[Published in Management Accountant, Sep 2012]
Strategy is to leadership what is compass or a map to the captain of a ship; it provides a broad map for navigating the corporate ship to its goals. The most important part of an effective strategy is its ability to anticipate future possibilities and opportunities and provide a roadmap for building a successful future. What is the type or nature of leadership and strategy which can steer an organisation triumphantly into the future? This article examines this question in the light of an integral approach to management. The format of the article is in the form of critical questions on the subject and in this article we are using the thoughtful questions raised by the well-known strategy consultant and business writer, Rowan Gibson in a book edited by him.
The Future Perspective
Are organisations spending too much time managing the present and not enough time for the future? Why is it so challenging to think strategically about the future? And how do you create the incentives within an organisation to do so?
Most of the executives are under great pressure to achieve short-term targets. The present corporate environment rewards short-term performance and not long-term effectiveness. So executives and firms don’t have the incentives or inclination to think about the future.
But this applies only to the average company or the executive. If you look beyond the average to the extraordinary performers we will find most of them have a strong orientation towards the future. For example, James S. Burke, former CEO of Johnson and Johnson states in an interview that when he meets managers he never asks what they are doing at present but always asks, what are their future plans or goals and how they are going to achieve them. Similarly, in GEC, the entire management team of each division goes to its famous leadership training centre where the main focus is on creating an action plan for the future growth of the division through a process of free and intense discussion.
This brings us to different ways of building the future. In fact almost all companies or entrepreneurs do some kind of planning for the future. But most of them are extensions or repetitions of the past. For example, if you are running a restaurant, you plan for some more restaurants of the same kind in other locations. But this can also be done in an innovative way like for example making the new restaurants better than the first interms of efficiency, productivity, quality, customer service, interior decoration or else like McDonald or Starbucks, strive for a massive standardized expansion in scale and volume. The second way is to identify a new business opportunity with great potential in the future, like for example GEC’s venture into the domain of green energy. The third approach to future is to discover an unmet need in the market and build a new venture like for example, Ted Turner of CNN spotting the unmet need in news and building a 24-hour news channel. The fourth way is through innovations in product development like for example Sony’s Walkman or Tata’s Nano. Building the future through a repetitive expansion of the past is less challenging than creating a new future, which requires intuition, imagination and innovation.
But in a broader perspective, the main objective of management is not futurism per se, but long-term effectiveness of the organisation. Futurism is only one aspect of this long-term viability of an organisation, which requires reconciling, stability and continuity with change, progress and future growth. Stability and continuity comes from shared values which are in harmony with the universal laws of life and higher nature of human beings like truth, beauty, goodness, liberty, equality and fraternity. Progress and growth come from a constant quest for the new, better and perfect in every activity of the individual and corporate life.
How to create the incentive for people to think and act in the long-term? The only effective way is to evolve a performance management system which rewards factors that lead to long-term performance like character, ethics, values, customer-orientation, quality, creativity, learning, quest for progress and perfection, social responsibility, caring for human wellbeing and development of people.
Who should a company involve in the process of developing and implementing strategy? What should be the role of senior management in the process?
Until now, strategy-making is the function of top or senior management. But some management thinkers are counselling for the “democratization of strategy.” For example Gary Hamel argues that there must be a greater participation from the younger members of the organisation and from the lower levels of the hierarchy, especially the front-line workers who are in direct contact with the customers. As Hamel explains:
“If you want to create a point of view about the future, if you want to craft a meaningful strategy, you have to create in your company a hierarchy of imagination. And that means giving a disproportionate share of voice to the people who up until now have been disenfranchised from the strategy-making process. It means giving a disproportionate share of voice to the young people. It means giving a disproportionate share of voice to the geographic periphery of your organization—because, typically, the farther away you are from headquarters, the more creative people are: they don’t have the dead hand of bureaucracy and orthodoxy on them. And it means giving a disproportionate share of voice to newcomers.”
There is a valid point in this proposition of Gary Hamel. However we must also take into consideration the temperament and capability of people. Strategic thinking requires a well-developed conceptual mind with a capacity for seeing the big-picture, holistic and long-term perspective and a visionary gaze into future possibilities. There can be a greater participation on strategy-making from all the levels of hierarchy. For example, something like quality-circles in Total Quality Management, there can be some form of strategy circles, where people from all levels of the hierarchy are called upon to give their ideas and suggestions. But the core process of strategy-making has to be done by people who have the temperament and capacity for strategic thinking with inputs from field-executives who have to implement the strategy. Ideally, the strategy-building team should have the following categories of people:
- Strategic thinkers with the conceptual abilities for long-term and big-picture thinking.
- Front-line workers and employees who have the best understanding of the changing external environment and customer needs, mostly from marketing and sales.
- Field executives who have to implement the strategy.
- Representatives from finance and productions.
Technology and Competitive Advantage
How important will technology is in creating a competitive advantage in the future?
Technology will remain as an important factor in gaining competitive advantage. However, in the corporate world, what is more important than acquiring cutting-edge technology or achieving technological break-throughs by R & D, is how technology is applied for enhancing organisational effectiveness and maximising customer satisfaction. As the well-known strategy specialist, Michael Porter points out:
“I believe that every company has to master─or at least have the capacity to assimilate─the range of technologies that are affecting the way it goes about delivering value to its customers. I would say, from looking at many industries that a sheer scientific breakthrough─or the ability to have the most scientific technological capability in a particular field─does not seem to be that important. It’s more the ability to apply technology that is the source of advantage. And to apply technology you’ve got to integrate it with a lot of other things. So we find over and over again that the first one to market with a new technology is often not the winner in the marketplace. The winner is the one that figures out how to incorporate that technology into the broader system of the company.”
So in a long-term perspective the more strategically important factor than technology will be how effectively we are able to harness and unleash the creative potentialities of the people who will be creating, using and applying technology.
The Old and New Leadership
What will be the essential difference between the old and new leadership.
The mantra of old leadership is Enforcement by Rules and Regulation Law. The mantra of new leadership is Unfoldment through Liberty or in the striking phrase of Tom Peters, “Liberation Management”. The main challenge of new leadership is to create an environment which leads to a free and harmonious unfoldment of human potential in the consciousness of the individual and the group and an equally free and harmonious self-expression of this unfolding human potential in the outer life of the group.
The values of old leadership are authority, hierarchy, command and control, fear of punishment, lure of reward, rules and regulation, rigid dogma or ideology, order of uniformity, rational analysis. The values of new leadership are living example, empowerment, intuition, vision, empathy, understanding, purpose, values, nondogmatic flexibility and integrating diversity. The old leader is bent on managing others, but the new leader is anchored in self-management. The old leader is satisfied with the routine and efficiency of statuesque. The new leader has to embrace change and foster creativity, innovation, evolution and spiritual growth.
This doesn’t mean the new leader will be a soft and saintly weakling. He can be firm or even aggressive, if the situation demands such an action or behaviour. He will not entirely reject the values of old leadership. He is not also dogmatically attached to the new values. As we have indicated earlier a nondogmatic flexibility is one of the main qualities of the new leader. He will intuitively perceive the holistic truth of each situation and do what is to be done in the present condition for upholding his personal or organizational values. For example, though he is personally inclined to the principle of minimum rules and maximum freedom, he will not hesitate to enforce strict rules temporarily, when freedom degenerates into chaotic license. He will be kind and magnanimous to those who use their freedom with responsibility and patient with those who make mistakes out of weakness or incompetence. But he will be firm or severe with those who violate values or trample down on others freedom or exploit the weak out of an aggressive and arrogant egoism. In the difficult task of upholding ideals without losing hold on present realities, he will be a pragmatic idealist. He is ready to compromise in the short-term in order to gain in the long-term, like what Sri Aurobindo wrote on a great Indian leader:
“Though he can be obstinate and iron willed when his mind is made up as to the necessity of a course of action or recognition of a principle, he is always ready for compromise which will allow real work to be done, and will take willingly half a load rather than no bread, though always with a full intention of getting the whole bread in good time.”
And finally, the new leader perceives the truth of spiritual evolution of consciousness and the need for spiritual progress. He understands that only in the intuitive knowledge of the spiritual consciousness of unity where he can feel his oneness with all existence, he can unify and harmonise the interests, claims and realities of life with the higher values and ideals of the mind and spirit. So, the new leader strives consciously to attain this spiritual consciousness and intuitive knowledge through an inner discipline.
In the segment of life he leads, he will felicitate this higher evolution of consciousness within his sphere of influence. The eminent scientist and evolutionary thinker, Teil-hard-de-chardin coined the world “Evolutor.” He said, the divine is the Evolutor which means He makes the world evolve towards higher orders of life. The New Leader will be such an evolutor and a human representative of the Divine Evolutor.
Building Distributed Leadership
How can we encourage leadership at all the levels of the organisation?
First of all we must be clear about what does it mean by “encouraging leadership” at all the levels of the organisation. It means empowering employees at all levels to take operational or executive decisions without any supervision, interference or control by those in the higher levels of the organisation. Let us now examine what are the conditions or the environment which can make it happen.
First, condition is a shared vision, values and principles which provides the overarching guiding light for employees to know whether their decisions are in harmony with the higher purpose or what Tom Peters described as the “superordinate goals” of the organisation.
The second factor is Commitment to Performance Standards. Power and responsibility go together. Empowerment works only when people who are empowered are made accountable to clear performance standards which are not imposed upon them from above, but evolved through a process of consultation and dialogue. In other words, there must be voluntarily commitment to clearly defined performance standards.
The third factor is Capacity-building. An employee cannot be considered as fully empowered if he doesn’t have the capability to achieve the performance standards. This task of capacity-building has to begin at the stage of recruitment. The management has to ensure that each employee has a job which is in harmony with his/her natural temperament and capabilities. In the next stage, every employee has to be provided with the necessary information and continuous training for developing the knowledge and skill and qualities for the living values of the organisation and achieving the performance standards.
The third condition is full development of the human potential in each individual. The employee development programmes must go beyond capacity-building for performance and aim at a holistic awakening of the human potential in all the levels-physical, emotional, mental, ethical, aesthetic and spiritual.
The fourth condition is to create a culture of borderless collaboration and sharing. In the new corporate environment where everything is interlinked and interdependent nothing can be achieved without collaboration and teamwork. So the management has to create an environment where there is sufficient, incentives, encouragement and motivation for a free flow and sharing of knowledge, information and resources across the various divisions of the organisation.
Creating a Meaningful Purpose
Is it the organization’s responsibility to give people a purpose in life?
It is always desirable for an organisation to hold a purpose which provides a greater meaning to work than mere livelihood or money-making. Without this higher purpose, people will have no motivation to give all their mind and heart and potentialities for the organisation. Here comes the limitation of some of new trends and concepts in management like “employability.” According to this new concept advocated by some management academics, job security is no longer possible in the new workplace. Companies can only offer “employability” which means provide the opportunity and experience to develop the professional competence which makes the corporate worker employable elsewhere. But such a contractual approach to people offers no meaningful motivation to employees to give their mind and heart to the organisation. In this approach, the organisation becomes more or less a soulless workshop for developing skills which can be sold elsewhere. As Charles Hardy, the well-known British management thinker argues:
“If you want to retain talent you’ve got to create a cause. Otherwise you get a purely instrumental relationship in which I’m working for you purely because I’m earning money, or because it’s teaching me some skills which I will go somewhere else and use. Then you get very short-term thinking, very selfish thinking.”
Similarly, according to Warren Bennis, another eminent management thinker, the most important function of leadership is to create a shared sense of purpose. As this well-known leadership guru explains:
“What leaders have to realize is that people would much rather live a life dedicated to an idea or a cause that they believe in, than lead a life of aimless diversion. I think that’s what effective leaders are all about and that’s what creative collaboration is all about. It’s about creating a shared sense of purpose. Because people really need purpose. Meaningful purpose. That’s why we live. And I think that the power of an organisation will be that shared sense of purpose. With a purpose like that you can achieve anything.”
Charles Handy, (1996) ‘Finding Sense in Certainty,’ Nicholas Brearley Publication, London, p. 11.
Gary Hamel, (1996) ‘Reinventing the Basics of Competition’, Rethinking the Future, Nicholas Brearley Publication, London, p. 76-92
Michael Porter, (1996) ‘Creating Tomorrow’s advantage,’ Rethinking the Future, Nicholas Brearley Publication, London, p. 48-61
Rowan Gibson, (Ed), (1996) Rethinking the Future, Nicholas Brearley Publication, London, p. 76-92.
Sri Aurobindo, (2003) Collected Works, Vol. 1, Early Cultural Writings, Sri Aurobindo Ashram, Puducherry, p. 650