary The Idea in Brief—the core idea The Idea in Practice—putting the idea to work

75 How Successful Leaders Think

83 Further Reading A list of related materials, with annotations to guide further exploration of the article’s ideas and applications

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How Successful Leaders Think

The Idea in Brief The Idea in Practice The secret to becoming a great leader? What does integrative thinking look like in STEP 3: ENVISIONING THE DECISION’S Don’t act like one, Martin advises. Instead, action? Contrast conventional and integra- OVERALL STRUCTURE think like one. tive thinkers’ approaches to the four steps of Conventional thinkers break a problem decision making: Brilliant leaders excel at integrative thinking. into pieces and work on them separately. Inte- They can hold two opposing ideas in their grative thinkers see a problem as a whole— STEP 1: IDENTIFYING KEY FACTORS minds at once. Then, rather than settling for examining how its various aspects affect one choice A or B, they forge an innovative Conventional thinkers consider only obvi- another. ously relevant factors while weighing options. “third way” that contains elements of both Example: Integrative thinkers seek less obvious but po- but improves on each. Young held several issues in his head simul- tentially more relevant considerations. Consider Bob Young, cofounder of Red taneously, including CIOs’ concerns, dy- Hat, the dominant distributor of Linux Example: namics of individual and corporate markets open-source software. The business model Bob Young disliked the two prevailing soft- for system software, and the evolving eco- Young created for Red Hat transcended the ware business models: selling operating nomics of the free-software business. Each two prevailing software industry models— software but not source code needed to “piece” could have pushed him toward a winning Red Hat entrée into the lucrative develop software applications (profitable separate decision. But by considering the corporate market. but anathema to open-source advocates) issues as an interrelated whole, Young or selling CD-ROMs containing software began to realize only one player would ulti- How to become an integrative thinker? Resist and source code (aligned with open-source mately dominate the corporate market. the simplicity and certainty that comes values but not profitable). Seeking a third with conventional “either-or” thinking. choice, he considered CIOs’ reluctance to STEP 4: ACHIEVING RESOLUTION Embrace the messiness and complexity of buy new technology that would be compli- Conventional thinkers make either-or conflicting options. And emulate great cated to maintain. Viewing their reluctance choices. Integrative thinkers refuse to accept leaders’ decision-making approach— as relevant eventually helped Young see conventional options. looking beyond obvious considerations. that selling software service would be a su- Example: Your reward? Instead of making unattrac- perior alternative to the existing product- To pursue market leadership, Young devised tive trade-offs, you generate a wealth of based business models. an unconventional business model. The profitable solutions for your business. STEP 2: ANALYZING CAUSALITY model synthesized two seemingly irrecon- cilable models by combining low product Conventional thinkers consider one-way, lin- price with profitable service offerings. Red ear relationships between factors: more of A Hat began helping companies manage the produces more of B. Integrative thinkers con- software upgrades available almost daily sider multidirectional relationships. through Linux’s open-source platform. It Example: also gave the software away as a free Inter- Young analyzed the complex relationships net download. Thus, Red Hat acquired the among pricing, profitability, and distribu- scale and market leadership to attract cau- tion channels. He recognized that a prod- tious corporate customers to what became uct based on freely available components its central offering: service, not software. would soon become a commodity. Any electronics retailer could assemble its own Linux product and push it through its well- developed distribution channel—leaving Red Hat stranded. Analysis of these causal relationships yielded a nuanced picture of the industry’s future. OPYRIGHT © 2007 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. OPYRIGHT © 2007 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. C

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We look for lessons in the actions of great leaders. We should instead be examining what goes on in their heads—particularly the way they creatively build on the tensions among conflicting ideas.

How Successful Leaders Think

by Roger Martin

We are drawn to the stories of effective leaders forcing managers to look for opportunities in action. Their decisiveness invigorates us. beyond the confines of a narrowly conceived The events that unfold from their bold moves, market. Trying to learn from what Jack Welch often culminating in successful outcomes, did invites confusion and incoherence, because make for gripping narratives. Perhaps most he pursued—wisely, I might add—diametrically important, we turn to accounts of their deeds opposed courses at different points in his for lessons that we can apply in our own career and in GE’s history. careers. Books like Jack: Straight from the Gut So where do we look for lessons? A more and Execution: The Discipline of Getting Things productive, though more difficult, approach is Done are compelling in part because they to focus on how a leader thinks—that is, to implicitly promise that we can achieve the examine the antecedent of doing, or the ways success of a Jack Welch or a Larry Bossidy—if in which leaders’ cognitive processes produce only we learn to emulate his actions. their actions. But this focus on what a leader does is mis- I have spent the past 15 years, first as a man- placed. That’s because moves that work in one agement consultant and now as the dean of a context often make little sense in another, business school, studying leaders with exem- even at the same company or within the expe- plary records. Over the past six years, I have in- rience of a single leader. Recall that Jack terviewed more than 50 such leaders, some for Welch, early in his career at General Electric, as long as eight hours, and found that most of insisted that each of GE’s businesses be num- them share a somewhat unusual trait: They ber one or number two in market share in its have the predisposition and the capacity to industry; years later he insisted that those hold in their heads two opposing ideas at once. same businesses define their markets so that And then, without panicking or simply settling their share was no greater than 10%, thereby for one alternative or the other, they’re able to OPYRIGHT © 2007 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. OPYRIGHT © 2007 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. C

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creatively resolve the tension between those One was the classic proprietary-software two ideas by generating a new one that con- model, employed by big players such as Mi- tains elements of the others but is superior to crosoft, Oracle, and SAP, which sold custom- both. This process of consideration and synthe- ers operating software but not the source sis can be termed integrative thinking. It is this code. These companies invested heavily in discipline—not superior strategy or faultless research and development, guarded their execution—that is a defining characteristic of intellectual property jealously, charged high most exceptional businesses and the people prices, and enjoyed wide profit margins be- who run them. cause their customers, lacking access to the I don’t claim that this is a new idea. More source code, were essentially locked into than 60 years ago, F. Scott Fitzgerald saw “the purchasing regular upgrades. ability to hold two opposing ideas in mind at The alternative, employed by numerous the same time and still retain the ability to small companies, including Red Hat itself, was function” as the sign of a truly intelligent indi- the so-called free-software model, in which vidual. And certainly not every good leader suppliers sold CD-ROMs with both the software exhibits this capability, nor is it the sole source and the source code. The software products of success for those who do. But it is clear to weren’t in fact free, but prices were modest—$15 me that integrative thinking tremendously for a packaged version of the Linux operating improves people’s odds. system versus more than $200 for Microsoft This insight is easy to miss, though, since the Windows. Suppliers made money each time management conversation in recent years has they assembled a new version from the many tilted away from thinking and toward doing free updates by independent developers; but (witness the popularity of books like Execu- profit margins were narrow and revenue was tion). Also, many great integrative thinkers uncertain. Corporate customers, looking for aren’t even aware of their particular capability standardization and predictability, were wary and thus don’t consciously exercise it. Take not only of the unfamiliar software but also of Jack Welch, who is among the executives I its small and idiosyncratic suppliers. have interviewed: He is clearly a consummate Bob Young—a self-deprecating eccentric in integrative thinker—but you’d never know it an industry full of eccentrics, who signaled his from reading his books. affiliation with his company by regularly sport- Indeed, my aim in this article is to decon- ing red socks and a red hat—didn’t like either struct and describe a capability that seems to of these models. The high-margin proprietary come naturally to many successful leaders. To model ran counter to the whole philosophy of illustrate the concept, I’ll concentrate on an ex- Linux and the open-source movement, even if ecutive I talked with at length: Bob Young, the there had been a way to create proprietary ver- colorful cofounder and former CEO of Red sions of the software. “Buying proprietary soft- Hat, the dominant distributor of Linux open- ware is like buying a car with the hood welded source software. The assumption underlying shut,” Young told me. “If something goes my examination of his and others’ integrative wrong, you can’t even try to fix it.” But the free- thinking is this: It isn’t just an ability you’re software model meant scraping a slim profit born with—it’s something you can hone. from the packaging and distribution of a freely available commodity in a fringe market, which Opposable Thumb, Opposable Mind might have offered reasonable returns in In the mid-1990s, Red Hat faced what seemed the short term but wasn’t likely to deliver like two alternative paths to growth. At the sustained profitable growth. time, the company sold packaged versions Young likes to say that he’s not “one of the Roger Martin (martin@rotman of Linux open-source software, mainly to smart guys” in the industry, that he’s a sales- .utoronto.ca) is the dean of the Rotman computer geeks, periodically bundling to- man in a world of technical geniuses. Nonethe- School of Management at the Univer- gether new versions that included the latest less, he managed to synthesize two seemingly sity of Toronto and the author of The upgrades from countless independent devel- irreconcilable business models, placing Red Opposable Mind: How Successful Lead- opers. As Red Hat looked to grow beyond Hat on a path to tremendous success. His re- ers Win Through Integrative Thinking, its $1 million in annual sales, it could have sponse to his strategic dilemma was to com- forthcoming from Harvard Business chosen one of the two basic business models bine the free-software model’s low product School Press in the fall of 2007. in the software industry. price with the proprietary model’s profitable

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service component, in the process creating tage, it would have gone to waste if our species something new: a corporate market for the had not exercised it in ever more sophisticated Linux operating system. As is often the case ways. When we engage in something like writ- with integrative thinking, Young included ing, we train the muscles involved and the some twists on both models that made the brain that controls them. Without exploring synthesis work. the possibilities of opposition, we wouldn’t have Although inspired by the proprietary developed either its physical properties or the model, Red Hat’s service offering was quite cognition that accompanies and animates it. different. “If you ran into a bug that caused Analogously, we were born with opposable your systems to crash,” Young said of the ser- minds, which allow us to hold two conflicting vice you’d buy from the big proprietary shops, ideas in constructive, almost dialectic tension. “you would call up the manufacturer and say, We can use that tension to think our way ‘My systems are crashing.’ And he’d say, ‘Oh, toward new, superior ideas. Were we able to dear,’ while he really meant, ‘Oh, good.’ He’d hold only one thought or idea in our heads at a send an engineer over at several hundred time, we wouldn’t have access to the insights dollars an hour to fix his software, which was that the opposable mind can produce. broken when he delivered it to you, and he’d Unfortunately, because people don’t exercise call that customer service.” Red Hat, by con- this capability much, great integrative think- trast, helped companies manage the upgrades ers are fairly rare. Why is this potentially pow- and improvements available almost daily erful but generally latent tool used so infre- through Linux’s open-source platform. quently and to less than full advantage? Young also made a crucial change to what Because putting it to work makes us anxious. had been the somewhat misleadingly dubbed Most of us avoid complexity and ambiguity free-software model: He actually gave the soft- and seek out the comfort of simplicity and clar- We often don’t know ware away, repackaging it as a free download ity. To cope with the dizzying complexity of the on the Internet rather than as an inexpensive world around us, we simplify where we can. what to do with but cumbersome CD-ROM. This allowed Red We crave the certainty of choosing between fundamentally opposing Hat to break away from the multitude of small well-defined alternatives and the closure that Linux packagers by acquiring the scale and comes when a decision has been made. models. Our first impulse market leadership to generate faith among For those reasons, we often don’t know what cautious corporate customers in what would to do with fundamentally opposing and seem- is usually to determine become Red Hat’s central offering—service, ingly incommensurable models. Our first im- which is “right” and, by not software. pulse is usually to determine which of the two In 1999, Red Hat went public, and Young models is “right” and, by the process of elimi- the process of became a billionaire on the first day of trading. nation, which is “wrong.” We may even take elimination, which is By 2000, Linux had captured 25% of the server sides and try to prove that our chosen model is operating system market, and Red Hat held better than the other one. But in rejecting one “wrong.” more than 50% of the global market for Linux model out of hand, we miss out on all the systems. Unlike the vast majority of dot-com value that we could have realized by consider- era start-ups, Red Hat has continued to grow. ing the opposing two at the same time and What enabled Young to resolve the apparent finding in the tension clues to a superior choice between two unattractive models? It model. By forcing a choice between the two, was his use of an innate but underdeveloped we disengage the opposable mind before it can human characteristic, something we might seek a creative resolution. call—in a metaphor that echoes another This nearly universal personal trait is writ human trait—the opposable mind. large in most organizations. When a colleague Human beings are distinguished from admonishes us to “quit complicating the issue,” nearly every other creature by a physical fea- it’s not just an impatient reminder to get on ture: the opposable thumb. Thanks to the ten- with the damn job—it’s also a plea to keep the sion that we can create by opposing the thumb complexity at a comfortable level. and fingers, we can do marvelous things— To take advantage of our opposable minds, write, thread a needle, guide a catheter we must resist our natural leaning toward sim- through an artery. Although evolution pro- plicity and certainty. Bob Young recognized vided human beings with this potential advan- from the beginning that he wasn’t bound to harvard business review • june 2007 page 77

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choose one of the two prevailing software busi- tive about integrative thinkers is how they ness models. He saw the unpleasant trade-offs approach the steps. (See the exhibit “Conven- he’d have to make if he chose between the two tional Versus Integrative Thinking.”) as a signal to rethink the problem from the Determining salience. The first step is figur- ground up. And he didn’t rest until he found ing out which factors to take into account. The a new model that grew out of the tension conventional approach is to discard as many as between them. possible—or not even to consider some of them Basically, Young refused to settle for an in the first place. In order to reduce our expo- “either-or” choice. That phrase has come up sure to uncomfortable complexity, we filter out time and again in my interviews with success- salient features when considering an issue. ful leaders. When asked whether he thought We also do this because of how most orga- strategy or execution was more important, nizations are structured. Each functional spe- Jack Welch responded: “I don’t think it’s an cialty has its own narrow view of what merits ‘either-or.’” Similarly, Procter & Gamble CEO consideration. Finance departments haven’t A.G. Lafley—when asked how he came up with traditionally regarded emotional factors as a turnaround plan that drew on both cost salient; similarly, departments concerned with cutting and investment in innovation—said: organizational behavior have often ignored “We weren’t going to win if it were an ‘or.’ quantitative questions. Managers pressure Everybody can do ‘or.’” employees to limit their view of what’s salient to match the department’s doctrine, leaving The Four Stages of Decision Making people with only a subset of the factors to So what does the process of integrative think- which they might otherwise have produc- ing look like? How do integrative thinkers con- tively paid attention. sider their options in a way that leads to new When our decisions turn out badly, we often possibilities and not merely back to the same recognize after the fact that we’ve failed to inadequate alternatives? They work through consider factors that are significant to those four related but distinct stages. The steps outside the immediate reach of our jobs or themselves aren’t particular to integrative functional specialties. We say to ourselves, “I thinking: Everyone goes through them while should have thought about how the employees thinking through a decision. What’s distinc- in our European operation would have inter-

Conventional Versus Integrative Thinking When responding to problems or challenges, leaders work through four steps. Those who are conventional thinkers seek simplicity along the way and are often forced to make unattractive trade-offs. By contrast, integrative thinkers welcome complexity—even if it means repeating one or more of the steps—and this allows them to craft innovative solutions.

Determining Analyzing Envisioning Achieving Salience Causality the Decision Resolution 1 2 3 Architecture 4

CONVENTIONAL Focus only on Consider one-way, Break problems into Make either-or THINKERS obviously relevant linear relationships pieces and work on choices; settle for features between variables, them separately or best available in which more of A sequentially options produces more of B

INTEGRATIVE Seek less obvious Consider See problems as a Creatively resolve THINKERS but potentially multidirectional whole, examining how tensions among relevant factors and nonlinear the parts fit together opposing ideas; relationships and how decisions generate innovative among variables affect one another outcomes

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preted the wording of that memo” or “I should Linux, service was a bigger selling point than have thought about the state’s road-repair product and that a vendor’s long-term credibil- program before choosing a site for our new dis- ity was crucial. tribution center.” The integrative thinker, by Analyzing causality. In the second step of contrast, actively seeks less obvious but poten- decision making, you analyze how the nu- tially relevant factors. Of course, more salient merous salient factors relate to one another. features make for a messier problem, but inte- Conventional thinkers tend to take the same grative thinkers don’t mind the mess. In fact, narrow view of causality that they do of sa- they embrace it, because it assures them that lience. The simplest type of all is a straight-line they haven’t dismissed anything that may illu- causal relationship. It’s no accident that linear minate the problem as a whole. They welcome regression is the business world’s preferred complexity, because that’s where the best tool for establishing relationships between answers come from. They are confident that variables. Other tools are available, of course, they’ll find their way through it and emerge on but most managers shun them because they’re the other side with a clear resolution. harder to use. How many times has a superior In his thinking about a new business model scolded you for making a problem more com- for Red Hat, Bob Young added into his calcula- plicated than it needs to be? You protest that tions something ignored both by software you’re not trying to complicate anything; you companies generally and by Linux suppliers in just want to see the problem as it really is. Your particular: the day-to-day concerns of corpo- boss tells you to stick to your job, and a poten- rate CIOs and their systems administrators. tially complex relationship becomes a linear Doing this allowed him to envision an innova- one in which more of A produces more of B. tive model that tapped into an entirely new When we make bad decisions, sometimes it market for Linux-based products and services. is because we got the causal links between sa- Integrative thinkers don’t As a whole, the software industry disdains lient features wrong. We may have been right CIOs’ reluctance to buy the newest and best about the direction of a relationship but wrong mind a messy problem. technology, attributing it to timidity or strict about the magnitude: “I thought that our costs In fact, they welcome adherence to the “you’ll never get fired for buy- would decrease much faster than they actually ing IBM” mantra. Young not only empathized did as our scale grew.” Or we may have gotten complexity, because with the CIOs but found their caution under- the direction of a relationship wrong: “I standable. “It’s not FUD—fear, uncertainty, and thought that our capacity to serve clients that’s where the best doubt,” he said. “It’s sensible.” would increase when we hired a new batch of answers come from. Linux software was an entirely new product consultants, but it actually shrank, because the for corporate buyers, one that didn’t follow any experienced consultants had to spend a huge familiar rules. It was free. No one supplier con- amount of their time training the new ones trolled it. Thousands of versions were out and fixing their rookie mistakes.” there, and each one changed nearly every The integrative thinker isn’t afraid to ques- day. From the CIOs’ perspective, that Linux tion the validity of apparently obvious links was cheaper and better than Windows-based or to consider multidirectional and nonlinear products—the basic sales message delivered by relationships. So, for example, rather than sim- Red Hat’s rivals—played a relatively small part ply thinking, “That competitor’s price-cutting in the calculation. The CIOs were thinking is hurting our bottom line,” the integrative about whether their investment would be in a thinker may conclude, “Our product intro- stable and consistent platform that would duction really upset our rivals. Now they’re work across their organizations and whether cutting prices in response, and our profitabil- their suppliers would still be around in ten or ity is suffering.” 15 years. Systems administrators worried that The most interesting causal link that Young the complexity of Linux—with its random and identified was the rather subtle one between almost daily upgrades—would create a man- the free availability of Red Hat software’s basic agement nightmare, since different teams of components and the likely—or inevitable, in people throughout the company would have Young’s view—evolution of the industry. The to maintain the software packages. relationships he saw between pricing, profit- Viewing these concerns as salient helped ability, and distribution channel drove his lead Young to conclude that, in the case of company in a different direction from its harvard business review • june 2007 page 79

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Linux competitors, which saw a perfectly good and distribution of Red Hat’s original software market for their “free” software. This is what product. Would their individual answers, allowed him to create and then lock up the agglomerated into an overall Red Hat strategy, new corporate market. have produced the spectacularly successful For example, Young recognized the vulner- new business model that Young came up with? ability of a product based on freely available It doesn’t seem all that likely. components. Whatever you charged for the Integrative thinkers don’t break down a convenience of getting a Linux operating sys- problem into independent pieces and work on tem bundled together on one CD-ROM, inevi- them separately or in a certain order. They see tably “someone else would come in and price the entire architecture of the problem—how it lower,” he said. “It was a commodity in the the various parts of it fit together, how one truest sense of the word.” He also realized decision will affect another. Just as important, that a company that wasn’t a current rival— they hold all of those pieces suspended in say, a big electronics retailer—could put to- their minds at once. They don’t parcel out the gether a Linux product of its own and then elements for others to work on piecemeal or push it through its own well-developed dis- let one element temporarily drop out of sight, tribution channel, leaving Red Hat and only to be taken up again for consideration other suppliers out in the cold. “I knew I after everything else has been decided. An needed a product I had some control over so I architect doesn’t ask his subordinates to design could make CompUSA a customer”—that is, a a perfect bathroom and a perfect living room corporate purchaser of Red Hat’s service and a perfect kitchen, and then hope that the package—“rather than a competitor” with its pieces of the house will fit nicely together. A own CD-ROM product. business executive doesn’t design a product be- The causal relationships spotted by Young fore considering the costs of manufacturing it. weren’t earth-shattering on their own, but Young held simultaneously in his head a putting them together helped Young create a number of issues: the feelings and the chal- more nuanced picture of the industry’s future lenges of chief information officers and sys- than his competitors were able to. tems administrators, the dynamics of both Envisioning the decision architecture. the individual and the corporate markets for With a good handle on the causal relation- operating system software, the evolving eco- ships between salient features, you’re ready to nomics of the free-software business, and the turn to the decision itself. But which decision? motivations behind the major players in the Even the simple question of whether to go to a proprietary-software business. Each factor movie tonight involves deciding, at the very could have pushed him toward a separate least, which movie to see, which theater to go decision on how to address the challenge. But to, and which showing to attend. The order in he delayed making decisions and considered which you make these decisions will affect the relationships between these issues as he the outcome. For example, you may not be slowly moved toward the creation of a new able to see your preferred movie if you’ve business model, one based on the belief that already decided you need to be back in time to dominant market share would be critical to relieve a babysitter who has plans for later in Red Hat’s success. the evening. When you’re trying to invent a Achieving resolution. All of these stages— new business model, the number of decision- determining what is salient, analyzing the making variables explodes. And with that causal relationships between the salient comes the impulse not only to establish a strict factors, examining the architecture of the sequence in which issues will be considered problem—lead to an outcome. Too often, we but also to dole out pieces of a decision so that accept an unpleasant trade-off with relatively various parties—often, different corporate little complaint, since it appears to be the best functions—can work on them separately. alternative. That’s because by the time we What usually happens is that everyone loses have reached this stage, our desire for simplic- sight of the overriding issue, and a mediocre ity has led us to ignore opportunities in the outcome results. Suppose that Bob Young had previous three steps to discover interesting delegated to different functional heads ques- and novel ways around the trade-off. Instead tions concerning the pricing, enhancement, of rebelling against the meager and unattrac-

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tive alternatives, instead of refusing to settle son that life is about accepting unattractive for the best available bad choice, the conven- trade-offs. Fundamentally, the conventional tional thinker shrugs and asks, “What else thinker prefers to accept the world just as it is, could we have done?” whereas the integrative thinker welcomes the “Much else,” the integrative thinker says. A challenge of shaping the world for the better. leader who embraces holistic rather than seg- Given the benefits of integrative thinking, mented thinking can creatively resolve the you have to ask, “If I’m not an integrative tensions that launched the decision-making thinker, can I learn to be one?” In F. Scott process. The actions associated with the search Fitzgerald’s view, only people with “first-rate for such resolution—creating delays, sending intelligence” can continue to function while teams back to examine things more deeply, holding two opposing ideas in their heads. generating new options at the 11th hour—can But I refuse to believe that the ability to appear irresolute from the outside. Indeed, the use our opposable minds is a gift reserved integrative thinker may even be dissatisfied for a small minority of people. I prefer the with the fresh batch of options he’s come up view suggested by Thomas C. Chamberlin, a with, in which case he may go back and start nineteenth-century American geologist and over. When a satisfactory outcome does emerge, former president of the University of Wiscon- though, it is inevitably due to the leader’s refusal sin. More than 100 years ago, Chamberlin to accept trade-offs and conventional options. wrote an article in Science magazine proposing The outcome in the case of Red Hat was the idea of “multiple working hypotheses” as completely unconventional—not many com- an improvement over the most commonly em- panies suddenly decide to give away their ployed scientific method of the time: testing products—and ultimately successful. Young’s the validity of a single hypothesis through gradual realization that only one player in his trial and error. Chamberlin argued that his ap- industry would have leverage with and support proach would provide more accurate explana- from corporate customers—and that such le- tions of scientific phenomena by taking into verage and support could reap attractive service account “the co-ordination of several agencies, revenues from totally free software—shaped which enter into the combined result in the dramatically creative decision he made. varying proportions.” While acknowledging The thinking that he intuitively engaged in the cognitive challenges posed by such an is very different from the thinking that pro- approach, Chamberlin wrote that it “devel- duces most managerial decisions. But, he said, ops a habit of thought analogous to the his experience was hardly unique: “People are method itself, which may be designated a often faced with difficult choices—for instance, habit of parallel or complex thought. Instead ‘Do I want to be the high-quality, high-cost of a simple succession of thoughts in linear supplier or the low-quality, low-cost supplier?’ order…the mind appears to become possessed We’re trained to examine the pros and cons of of the power of simultaneous vision from such alternatives and then pick one of them. different standpoints.” But really successful businesspeople look at Similarly, I believe that integrative thinking choices like these and say, ‘I don’t like either is a “habit of thought” that all of us can con- one.’” Using that recurring phrase, he added: sciously develop to arrive at solutions that would “They don’t accept that it’s an ‘either-or.’” otherwise not be evident. First, there needs to be greater general awareness of integrative Born and Bred thinking as a concept. Then, over time, we can The consequences of integrative thinking and teach it in our business schools—an endeavor conventional thinking couldn’t be more dis- that colleagues and I are currently working on. tinct. Integrative thinking generates options At some point, integrative thinking will no and new solutions. It creates a sense of limitless longer be just a tacit skill (cultivated know- possibility. Conventional thinking glosses over ingly or not) in the heads of a select few. potential solutions and fosters the illusion that creative solutions don’t actually exist. With Reprint R0706C integrative thinking, aspirations rise over time. To order, see the next page With conventional thinking, they wear away or call 800-988-0886 or 617-783-7500 with every apparent reinforcement of the les- or go to www.hbrreprints.org harvard business review • june 2007 page 81

How Successful Leaders Think

Further Reading ARTICLE The Seasoned Executive’s Decision- Making Style by Kenneth R. Brousseau, Michael J. Driver, Gary Hourihan, and Rikard Larsson Harvard Business Review February 2006 Product no. R0602F

The authors affirm the importance of “integra- tive thinking” to leadership success. But they also argue that integrative thinking may not always create advantage for lower-level man- agers. At lower levels, the job is to get widgets out the door (or solve glitches on the spot). Action is at a premium. At higher levels, the job involves making decisions about which widgets or services to offer and how to de- velop them. To climb the corporate ladder and be effective in new roles, managers must change their decision-making styles. Making decisions like a full-fledged senior executive too soon can hurl an ambitious manager right off the fast track. And it’s just as destructive to act like a first-line supervisor after being bumped up to senior management. By under- standing the distinguishing characteristics of four different decision-making styles, manag- ers can ensure that they use the right ones during each stage in their career.

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For customized and quantity orders of Harvard Business Review article reprints, call 617-783-7626, or e-mail [email protected] page 83

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Teams whose members come from different nations and Managing backgrounds place special demands on managers— Multicultural Teams especially when a feuding team looks to the boss for help with a conflict. by Jeanne Brett, Kristin Behfar, and Mary C. Kern

Included with this full-text Harvard Business Review article:

87 Article Summary The Idea in Brief—the core idea The Idea in Practice—putting the idea to work

89 Managing Multicultural Teams

97 Further Reading A list of related materials, with annotations to guide further exploration of the article’s ideas and applications

Reprint R0611D page 85

Managing Multicultural Teams

The Idea in Brief The Idea in Practice If your company does business internation- FOUR BARRIERS • Differing attitudes toward hierarchy. Team ally, you’re probably leading teams with members from hierarchical cultures expect members from diverse cultural back- The following cultural differences can cause to be treated differently according to their grounds. Those differences can present destructive conflicts in a team: status in the organization. Members from serious obstacles. For example, some • Direct versus indirect communication. egalitarian cultures do not. Failure of some members’ lack of fluency in the team’s Some team members use direct, explicit members to honor those expectations can dominant language can lead others to communication while others are indirect, cause humiliation or loss of stature and underestimate their competence. When such for example, asking questions instead of credibility. obstacles arise, your team can stalemate. pointing out problems with a project. • Conflicting decision-making norms. To get the team moving again, avoid inter- When members see such differences as Members vary in how quickly they make vening directly, advise Brett, Behfar, and violations of their culture’s communication decisions and in how much analysis they Kern. Though sometimes necessary, your norms, relationships can suffer. require beforehand. Someone who prefers involvement can prevent team members • Trouble with accents and fluency. Mem- making decisions quickly may grow frus- from solving problems themselves—and bers who aren’t fluent in the team’s trated with those who need more time. learning from that process. dominant language may have difficulty FOUR INTERVENTIONS Instead, choose one of three indirect inter- communicating their knowledge. This can ventions. When possible, encourage team prevent the team from using their expertise Your team’s unique circumstances can help members to adapt by acknowledging cul- and create frustration or perceptions of you determine how to respond to multicul- tural gaps and working around them. If incompetence. tural conflicts. Consider these options: your team isn’t able to be open about their differences, consider structural interven- Intervention Type When to Use Example tion (e.g., reassigning members to reduce Adaptation: Members are willing An American engineer working on a team that included interpersonal friction). As a last resort, use working with or to acknowledge Israelis was shocked by their in-your-face, argumentative an exit strategy (e.g., removing a member around diff erences cultural diff erences style. Once he noticed they confronted each other from the team). and fi gure out how to and not just him—and still worked well together—he live with them. realized confrontations weren’t personal attacks and There’s no one right way to tackle multicul- accepted their style. tural problems. But understanding four Structural The team has An international research team’s leader realized that barriers to team success can help you begin intervention: obvious subgroups, when he led meetings, members “shut down” because evaluating possible responses. reorganizing to or members cling to they felt intimidated by his executive status. After he reduce friction negative stereotypes hired a consultant to run future meetings, members of one another. participated more. Managerial Rarely; for instance, A software development team’s lingua franca was intervention: a new team English, but some members spoke with pronounced making fi nal needs guidance accents. The manager explained they’d been chosen decisions without in establishing for their task expertise, not fl uency in English. And she team involvement productive norms. directed them to tell customers: “I realize I have an accent. If you don’t understand what I’m saying, just stop me and ask questions.” Exit: voluntary or Emotions are running When two members of a multicultural consulting involuntary removal high, and too much team couldn’t resolve their disagreement over how to of a team member face has been lost on approach problems, one member left the fi rm. both sides to salvage the situation. OPYRIGHT © 2007 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. OPYRIGHT © 2007 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. C

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Teams whose members come from different nations and backgrounds place special demands on managers—especially when a feuding team looks to the boss for help with a conflict.

Managing Multicultural Teams

by Jeanne Brett, Kristin Behfar, and Mary C. Kern

When a major international software devel- details that the team should have been able to oper needed to produce a new product handle itself. The manager became so bogged quickly, the project manager assembled a down by quotidian issues that the project ca- team of employees from India and the United reened hopelessly off even the most pessimis- States. From the start the team members tic schedule—and the team never learned to could not agree on a delivery date for the work together effectively. product. The Americans thought the work Multicultural teams often generate frus- could be done in two to three weeks; the Indi- trating management dilemmas. Cultural dif- ans predicted it would take two to three ferences can create substantial obstacles to months. As time went on, the Indian team effective teamwork—but these may be sub- members proved reluctant to report setbacks tle and difficult to recognize until significant in the production process, which the Ameri- damage has already been done. As in the can team members would find out about only case above, which the manager involved told when work was due to be passed to them. us about, managers may create more prob- Such conflicts, of course, may affect any team, lems than they resolve by intervening. The but in this case they arose from cultural differ- challenge in managing multicultural teams ences. As tensions mounted, conflict over de- effectively is to recognize underlying cul- livery dates and feedback became personal, tural causes of conflict, and to intervene in disrupting team members’ communication ways that both get the team back on track about even mundane issues. The project and empower its members to deal with manager decided he had to intervene—with future challenges themselves. the result that both the American and the We interviewed managers and members of Indian team members came to rely on him multicultural teams from all over the world. for direction regarding minute operational These interviews, combined with our deep OPYRIGHT © 2006 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. OPYRIGHT © 2006 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. C

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research on dispute resolution and teamwork, Japanese customer-data system explained the led us to conclude that the wrong kind of man- problems her team was having this way: “In agerial intervention may sideline valuable Japan, they want to talk and discuss. Then we members who should be participating or, take a break and they talk within the organi- worse, create resistance, resulting in poor team zation. They want to make sure that there’s performance. We’re not talking here about re- harmony in the rest of the organization. One specting differing national standards for doing of the hardest lessons for me was when I business, such as accounting practices. We’re thought they were saying yes but they just referring to day-to-day working problems meant ‘I’m listening to you.’” among team members that can keep multicul- The differences between direct and indirect tural teams from realizing the very gains they communication can cause serious damage were set up to harvest, such as knowledge of to relationships when team projects run into different product markets, culturally sensitive problems. When the American manager customer service, and 24-hour work rotations. quoted above discovered that several flaws The good news is that cultural challenges in the system would significantly disrupt com- are manageable if managers and team mem- pany operations, she pointed this out in an bers choose the right strategy and avoid e-mail to her American boss and the Japanese imposing single-culture-based approaches on team members. Her boss appreciated the multicultural situations. direct warnings; her Japanese colleagues were embarrassed, because she had violated their The Challenges norms for uncovering and discussing prob- People tend to assume that challenges on mul- lems. Their reaction was to provide her with ticultural teams arise from differing styles of less access to the people and information communication. But this is only one of the she needed to monitor progress. They would four categories that, according to our research, probably have responded better if she had can create barriers to a team’s ultimate suc- pointed out the problems indirectly—for cess. These categories are direct versus indi- example, by asking them what would happen rect communication; trouble with accents and if a certain part of the system was not func- fluency; differing attitudes toward hierarchy tioning properly, even though she knew full and authority; and conflicting norms for well that it was malfunctioning and also what decision making. the implications were. Direct versus indirect communication. As our research indicates is so often true, Communication in Western cultures is typi- communication challenges create barriers to cally direct and explicit. The meaning is on effective teamwork by reducing information the surface, and a listener doesn’t have to sharing, creating interpersonal conflict, or know much about the context or the speaker both. In Japan, a typical response to direct to interpret it. This is not true in many other confrontation is to isolate the norm violator. cultures, where meaning is embedded in the This American manager was isolated not just way the message is presented. For example, socially but also physically. She told us, “They Western negotiators get crucial information literally put my office in a storage room, about the other party’s preferences and prior- where I had desks stacked from floor to ceil- Jeanne Brett is the DeWitt W. ities by asking direct questions, such as “Do ing and I was the only person there. So they Buchanan, Jr., Distinguished you prefer option A or option B?” In cultures totally isolated me, which was a pretty loud Professor of Dispute Resolution and that use indirect communication, negotiators signal to me that I was not a part of the inside Organizations and the director of the may have to infer preferences and priorities circle and that they would communicate with Dispute Resolution Research Center at from changes—or the lack of them—in the me only as needed.” Northwestern University’s Kellogg other party’s settlement proposal. In cross- Her direct approach had been intended to School of Management in Evanston, cultural negotiations, the non-Westerner can solve a problem, and in one sense, it did, be- Illinois. Kristin Behfar is an assistant understand the direct communications of the cause her project was launched problem- professor at the Paul Merage School of Westerner, but the Westerner has difficulty free. But her norm violations exacerbated Business at the University of California understanding the indirect communications the challenges of working with her Japanese at Irvine. Mary C. Kern is an assistant of the non-Westerner. colleagues and limited her ability to uncover professor at the Zicklin School of Busi- An American manager who was leading a any other problems that might have derailed ness at Baruch College in New York. project to build an interface for a U.S. and the project later on.

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Trouble with accents and fluency. Although discussed only inconsequential current events the language of international business is En- and sports, in case any of the Koreans spoke glish, misunderstandings or deep frustration Spanish. Members of the team who didn’t may occur because of nonnative speakers’ speak Spanish pretended to participate, to accents, lack of fluency, or problems with trans- the great amusement of their teammates. lation or usage. These may also influence This approach proved effective: It conveyed to perceptions of status or competence. the Koreans in an appropriately indirect way For example, a Latin American member of that their caucuses in Korean were frustrating a multicultural consulting team lamented, and annoying to the other side. As a result, “Many times I felt that because of the lan- both teams cut back on sidebar conversations. guage difference, I didn’t have the words to say Differing attitudes toward hierarchy and some things that I was thinking. I noticed that authority. A challenge inherent in multicul- when I went to these interviews with the U.S. tural teamwork is that by design, teams have guy, he would tend to lead the interviews, a rather flat structure. But team members which was understandable but also disappoint- from some cultures, in which people are ing, because we are at the same level. I had treated differently according to their status in very good questions, but he would take an organization, are uncomfortable on flat the lead.” teams. If they defer to higher-status team When we interviewed an American mem- members, their behavior will be seen as ap- ber of a U.S.-Japanese team that was assessing propriate when most of the team comes from the potential expansion of a U.S. retail chain a hierarchical culture; but they may damage into Japan, she described one American team- their stature and credibility—and even face mate this way: “He was not interested in the humiliation—if most of the team comes from Japanese consultants’ feedback and felt that an egalitarian culture. Team members who are because they weren’t as fluent as he was, they One manager of Mexican heritage, who was weren’t intelligent enough and, therefore, working on a credit and underwriting team uncomfortable on flat could add no value.” The team member de- for a bank, told us, “In Mexican culture, you’re teams may, by deferring scribed was responsible for assessing one as- always supposed to be humble. So whether pect of the feasibility of expansion into Japan. you understand something or not, you’re sup- to higher-status Without input from the Japanese experts, posed to put it in the form of a question. You he risked overestimating opportunities and have to keep it open-ended, out of respect. I teammates, damage their underestimating challenges. think that actually worked against me, be- stature and credibility— Nonfluent team members may well be the cause the Americans thought I really didn’t most expert on the team, but their difficulty know what I was talking about. So it made and even face communicating knowledge makes it hard me feel like they thought I was wavering on humiliation—if most of for the team to recognize and utilize their ex- my answer.” pertise. If teammates become frustrated or When, as a result of differing cultural the team is from an impatient with a lack of fluency, interper- norms, team members believe they’ve been sonal conflicts can arise. Nonnative speakers treated disrespectfully, the whole project can egalitarian culture. may become less motivated to contribute, or blow up. In another Korean-U.S. negotiation, anxious about their performance evaluations the American members of a due diligence and future career prospects. The organiza- team were having difficulty getting informa- tion as a whole pays a greater price: Its invest- tion from their Korean counterparts, so they ment in a multicultural team fails to pay off. complained directly to higher-level Korean Some teams, we learned, use language dif- management, nearly wrecking the deal. The ferences to resolve (rather than create) ten- higher-level managers were offended because sions. A team of U.S. and Latin American hierarchy is strictly adhered to in Korean or- buyers was negotiating with a team from a ganizations and culture. It should have been Korean supplier. The negotiations took place their own lower-level people, not the U.S. in Korea, but the discussions were conducted team members, who came to them with a in English. Frequently the Koreans would problem. And the Korean team members caucus at the table by speaking Korean. The were mortified that their bosses had been buyers, frustrated, would respond by appear- involved before they themselves could brief ing to caucus in Spanish—though they them. The crisis was resolved only when high- harvard business review • november 2006 page 91

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level U.S. managers made a trip to Korea, first step. The more crucial step is assessing conveying appropriate respect for their the circumstances—or “enabling situational Korean counterparts. conditions”—under which the team is work- Conflicting norms for decision making. ing. For example, does the project allow any Cultures differ enormously when it comes to flexibility for change, or do deadlines make decision making—particularly, how quickly that impossible? Are there additional re- decisions should be made and how much sources available that might be tapped? Is analysis is required beforehand. Not surpris- the team permanent or temporary? Does the ingly, U.S. managers like to make decisions team’s manager have the autonomy to make a very quickly and with relatively little analysis decision about changing the team in some by comparison with managers from other way? Once the situational conditions have countries. been analyzed, the team’s leader can identify A Brazilian manager at an American com- an appropriate response (see the exhibit pany who was negotiating to buy Korean prod- “Identifying the Right Strategy”). ucts destined for Latin America told us, “On Adaptation. Some teams find ways to work the first day, we agreed on three points, and on with or around the challenges they face, the second day, the U.S.-Spanish side wanted to adapting practices or attitudes without mak- start with point four. But the Korean side ing changes to the group’s membership or wanted to go back and rediscuss points one assignments. Adaptation works when team through three. My boss almost had an attack.” members are willing to acknowledge and What U.S. team members learn from an ex- name their cultural differences and to assume perience like this is that the American way responsibility for figuring out how to live with simply cannot be imposed on other cultures. them. It’s often the best possible approach to a Managers from other cultures may, for exam- problem, because it typically involves less ple, decline to share information until they managerial time than other strategies; and be- understand the full scope of a project. But cause team members participate in solving the they have learned that they can’t simply ig- problem themselves, they learn from the pro- nore the desire of their American counter- cess. When team members have this mind-set, parts to make decisions quickly. What to do? they can be creative about protecting their The best solution seems to be to make minor own substantive differences while acceding to concessions on process—to learn to adjust to the processes of others. and even respect another approach to deci- An American software engineer located sion making. For example, American manag- in Ireland who was working with an Israeli ers have learned to keep their impatient account management team from his own bosses away from team meetings and give company told us how shocked he was by the them frequent if brief updates. A comparable Israelis’ in-your-face style: “There were defi- lesson for managers from other cultures is to nitely different ways of approaching issues and be explicit about what they need—saying, discussing them. There is something pretty for example, “We have to see the big picture common to the Israeli culture: They like to ar- before we talk details.” gue. I tend to try to collaborate more, and it got very stressful for me until I figured out Four Strategies how to kind of merge the cultures.” The most successful teams and managers we The software engineer adapted. He im- interviewed used four strategies for dealing posed some structure on the Israelis that with these challenges: adaptation (acknowl- helped him maintain his own style of being edging cultural gaps openly and working thoroughly prepared; that accommodation around them), structural intervention (chang- enabled him to accept the Israeli style. He ing the shape of the team), managerial inter- also noticed that team members weren’t vention (setting norms early or bringing in a just confronting him; they confronted one higher-level manager), and exit (removing a another but were able to work together effec- team member when other options have tively nevertheless. He realized that the con- failed). There is no one right way to deal with frontation was not personal but cultural. a particular kind of multicultural problem; In another example, an American member identifying the type of challenge is only the of a postmerger consulting team was frus-

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trated by the hierarchy of the French com- attention from political scientists and from pany his team was working with. He felt that government officials dealing with multicul- a meeting with certain French managers who tural populations that want to protect their were not directly involved in the merger cultures rather than integrate or assimilate. If “wouldn’t deliver any value to me or for pur- the team had relied exclusively on the Ameri- poses of the project,” but said that he had cans’ “forge ahead” approach, it might not come to understand that “it was very impor- have recognized the pitfalls that lay ahead tant to really involve all the people there” if and might later have had to back up and start the integration was ultimately to work. over. Meanwhile, the UK members would A U.S. and UK multicultural team tried to have been gritting their teeth and saying “We use their differing approaches to decision told you things were moving too fast.” If the making to reach a higher-quality decision. team had used the “Let’s think about this” UK This approach, called fusion, is getting serious approach, it might have wasted a lot of time

Identifying the Right Strategy The most successful teams and managers we interviewed use four strategies for dealing with problems: adaptation (acknowledging cultural gaps openly and working around them), structural intervention (changing the shape of the team), managerial intervention (setting norms early or bringing in a higher-level manager), and exit (removing a team member when other options have failed). Adaptation is the ideal strat- egy because the team works effectively to solve its own problem with minimal input from management—and, most important, learns from the experience. The guide below can help you identify the right strategy once you have identified both the problem and the “enabling situational conditions” that apply to the team.

REPRESENTATIVE ENABLING SITUATIONAL STRATEGY COMPLICATING PROBLEMS CONDITIONS FACTORS

• Conflict arises from decision- • Team members can attribute a Adaptation • Team members must making differences challenge to culture rather than be exceptionally aware • Misunderstanding or stone- personality • Negotiating a common walling arises from commu- • Higher-level managers are not understanding takes nication differences available or the team would be time embarrassed to involve them

• The team is affected by emo- • The team can be subdivided Structural • If team members aren’t tional tensions relating to flu- to mix cultures or expertise Intervention carefully distributed, sub- ency issues or prejudice • Tasks can be subdivided groups can strengthen • Team members are inhibited preexisting differences by perceived status differ- • Subgroup solutions ences among teammates have to fit back together

• Violations of hierarchy have • The problem has produced Managerial • The team becomes resulted in loss of face a high level of emotion Intervention overly dependent • An absence of ground rules • The team has reached on the manager is causing conflict a stalemate • Team members may • A higher-level manager is able be sidelined or resistant and willing to intervene

• A team member cannot ad- • The team is permanent rather Exit • Talent and training just to the challenge at hand than temporary costs are lost and has become unable to • Emotions are beyond the point contribute to the project of intervention • Too much face has been lost

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trying to identify every pitfall, including team members got to know and respect the most unlikely, while the U.S. members everyone else on the team. chomped at the bit and muttered about anal- The subgrouping technique involves risks, ysis paralysis. The strength of this team was however. It buffers people who are not work- that some of its members were willing to ing well together or not participating in forge ahead and some were willing to work the larger group for one reason or another. through pitfalls. To accommodate them all, Sooner or later the team will have to assem- the team did both—moving not quite as fast as ble the pieces that the subgroups have come the U.S. members would have on their own and up with, so this approach relies on another not quite as thoroughly as the UK members structural intervention: Someone must be- would have. come a mediator in order to see that the Structural intervention. A structural inter- various pieces fit together. vention is a deliberate reorganization or re- Managerial intervention. When a manager assignment designed to reduce interpersonal behaves like an arbitrator or a judge, making friction or to remove a source of conflict a final decision without team involvement, for one or more groups. This approach can be neither the manager nor the team gains extremely effective when obvious subgroups much insight into why the team has stale- demarcate the team (for example, headquar- mated. But it is possible for team members to ters versus national subsidiaries) or if team use managerial intervention effectively to members are proud, defensive, threatened, sort out problems. or clinging to negative stereotypes of one When an American refinery-safety expert another. with significant experience throughout East A member of an investment research team Asia got stymied during a project in China, scattered across continental Europe, the UK, she called in her company’s higher-level and the U.S. described for us how his man- managers in Beijing to talk to the higher- ager resolved conflicts stemming from status level managers to whom the Chinese refin- differences and language tensions among the ery’s managers reported. Unlike the Western team’s three “tribes.” The manager started by team members who breached etiquette by having the team meet face-to-face twice a approaching the superiors of their Korean year, not to discuss mundane day-to-day prob- counterparts, the safety expert made sure to lems (of which there were many) but to iden- respect hierarchies in both organizations. tify a set of values that the team would use to “Trying to resolve the issues,” she told us, direct and evaluate its progress. At the first “the local management at the Chinese refin- meeting, he realized that when he started to ery would end up having conferences with speak, everyone else “shut down,” waiting to our Beijing office and also with the upper hear what he had to say. So he hired a con- management within the refinery. Eventually sultant to run future meetings. The con- they understood that we weren’t trying to in- sultant didn’t represent a hierarchical threat sult them or their culture or to tell them they and was therefore able to get lots of participa- were bad in any way. We were trying to help. tion from team members. They eventually understood that there were Another structural intervention might be significant fire and safety issues. But we actu- to create smaller working groups of mixed ally had to go up some levels of management cultures or mixed corporate identities in order to get those resolved.” to get at information that is not forthcoming Managerial intervention to set norms early from the team as a whole. The manager of in a team’s life can really help the team start the team that was evaluating retail opportu- out with effective processes. In one instance nities in Japan used this approach. When she reported to us, a multicultural software devel- realized that the female Japanese consultants opment team’s lingua franca was English, but would not participate if the group got large, some members, though they spoke grammati- or if their male superior was present, she cally correct English, had a very pronounced broke the team up into smaller groups to try accent. In setting the ground rules for the to solve problems. She used this technique team, the manager addressed the challenge repeatedly and made a point of changing the directly, telling the members that they had subgroups’ membership each time so that been chosen for their task expertise, not their

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fluency in English, and that the team was vene early and set norms; teams and managers going to have to work around language prob- who structure social interaction and work to lems. As the project moved to the customer- engage everyone on the team; and teams that services training stage, the manager advised can see problems as stemming from culture, the team members to acknowledge their not personality, approach challenges with accents up front. She said they should tell cus- good humor and creativity. Managers who tomers, “I realize I have an accent. If you don’t have to intervene when the team has reached understand what I’m saying, just stop me and a stalemate may be able to get the team mov- ask questions.” ing again, but they seldom empower it to help Exit. Possibly because many of the teams we itself the next time a stalemate occurs. studied were project based, we found that When frustrated team members take some leaving the team was an infrequent strategy time to think through challenges and possible for managing challenges. In short-term situa- solutions themselves, it can make a huge dif- tions, unhappy team members often just ference. Take, for example, this story about a waited out the project. When teams were per- financial-services call center. The members of manent, producing products or services, the the call-center team were all fluent Spanish- exit of one or more members was a strategy of speakers, but some were North Americans last resort, but it was used—either voluntarily and some were Latin Americans. Team perfor- or after a formal request from management. mance, measured by calls answered per hour, Exit was likely when emotions were running was lagging. One Latin American was taking high and too much face had been lost on both twice as long with her calls as the rest of the sides to salvage the situation. team. She was handling callers’ questions ap- An American member of a multicultural propriately, but she was also engaging in chit- consulting team described the conflict be- chat. When her teammates confronted her for One team manager tween two senior consultants, one a Greek being a free rider (they resented having to woman and the other a Polish man, over how make up for her low call rate), she immedi- addressed the language to approach problems: “The woman from ately acknowledged the problem, admitting challenge directly, telling Greece would say, ‘Here’s the way I think we that she did not know how to end the call should do it.’ It would be something that she politely—chitchat being normal in her cul- the members that they was in control of. The guy from Poland would ture. They rallied to help her: Using their say, ‘I think we should actually do it this way technology, they would break into any of her had been chosen for their instead.’ The woman would kind of turn red calls that went overtime, excusing themselves task expertise, not their in the face, upset, and say, ‘I just don’t think to the customer, offering to take over the call, that’s the right way of doing it.’ It would and saying that this employee was urgently fluency in English, and definitely switch from just professional differ- needed to help out on a different call. The that the team would have ences to personal differences. team’s solution worked in the short run, and “The woman from Greece ended up leaving the employee got better at ending her calls in to work around the firm. That was a direct result of probably the long run. all the different issues going on between In another case, the Indian manager of a problems. these people. It really just wasn’t a good fit. multicultural team coordinating a company- I’ve found that oftentimes when you’re in wide IT project found himself frustrated consulting, you have to adapt to the culture, when he and a teammate from Singapore met obviously, but you have to adapt just as much with two Japanese members of the coordinat- to the style of whoever is leading the project.” ing team to try to get the Japan section to • • • deliver its part of the project. The Japanese Though multicultural teams face challenges members seemed to be saying yes, but in the that are not directly attributable to cultural Indian manager’s view, their follow-through differences, such differences underlay what- was insufficient. He considered and rejected ever problem needed to be addressed in many the idea of going up the hierarchy to the Japa- of the teams we studied. Furthermore, while nese team members’ boss, and decided in- serious in their own right when they have a stead to try to build consensus with the whole negative effect on team functioning, cultural Japanese IT team, not just the two members challenges may also unmask fundamental on the coordinating team. He and his Sin- managerial problems. Managers who inter- gapore teammate put together an eBusiness harvard business review • november 2006 page 95

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road show, took it to Japan, invited the whole IT team to view it at a lunch meeting, and walked through success stories about other parts of the organization that had aligned with the company’s larger business priorities. It was rather subtle, he told us, but it worked. The Japanese IT team wanted to be spot- lighted in future eBusiness road shows. In the end, the whole team worked well together— and no higher-level manager had to get involved.

Reprint R0611D To order, see the next page or call 800-988-0886 or 617-783-7500 or go to www.hbrreprints.org

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Further Reading ARTICLES Making Differences Matter: A New Cultural Intelligence Paradigm for Managing Diversity by P. Christopher Earley and by David A. Thomas and Robin J. Ely Elaine Mosakowski Harvard Business Review Harvard Business Review September 1996 October 2004 Product no. 96510 Product no. R0410J You can strengthen your teams’ ability to use Team members can further strengthen their the adaptation process suggested by Brett, adaptation skills by developing their cultural Behfar, and Kern by fostering a working envi- intelligence. 1) Look for clues to the shared ronment in which cultural differences are understandings that define another culture. valued. To cultivate such an environment: 1) For example, do people from that culture tend Encourage open discussion of cultural back- to be strict or flexible about deadlines? Are grounds. For instance, a food company’s they receptive to highly imaginative ideas, or Chinese chemist draws on her cooking, not do they prefer more conservative thinking? 2) her scientific, experience to solve a soup- Adopt the habits and mannerisms of people flavoring problem. 2) Eliminate forms of from other cultures. You’ll discover in an dominance—by hierarchy, function, race, elemental way what it’s like to be them. And gender, and so forth—that inhibit team you’ll demonstrate respect for their ways. 3) members’ full contribution. 3) Acknowledge Cultivate confidence that you can overcome and swiftly resolve the inevitable tensions that multicultural obstacles and setbacks and that arise when employees from different back- you’re capable of understanding people from grounds share ideas and emotions. unfamiliar cultures. Oil and Wasser by Byron Reimus Harvard Business Review May 2004 Product no. R0405X In this fictional case study, executives from an English firm and a German company who are seeking a supposed “merger of equals” must resolve cross-cultural tensions threatening the deal. Four experts provide suggestions. For example, develop a new shared vision and common strategic goals for the project (such To Order as “Beat the competition and become number one”) that rise above national differences. Cultivate personal relationships with the For Harvard Business Review reprints and “other” to eliminate stereotypes, by getting subscriptions, call 800-988-0886 or together in relaxed, shoptalk-free social 617-783-7500. Go to www.hbrreprints.org settings. When you get to know one another as individuals, it becomes easier to let go of For customized and quantity orders of negative stereotypes. Harvard Business Review article reprints, call 617-783-7626, or e-mail [email protected] page 97

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Great leaders tap into the needs and fears we all share. What Great Great managers, by contrast, perform their magic by Managers Do discovering, developing, and celebrating what’s different about each person who works by Marcus Buckingham for them. Here’s how they do it.

Included with this full-text Harvard Business Review article:

101 Article Summary The Idea in Brief—the core idea The Idea in Practice—putting the idea to work

103 What Great Managers Do

113 Further Reading A list of related materials, with annotations to guide further exploration of the article’s ideas and applications

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What Great Managers Do

The Idea in Brief The Idea in Practice You’ve spent months coaching that em- A closer look at the three tactics: ployee to treat customers better, work more independently, or get organized— CAPITALIZE ON EMPLOYEES’ STRENGTHS all to no avail. First identify each employee’s unique strengths: Walk around, observing people’s reactions to How to make better use of your precious events. Note activities each employee is drawn to. Ask “What was the best day at work you’ve time? Do what great managers do: Instead had in the past three months?” Listen for activities people find intrinsically satisfying. of trying to change your employees, iden- Watch for weaknesses, too, but downplay them in your communications with employees. Offer tify their unique abilities (and even their training to help employees overcome shortcomings stemming from lack of skills or knowledge. eccentricities)—then help them use those Otherwise, apply these strategies: qualities to excel in their own way. • Find the employee a partner with complementary talents. A merchandising manager who You’ll need these three tactics: couldn’t start tasks without exhaustive information performed superbly once her supervisor • Continuously tweak roles to capitalize (the VP) began acting as her “information partner.” The VP committed to leaving the manager on individual strengths. One Walgreens a brief voicemail update daily and arranging two “touch base” conversations weekly. store manager put a laconic but highly • Reconfigure work to neutralize weaknesses. Use your creativity to envision more effective organized employee in charge of re- work arrangements, and be courageous about adopting unconventional job designs. stocking aisles—freeing up more socia- ble employees to serve customers. ACTIVATE EMPLOYEES’ STRENGTHS • Pull the triggers that activate employ- The ultimate trigger for activating an employee’s strengths is recognition. But each employee ees’ strengths. Offer incentives such as plays to a different audience. So tailor your praise accordingly. time spent with you, opportunities to IF AN EMPLOYEE VALUES work independently, and recognition in RECOGNITION FROM. . . PRAISE HIM BY. . . forms each employee values most. His peers Publicly celebrating his achievement in front of coworkers • Tailor coaching to unique learning YouTelling him privately but vividly why he’s such a valuable team styles. Give “analyzers” the information member they need before starting a task. Start “doers” off with simple tasks, then Others with similar expertise Giving him a professional or technical award gradually raise the bar. Let “watchers” Customers Posting a photo of him and his best customer in the office ride shotgun with your most experi- enced performers. TAILOR COACHING TO LEARNING STYLE The payoff for capitalizing on employees’ Adapt your coaching efforts to each employee’s unique learning style: unique strengths? You save time. Your peo- IF AN EMPLOYEE IS . . . COACH HIM BY. . . ple take ownership for improving their skills. And you teach employees to value An “analyzer”—he requires exten- • Giving him ample classroom time differences—building a powerful sense of sive information before taking on a • Role-playing with him team. task, and he hates making mistakes • Giving him time to prepare for challenges A “doer”—he uses trial and error to • Assigning him a simple task, explaining the desired outcomes, enhance his skills while grappling and getting out of his way with tasks • Gradually increasing a task’s complexity until he masters his role A “watcher”—he hones his skills by • Having him “shadow” top performers. watching other people in action OPYRIGHT © 2005 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. OPYRIGHT © 2005 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. C

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Great leaders tap into the needs and fears we all share. Great managers, by contrast, perform their magic by discovering, developing, and celebrating what’s different about each person who works for them. Here’s how they do it.

What Great Managers Do

by Marcus Buckingham

“The best boss I ever had.” That’s a phrase are uniform and move in the same way; they most of us have said or heard at some point, are interchangeable. You need to plan and but what does it mean? What sets the great coordinate their movements, certainly, but boss apart from the average boss? The litera- they all move at the same pace, on parallel ture is rife with provocative writing about the paths. In chess, each type of piece moves in a qualities of managers and leaders and different way, and you can’t play if you don’t whether the two differ, but little has been know how each piece moves. More impor- said about what happens in the thousands of tant, you won’t win if you don’t think care- daily interactions and decisions that allows fully about how you move the pieces. Great managers to get the best out of their people managers know and value the unique abili- and win their devotion. What do great man- ties and even the eccentricities of their em- agers actually do? ployees, and they learn how best to integrate In my research, beginning with a survey them into a coordinated plan of attack. of 80,000 managers conducted by the Gallup This is the exact opposite of what great lead- Organization and continuing during the past ers do. Great leaders discover what is universal two years with in-depth studies of a few top and capitalize on it. Their job is to rally people performers, I’ve found that while there are toward a better future. Leaders can succeed in as many styles of management as there are this only when they can cut through differ- managers, there is one quality that sets truly ences of race, sex, age, nationality, and person- great managers apart from the rest: They dis- ality and, using stories and celebrating heroes, cover what is unique about each person and tap into those very few needs we all share. The then capitalize on it. Average managers play job of a manager, meanwhile, is to turn one checkers, while great managers play chess. person’s particular talent into performance. The difference? In checkers, all the pieces Managers will succeed only when they can OPYRIGHT © 2005 ONE THING PRODUCTIONS, INC. ALL RIGHTS RESERVED. INC. OPYRIGHT © 2005 ONE THING PRODUCTIONS, C

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identify and deploy the differences among peo- tomer buying patterns (at the end of summer, ple, challenging each employee to excel in his for example, the stores will replace sun creams or her own way. This doesn’t mean a leader and lip balms with allergy medicines). A revi- can’t be a manager or vice versa. But to excel at sion is a less time-consuming but more fre- one or both, you must be aware of the very dif- quent version of the same thing: Replace these ferent skills each role requires. cartons of toothpaste with this new and im- proved variety. Display this new line of deter- The Game of Chess gent at this end of the row. Each aisle requires What does the chess game look like in action? some form of revision at least once a week. When I visited Michelle Miller, the manager In most Walgreens stores, each employee who opened Walgreens’ 4,000th store, I found “owns” one aisle, where she is responsible not the wall of her back office papered with work only for serving customers but also for facing schedules. Michelle’s store in Redondo Beach, the merchandise, keeping the aisle clean and California, employs people with sharply differ- orderly, tagging items with a Telxon gun, and ent skills and potentially disruptive differ- conducting all resets and revisions. This ar- ences in personality. A critical part of her job, rangement is simple and efficient, and it af- therefore, is to put people into roles and shifts fords each employee a sense of personal re- that will allow them to shine—and to avoid sponsibility. But Michelle decided that since putting clashing personalities together. At the Jeffrey was so good at resets and revisions— same time, she needs to find ways for individu- and didn’t enjoy interacting with customers— als to grow. this should be his full-time job, in every single There’s Jeffrey, for example, a “goth rocker” aisle. whose hair is shaved on one side and long It was a challenge. One week’s worth of revi- enough on the other side to cover his face. sions requires a binder three inches thick. But Michelle almost didn’t hire him because he Michelle reasoned that not only would Jeffrey couldn’t quite look her in the eye during his in- be excited by the challenge and get better and terview, but he wanted the hard-to-cover night better with practice, but other employees shift, so she decided to give him a chance. would be freed from what they considered a After a couple of months, she noticed that chore and have more time to greet and serve when she gave Jeffrey a vague assignment, customers. The store’s performance proved her such as “Straighten up the merchandise in right. After the reorganization, Michelle saw every aisle,” what should have been a two-hour not only increases in sales and profit but also in job would take him all night—and wouldn’t be that most critical performance metric, cus- done very well. But if she gave him a more spe- tomer satisfaction. In the subsequent four cific task, such as “Put up all the risers for months, her store netted perfect scores in Wal- Christmas,” all the risers would be symmetri- greens’ mystery shopper program. cal, with the right merchandise on each one, So far, so very good. Sadly, it didn’t last. This perfectly priced, labeled, and “faced” (turned “perfect” arrangement depended on Jeffrey re- toward the customer). Give Jeffrey a generic maining content, and he didn’t. With his suc- task, and he would struggle. Give him one that cess at doing resets and revisions, his confi- forced him to be accurate and analytical, and dence grew, and six months into the job, he he would excel. This, Michelle concluded, was wanted to move into management. Michelle Marcus Buckingham (info@ Jeffrey’s forte. So, as any good manager would wasn’t disappointed by this, however; she was onethinginc.com) is a consultant and do, she told him what she had deduced about intrigued. She had watched Jeffrey’s progress speaker on leadership and manage- him and praised him for his good work. closely and had already decided that he might ment practices. He is the coauthor of And a good manager would have left it at do well as a manager, though he wouldn’t be a First, Break All the Rules (Simon & that. But Michelle knew she could get more particularly emotive one. Besides, like any Schuster, 1999) and Now, Discover out Jeffrey. So she devised a scheme to reassign good chess player, she had been thinking a Your Strengths (Free Press, 2001). This responsibilities across the entire store to capi- couple of moves ahead. article is copyright 2005 by One Thing talize on his unique strengths. In every Wal- Over in the cosmetics aisle worked an em- Productions and has been adapted greens, there is a responsibility called “resets ployee named Genoa. Michelle saw Genoa as with permission from Buckingham’s and revisions.” A reset involves stocking an something of a double threat. Not only was new book, The One Thing You Need to aisle with new merchandise, a task that usually she adept at putting customers at ease—she re- Know (Free Press, March 2005). coincides with a predictable change in cus- membered their names, asked good questions,

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was welcoming yet professional when answer- Genoa configuration has probably outlived its ing the phone—but she was also a neatnik. usefulness, and Michelle has moved on to de- The cosmetics department was always per- sign other effective and inventive configura- fectly faced, every product remained aligned, tions. The ability to keep tweaking roles to cap- and everything was arranged just so. Her aisle italize on the uniqueness of each person is the was sexy: It made you want to reach out and essence of great management. touch the merchandise. A manager’s approach to capitalizing on dif- To capitalize on these twin talents, and to ferences can vary tremendously from place to accommodate Jeffrey’s desire for promotion, place. Walk into the back office at another Wal- Michelle shuffled the roles within the store greens, this one in San Jose, California, man- once again. She split Jeffrey’s reset and revision aged by Jim Kawashima, and you won’t see a job in two and gave the “revision” part of it to single work schedule. Instead, the walls are Genoa so that the whole store could now bene- covered with sales figures and statistics, the fit from her ability to arrange merchandise at- best of them circled with red felt-tip pen, and tractively. But Michelle didn’t want the store to dozens of photographs of sales contest win- miss out on Genoa’s gift for customer service, ners, most featuring a customer service repre- so Michelle asked her to focus on the revision sentative named Manjit. role only between 8:30 AM and 11 AM, and after Manjit outperforms her peers consistently. that, when the store began to fill with custom- When I first heard about her, she had just won ers on their lunch breaks, Genoa should shift a competition in Walgreens’ suggestive selling her focus over to them. program to sell the most units of Gillette de- She kept the reset role with Jeffrey. Assis- odorant in a month. The national average was tant managers don’t usually have an ongoing 300; Manjit had sold 1,600. Disposable cam- responsibility in the store, but, Michelle rea- eras, toothpaste, batteries—you name it, she soned, he was now so good and so fast at tear- could sell it. And Manjit won contest after con- ing an aisle apart and rebuilding it that he test despite working the graveyard shift, from could easily finish a major reset during a five- 12:30 AM to 8:30 AM, during which she met sig- hour stint, so he could handle resets along with nificantly fewer customers than did her peers. his managerial responsibilities. Manjit hadn’t always been such an excep- By the time you read this, the Jeffrey– tional performer. She became stunningly suc-

The Research To gather the raw material for my book The book—managing, leading, and sustained in- details of their actions and their choices. Why One Thing You Need to Know: About Great Man- dividual success—I first identified one or two did Myrtle Potter repeatedly turn down pro- aging, Great Leading, and Sustained Individual people in various roles and fields who had motions before taking on the challenge of Success, from which this article has been measurably, consistently, and dramatically turning around that failing drug? Why did adapted, I chose an approach that is rather outperformed their peers. These individuals Terry Leahy rely more on the memories of his different from the one I used for my previous included Myrtle Potter, president of commer- working-class upbringing to define his com- books. For 17 years, I had the good fortune to cial operations for Genentech, who trans- pany’s strategy than on the results of cus- work with the Gallup Organization, one of formed a failing drug into the highest selling tomer surveys or focus groups? Manjit works the most respected research firms in the prescription drug in the world; Sir Terry the night shift, and one of her hobbies is world. During that time, I was given the op- Leahy, the president of the European retail- weight lifting. Are those factors relevant to portunity to interview some of the world’s ing giant Tesco; Manjit, the customer service her performance? What were these special best leaders, managers, teachers, salespeo- representative from Jim Kawashima’s top- people doing that made them so very good at ple, stockbrokers, lawyers, and public ser- performing Walgreens store in San Jose, Cali- their roles? vants. These interviews were a part of large- fornia, who sold more than 1,600 units of Once these many details were duly noted scale studies that involved surveying groups Gillette deodorant in one month; and David and recorded, they slowly came together to of people in the hopes of finding broad pat- Koepp, the prolific screenwriter who penned reveal the “one thing” at the core of great terns in the data. For my book, I used this such blockbusters as Jurassic Park, Mission: managing, great leading, and sustained indi- foundation as the jumping-off point for Impossible, and Spider-Man. vidual success. deeper, more individualized research. What interested me about these high In each of the three areas targeted in the achievers was the practical, seemingly banal harvard business review • march 2005 page 105

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cessful only when Jim, who has made a habit long, the pictures of Manjit began to include of resuscitating troubled stores, came on other employees from the store, too. After a board. What did Jim do to initiate the change few months, the San Jose location was ranked in Manjit? He quickly picked up on her idio- number one out of 4,000 in Walgreens’ sugges- syncrasies and figured out how to translate tive selling program. them into outstanding performance. For exam- ple, back in India, Manjit was an athlete—a Great Managers Are Romantics runner and a weight lifter—and had always Think back to Michelle. Her creative choreog- thrilled to the challenge of measured perfor- raphy may sound like a last resort, an attempt mance. When I interviewed her, one of the first to make the best of a bad hire. It’s not. Jeffrey things out of her mouth was, “On Saturday, I and Genoa are not mediocre employees, and sold 343 low-carb candy bars. On Sunday, I sold capitalizing on each person’s uniqueness is a 367. Yesterday, 110, and today, 105.” I asked if tremendously powerful tool. she always knows how well she’s doing. “Oh First, identifying and capitalizing on each yes,” she replied. “Every day I check Mr. K’s person’s uniqueness saves time. No employee, charts. Even on my day off, I make a point to however talented, is perfectly well-rounded. come in and check my numbers.” Michelle could have spent untold hours coach- Manjit loves to win and revels in public rec- ing Jeffrey and cajoling him into smiling at, ognition. Hence, Jim’s walls are covered with making friends with, and remembering the charts and figures, Manjit’s scores are always names of customers, but she probably would highlighted in red, and there are photos docu- have seen little result for her efforts. Her time menting her success. Another manager might was much better spent carving out a role that have asked Manjit to curb her enthusiasm for took advantage of Jeffrey’s natural abilities. the limelight and give someone else a chance. Second, capitalizing on uniqueness makes Jim found a way to capitalize on it. each person more accountable. Michelle didn’t But what about Jim’s other staff members? just praise Jeffrey for his ability to execute spe- Instead of being resentful of Manjit’s public cific assignments. She challenged him to make recognition, the other employees came to un- this ability the cornerstone of his contribution derstand that Jim took the time to see them as to the store, to take ownership for this ability, individuals and evaluate them based on their to practice it, and to refine it. personal strengths. They also knew that Man- Third, capitalizing on what is unique about jit’s success spoke well of the entire store, so each person builds a stronger sense of team, her success galvanized the team. In fact, before because it creates interdependency. It helps

The Elusive “One Thing” It’s bold to characterize anything as the expla- situations. Take leadership as an example. ling insight should be more powerful. It nation or solution, so it’s a risky move to Lately, much has been made of the notion should show you how to get exponential im- make such definitive assertions as “this is the that there is no one best way to lead and that provement. For example, good managing is one thing all great managers do.” But with instead, the most effective leadership style the result of a combination of many ac- enough research and focus, it is possible to depends on the circumstance. While there is tions—selecting talented employees, setting identify that elusive “one thing.” no doubt that different situations require dif- clear expectations, catching people doing I like to think of the concept of “one thing” ferent actions from a leader, that doesn’t things right, and so on—but none of these as a “controlling insight.” Controlling insights mean the most insightful thing you can say factors qualifies as the “one thing” that great don’t explain all outcomes or events; they about leadership is that it’s situational. With managers do, because even when done well, serve as the best explanation of the greatest enough focus, you can identify the one thing these actions merely prevent managers from number of events. Such insights help you that underpins successful leadership across chasing their best employees away. know which of your actions will have the all situations and all styles. Finally, the controlling insight must guide most far-reaching influence in virtually every Second, a controlling insight must serve as action. It must point to precise things that situation. a multiplier. In any equation, some factors can be done to create better outcomes more For a concept to emerge as the single con- will have only an additive value: When you consistently. Insights that managers can act trolling insight, it must pass three tests. First, focus your actions on these factors, you see on—rather than simply ruminate over—are it must be applicable across a wide range of some incremental improvement. The control- the ones that can make all the difference.

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people appreciate one anothers’ particular Make the most of strengths. It takes time skills and learn that their coworkers can fill in and effort to gain a full appreciation of an em- where they are lacking. In short, it makes peo- ployee’s strengths and weaknesses. The great ple need one another. The old cliché is that manager spends a good deal of time outside there’s no “I” in “team.” But as Michael Jordan the office walking around, watching each per- once said, “There may be no ‘I’ in ‘team,’ but son’s reactions to events, listening, and taking there is in ‘win.’” mental notes about what each individual is Finally, when you capitalize on what is drawn to and what each person struggles with. unique about each person, you introduce a There’s no substitute for this kind of observa- healthy degree of disruption into your world. tion, but you can obtain a lot of information You shuffle existing hierarchies: If Jeffrey is in about a person by asking a few simple, open- charge of all resets and revisions in the store, ended questions and listening carefully to the should he now command more or less respect answers. Two queries in particular have than an assistant manager? You also shuffle ex- proven most revealing when it comes to iden- isting assumptions about who is allowed to do tifying strengths and weaknesses, and I recom- what: If Jeffrey devises new methods of reset- mend asking them of all new hires—and revis- ting an aisle, does he have to ask permission to iting the questions periodically. try these out, or can he experiment on his To identify a person’s strengths, first ask, own? And you shuffle existing beliefs about “What was the best day at work you’ve had in where the true expertise lies: If Genoa comes the past three months?” Find out what the per- up with a way of arranging new merchandise son was doing and why he enjoyed it so much. that she thinks is more appealing than the Remember: A strength is not merely some- method suggested by the “planogram” sent thing you are good at. In fact, it might be down from Walgreens headquarters, does her something you aren’t good at yet. It might be expertise trump the planners back at corpo- just a predilection, something you find so in- rate? These questions will challenge Wal- trinsically satisfying that you look forward to greens’ orthodoxies and thus will help the doing it again and again and getting better at it company become more inquisitive, more intel- over time. This question will prompt your em- ligent, more vital, and, despite its size, more ployee to start thinking about his interests and able to duck and weave into the future. abilities from this perspective. All that said, the reason great managers To identify a person’s weaknesses, just in- focus on uniqueness isn’t just because it vert the question: “What was the worst day makes good business sense. They do it because you’ve had at work in the past three months?” they can’t help it. Like Shelley and Keats, the And then probe for details about what he was nineteenth-century Romantic poets, great doing and why it grated on him so much. As managers are fascinated with individuality for with a strength, a weakness is not merely its own sake. Fine shadings of personality, something you are bad at (in fact, you might though they may be invisible to some and frus- be quite competent at it). It is something that trating to others, are crystal clear to and highly drains you of energy, an activity that you never valued by great managers. They could no more ignore these subtleties than ignore their own needs and desires. Figuring out what makes people tick is simply in their nature. What You Need to Know The Three Levers About Each of Your Direct Reports Although the Romantics were mesmerized by differences, at some point, managers need to rein in their inquisitiveness, gather up what What are his or her strengths? they know about a person, and put the em- ployee’s idiosyncrasies to use. To that end, there are three things you must know about What are the triggers that activate someone to manage her well: her strengths, those strengths? the triggers that activate those strengths, and how she learns. What is his or her learning style? harvard business review • march 2005 page 107

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look forward to doing and that when you are weakness where a role requires strength. In doing it, all you can think about is stopping. such cases, there are four approaches for over- Although you’re keeping an eye out for coming weaknesses. If the problem amounts to both the strengths and weaknesses of your em- a lack of skill or knowledge, that’s easy to solve: ployees, your focus should be on their Simply offer the relevant training, allow some strengths. Conventional wisdom holds that time for the employee to incorporate the new self-awareness is a good thing and that it’s the skills, and look for signs of improvement. If her job of the manager to identify weaknesses and performance doesn’t get better, you’ll know create a plan for overcoming them. But re- that the reason she’s struggling is because she search by Albert Bandura, the father of social is missing certain talents, a deficit no amount learning theory, has shown that self-assurance of skill or knowledge training is likely to fix. (labeled “self-efficacy” by cognitive psycholo- You’ll have to find a way to manage around gists), not self-awareness, is the strongest pre- this weakness and neutralize it. dictor of a person’s ability to set high goals, to Which brings us to the second strategy for persist in the face of obstacles, to bounce back overcoming an employee weakness. Can you when reversals occur, and, ultimately, to find her a partner, someone whose talents are achieve the goals they set. By contrast, self- strong in precisely the areas where hers are awareness has not been shown to be a predic- weak? Here’s how this strategy can look in ac- tor of any of these outcomes, and in some tion. As vice president of merchandising for cases, it appears to retard them. the women’s clothing retailer Ann Taylor, Judi Great managers seem to understand this in- Langley found that tensions were rising be- stinctively. They know that their job is not to tween her and one of her merchandising man- arm each employee with a dispassionately ac- agers, Claudia (not her real name), whose ana- Fine shadings of curate understanding of the limits of her lytical mind and intense nature created an strengths and the liabilities of her weaknesses overpowering “need to know.” If Claudia personality, though they but to reinforce her self-assurance. That’s why learned of something before Judi had a chance may be invisible to some great managers focus on strengths. When a to review it with her, she would become deeply person succeeds, the great manager doesn’t frustrated. Given the speed with which deci- and frustrating to others, praise her hard work. Even if there’s some ex- sions were made, and given Judi’s busy sched- aggeration in the statement, he tells her that ule, this happened frequently. Judi was con- are crystal clear to and she succeeded because she has become so good cerned that Claudia’s irritation was unsettling highly valued by great at deploying her specific strengths. This, the the whole product team, not to mention earn- manager knows, will strengthen the em- ing the employee a reputation as a malcontent. managers. ployee’s self-assurance and make her more op- An average manager might have identified timistic and more resilient in the face of chal- this behavior as a weakness and lectured Clau- lenges to come. dia on how to control her need for informa- The focus-on-strengths approach might cre- tion. Judi, however, realized that this “weak- ate in the employee a modicum of overconfi- ness” was an aspect of Claudia’s greatest dence, but great managers mitigate this by em- strength: her analytical mind. Claudia would phasizing the size and the difficulty of the never be able to rein it in, at least not for long. employee’s goals. They know that their pri- So Judi looked for a strategy that would honor mary objective is to create in each employee a and support Claudia’s need to know, while specific state of mind: one that includes a real- channeling it more productively. Judi decided istic assessment of the difficulty of the obstacle to act as Claudia’s information partner, and ahead but an unrealistically optimistic belief in she committed to leaving Claudia a voice mail her ability to overcome it. at the end of each day with a brief update. To And what if the employee fails? Assuming make sure nothing fell through the cracks, they the failure is not attributable to factors beyond set up two live “touch base” conversations per her control, always explain failure as a lack of week. This solution managed Claudia’s expec- effort, even if this is only partially accurate. tations and assured her that she would get the This will obscure self-doubt and give her some- information she needed, if not exactly when thing to work on as she faces up to the next she wanted it, then at least at frequent and challenge. predictable intervals. Giving Claudia a partner Repeated failure, of course, may indicate neutralized the negative manifestations of her

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strength, allowing her to focus her analytical The most powerful trigger by far is recogni- mind on her work. (Of course, in most cases, tion, not money. If you’re not convinced of the partner would need to be someone other this, start ignoring one of your highly paid than a manager.) stars, and watch what happens. Most managers Should the perfect partner prove hard to are aware that employees respond well to rec- find, try this third strategy: Insert into the em- ognition. Great managers refine and extend ployee’s world a technique that helps accom- this insight. They realize that each employee plish through discipline what the person can’t plays to a slightly different audience. To excel accomplish through instinct. I met one very as a manager, you must be able to match the successful screenwriter and director who had employee to the audience he values most. One struggled with telling other professionals, such employee’s audience might be his peers; the as composers and directors of photography, best way to praise him would be to stand him that their work was not up to snuff. So he de- up in front of his coworkers and publicly cele- vised a mental trick: He now imagines what brate his achievement. Another’s favorite audi- the “god of art” would want and uses this imag- ence might be you; the most powerful recogni- inary entity as a source of strength. In his tion would be a one-on-one conversation mind, he no longer imposes his own opinion where you tell him quietly but vividly why he on his colleagues but rather tells himself (and is such a valuable member of the team. Still them) that an authoritative third party has another employee might define himself by his weighed in. expertise; his most prized form of recognition If training produces no improvement, if would be some type of professional or techni- complementary partnering proves impracti- cal award. Yet another might value feedback cal, and if no nifty discipline technique can be only from customers, in which case a picture of found, you are going to have to try the fourth the employee with her best customer or a let- and final strategy, which is to rearrange the ter to her from the customer would be the best employee’s working world to render his weak- form of recognition. ness irrelevant, as Michelle Miller did with Jef- Given how much personal attention it re- frey. This strategy will require of you, first, the quires, tailoring praise to fit the person is creativity to envision a more effective arrange- mostly a manager’s responsibility. But organi- ment and, second, the courage to make that ar- zations can take a cue from this, too. There’s rangement work. But as Michelle’s experience no reason why a large company can’t take this revealed, the payoff that may come in the form individualized approach to recognition and of increased employee productivity and en- apply it to every employee. Of all the compa- gagement is well worth it. nies I’ve encountered, the North American di- Trigger good performance. A person’s vision of HSBC, a London-based bank, has strengths aren’t always on display. Sometimes done the best job of this. Each year it presents they require precise triggering to turn them its top individual consumer-lending perform- on. Squeeze the right trigger, and a person ers with its Dream Awards. Each winner re- will push himself harder and persevere in the ceives a unique prize. During the year, manag- face of resistance. Squeeze the wrong one, ers ask employees to identify what they would and the person may well shut down. This can like to receive should they win. The prize value be tricky because triggers come in myriad and is capped at $10,000, and it cannot be re- mysterious forms. One employee’s trigger deemed as cash, but beyond those two restric- might be tied to the time of day (he is a night tions, each employee is free to pick the prize owl, and his strengths only kick in after 3 PM). he wants. At the end of the year, the company Another employee’s trigger might be tied to holds a Dream Awards gala, during which it time with you, the boss (even though he’s shows a video about the winning employee worked with you for more than five years, he and why he selected his particular prize. still needs you to check in with him every You can imagine the impact these personal- day, or he feels he’s being ignored). Another ized prizes have on HSBC employees. It’s one worker’s trigger might be just the opposite— thing to be brought up on stage and given yet independence (she’s only worked for you for another plaque. It’s another thing when, in ad- six months, but if you check in with her even dition to public recognition of your perfor- once a week, she feels micromanaged). mance, you receive a college tuition fund for harvard business review • march 2005 page 109

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your child, or the Harley-Davidson motorcycle out of his way. Then gradually increase the de- you’ve always dreamed of, or—the prize every- gree of each task’s complexity until he has mas- one at the company still talks about—the air- tered every aspect of his role. He may make a line tickets to fly you and your family back to few mistakes along the way, but for the doer, Mexico to visit the grandmother you haven’t mistakes are the raw material for learning. seen in ten years. Finally, there’s watching. Watchers won’t Tailor to learning styles. Although there learn much through role-playing. They won’t are many learning styles, a careful review of learn by doing, either. Since most formal train- adult learning theory reveals that three styles ing programs incorporate both of these ele- predominate. These three are not mutually ex- ments, watchers are often viewed as rather clusive; certain employees may rely on a com- poor students. That may be true, but they bination of two or perhaps all three. Nonethe- aren’t necessarily poor learners. less, staying attuned to each employee’s style Watchers can learn a great deal when they or styles will help focus your coaching. are given the chance to see the total perfor- First, there’s analyzing. Claudia from Ann mance. Studying the individual parts of a task Taylor is an analyzer. She understands a task is about as meaningful for them as studying by taking it apart, examining its elements, and the individual pixels of a digital photograph. reconstructing it piece by piece. Because every What’s important for this type of learner is the single component of a task is important in her content of each pixel, its position relative to all eyes, she craves information. She needs to ab- the others. Watchers are only able to see this sorb all there is to know about a subject before when they view the complete picture. she can begin to feel comfortable with it. If she As it happens, this is the way I learn. Years doesn’t feel she has enough information, she ago, when I first began interviewing, I strug- will dig and push until she gets it. She will read gled to learn the skill of creating a report on a the assigned reading. She will attend the re- person after I had interviewed him. I under- quired classes. She will take good notes. She stood all the required steps, but I couldn’t will study. And she will still want more. seem to put them together. Some of my col- The best way to teach an analyzer is to give leagues could knock out a report in an hour; her ample time in the classroom. Role-play for me, it would take the better part of a day. with her. Do postmortem exercises with her. Then one afternoon, as I was staring morosely Break her performance down into its compo- into my Dictaphone, I overheard the voice of nent parts so she can carefully build it back up. the analyst next door. He was talking so rapidly Always allow her time to prepare. The ana- that I initially thought he was on the phone. lyzer hates mistakes. A commonly held view is Only after a few minutes did I realize that he that mistakes fuel learning, but for the ana- was dictating a report. This was the first time I lyzer, this just isn’t true. In fact, the reason she had heard someone “in the act.” I’d seen the prepares so diligently is to minimize the possi- finished results countless times, since reading bility of mistakes. So don’t expect to teach her the reports of others was the way we were sup- much by throwing her into a new situation and posed to learn, but I’d never actually heard an- telling her to wing it. other analyst in the act of creation. It was a The opposite is true for the second domi- revelation. I finally saw how everything should nant learning style, doing. While the most come together into a coherent whole. I re- powerful learning moments for the analyzer member picking up my Dictaphone, mimick- occur prior to the performance, the doer’s ing the cadence and even the accent of my most powerful moments occur during the neighbor, and feeling the words begin to flow. performance. Trial and error are integral to If you’re trying to teach a watcher, by far this learning process. Jeffrey, from Michelle the most effective technique is to get her out Miller’s store, is a doer. He learns the most of the classroom. Take her away from the man- while he’s in the act of figuring things out for uals, and make her ride shotgun with one of himself. For him, preparation is a dry, uninspir- your most experienced performers. ing activity. So rather than role-play with • • • someone like Jeffrey, pick a specific task within We’ve seen, in the stories of great managers his role that is simple but real, give him a brief like Michelle Miller and Judi Langley, that at overview of the outcomes you want, and get the very heart of their success lies an apprecia-

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What Great Managers Do tion for individuality. This is not to say that are. These differences of trait and talent are Differences of trait and managers don’t need other skills. They need to like blood types: They cut across the superficial be able to hire well, to set expectations, and to variations of race, sex, and age and capture the talent are like blood interact productively with their own bosses, essential uniqueness of each individual. types: They cut across the just to name a few. But what they do—instinc- Like blood types, the majority of these dif- tively—is play chess. Mediocre managers as- ferences are enduring and resistant to change. superficial variations of sume (or hope) that their employees will all be A manager’s most precious resource is time, motivated by the same things and driven by and great managers know that the most effec- race, sex, and age and the same goals, that they will desire the same tive way to invest their time is to identify ex- capture each person’s kinds of relationships and learn in roughly the actly how each employee is different and then same way. They define the behaviors they ex- to figure out how best to incorporate those en- uniqueness. pect from people and tell them to work on be- during idiosyncrasies into the overall plan. haviors that don’t come naturally. They praise To excel at managing others, you must bring those who can overcome their natural styles to that insight to your actions and interactions. conform to preset ideas. In short, they believe Always remember that great managing is the manager’s job is to mold, or transform, about release, not transformation. It’s about each employee into the perfect version of the constantly tweaking your environment so that role. the unique contribution, the unique needs, Great managers don’t try to change a per- and the unique style of each employee can be son’s style. They never try to push a knight to given free rein. Your success as a manager will move in the same way as a bishop. They know depend almost entirely on your ability to do that their employees will differ in how they this. think, how they build relationships, how altru- istic they are, how patient they can be, how Reprint R0503D much of an expert they need to be, how pre- To order, see the next page pared they need to feel, what drives them, or call 800-988-0886 or 617-783-7500 what challenges them, and what their goals or go to www.hbrreprints.org

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Further Reading ARTICLES How to Motivate Your Problem People people’s batteries again and again, you’ll en- by Nigel Nicholson able them to activate their own internal gen- Harvard Business Review erators. Your employees’ enthusiasm and January 2003 commitment will rise—along with your com- Product no. R0301D pany’s overall performance. Nicholson provides additional guidelines for Managing Away Bad Habits identifying the activities your people find in- by James Waldroop and Timothy Butler trinsically satisfying and unleashing employ- Harvard Business Review ees’ internal drive: 1) Through informal con- September–October 2000 versations, discern what drives an employee, Product no. R00512 what’s blocking those drives, and what could Waldroop and Butler further examine strate- happen if blockages were removed. 2) Con- gies for helping employees overcome weak- sider how you or the organizational situation nesses that can’t be addressed through skills (a tough restructuring, for example) might be training. The authors identify common “bad inadvertently blocking the person’s motiva- habits” and offer antidotes. For example, with tion. 3) Affirm the employee’s value to your “Heroes”—employees who drive themselves company. 4) Test hunches about ways to co- too hard and focus too much on the short opt the person’s passion for productive ends. term—point out the costs of burnout and en- One manager found that a talented but reti- courage them to assess themselves for symp- cent and angry employee was strongly moti- toms of overload. For “Bulldozers”—those who vated by his peers’ respect. The manager run roughshod over others but who get a lot asked him to consider becoming an adviser done—point out how many enemies they’ve and technical coach for his unit—then asked made and role-play conciliatory conversations him for ideas on how the new arrangement with their victims. For “Pessimists”—people might work. who emphasize the downside of change— One More Time: How Do You Motivate teach them to objectively evaluate the pros Employees? and cons of proposed ideas and the risks of by Frederick Herzberg doing nothing. Harvard Business Review January 2003 Product no. R0301F In this classic article, originally published in 1968, Herzberg focuses on the importance of tweaking job roles to capitalize on individual To Order employees’ strengths. To boost motivation, consider giving people responsibility for a complete process or unit of work. Enable peo- For Harvard Business Review reprints and ple to take on new, more difficult tasks they subscriptions, call 800-988-0886 or haven’t handled before. And assign individu- 617-783-7500. Go to www.hbrreprints.org als specialized tasks that allow them to be- come experts. Your reward? You’ll have more For customized and quantity orders of time to spend on your real job: developing Harvard Business Review article reprints, your staff rather than simply checking their call 617-783-7626, or e-mail work. Rather than trying to recharge your [email protected] page 113