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Darden Graduate School of Business

Red Herring

The Lexus and The Olive Tree. Thomas Friedman (Anchor, 2000)

Mindfulness. Ellen Langer. (Perseus, reprint 1990)

Powerful Conversations: How High-Impact Leaders Communicate. Phil Harkins. (McGraw-Hill, 1999)

Evolving Self: A Psychology for the Third Millennium. Mihaly Csikszentmihalyi (Harperperennial Library, reprint 1994)

Choice Theory: A New Psychology of Personal Freedom. William Glasser. (HarperCollins, 1999)

 

 

Over the last few years, executives have been confused and challenged by the new market forces that have affected their business, their careers, and their principles of leadership. The economic forces of information, technology, globalization, and capital are not only rending the fabric of economic structures, they are also fundamentally altering the cultural fabric of the organization. The rapid rate of change means that leaders can no longer act on what they know. They must learn continuously to be successful.

In The Lexus and The Olive Tree, Thomas Friedman argues that the digital global economy is ripping the existing social and economic framework apart and reassembling it based on technology, information, and capital. Technology is enabling almost unlimited access to information. With a constant flow of new information, investors can supply and divest capital on an enormous scale and more rapidly than at any point in history. These market forces are altering the social contract between employees, employer, and owner. Individuals can no longer depend upon a lifetime working within the same organization, and employers and owners must operate with a far more dynamic workforce. Global economic forces are not only forcing countries and organizations to restructure their political and economic policies, they are also creating organizational cultural changes that must be faced every day. Virtual workplaces and “free agent” employees are fundamentally changing corporate culture and forcing you to think and act differently. Your leadership capabilities, therefore, are increasingly important to guiding, shaping, and building a successful company.

It’s much harder to control such a dynamic environment where everyone is so connected and there is far greater instability than ever. If you avoid dealing with the changes created by these forces, you are risking the destruction of your long-term viability. It is imperative, then, that you begin to change your mindset and behavior to reflect the tremendous pace and pressure of today’s economy. Leadership requires a different set of abilities to help navigate the forces of change in the economy. Leadership—its dynamics, its boundaries, and its requirements—must fundamentally change from what it was less than a generation ago. To gain insight into the challenges facing a leader in the current environment, it is necessary to understand the underpinnings of how leaders have been valued in the past. 

The Leader in the Knowing-Doing Model

Leaders had a very different role before the forces of globalization, information, and capital changed the cultural and economic environment. First, the transmission and aggregation of information to both employees and the markets was slow. Leaders could limit the supply of information to an elite group who “managed” the company. Second, with less information, a slower pace of investment in the capital markets, and fewer instantaneous communication channels, leaders could maintain the social contract that enabled long-term relationships between employer and employee to be more stable. Third, leaders knew by experience the right strategy and actions to take. What worked in the past was likely to work in the future. Leaders were valued for their knowledge and ability to take action to solve a problem. Since they had all the information, they were valued for their ability to give direction and “take the bull by the horns.” 

We call this model of effective leadership “the knowing-doing model.” In this model, much of a leader’s success is based on their ability to take action on what they know and the information they maintain. Successes are outcome based; the priority is accomplishing tasks and maintaining constant activity. Knowing-Doing leadership is action oriented; leaders are always doing something—cutting costs, getting results. They focus on the bottom line, and through their knowledge make decisions about which projects and products to fund and which to cut, which managers will become effective executives and which will not, and which strategies will work and which will not. In hierarchical organizations, power rests with those at the top. The control of knowledge was the source of a leader’s power. 

The Leader in the Knowing-Learning Model

Compared to just a generation ago, the world has become infinitely more complex and fast-paced. Today, information is available at everyone’s fingertips. Through the Internet, email or wireless devices, anyone can access the desired information and share that with anyone on the globe at any time. Information is far more accessible and everyone can participate (trade, hedge, option, sell or buy) in the marketplace of ideas, information, and news. Information, once replete with value, is now the basis upon which every individual in the whole organization operates. It is impossible to restrict the flow of information given the wealth of sources, and anyone can aggregate the information that once was the source of a leader’s power. Value has shifted towards the ability to identify and execute on relevant information. In the organization, everyone has the capability for such analytical skills. Leaders, then, no longer control the transmission of or the analysis of “company” or market information.

Leaders no longer have any control over the employee/employer contract, and the hierarchical structure has crumbled. Given the effects of information on the markets, organizations have to move more rapidly, and therefore eliminate any positions of long-term job security. Jobs, rather than being information-based, are now more skill-based to accomplish particular projects. Some projects may last a few months, whereas others last significantly longer or shorter. As information shifts markets and markets shift the definition of work, individuals are adapting to the project nature of work by focusing on their own capabilities, their own skills sets and defining their own value to associate with any organization. In today’s marketplace, individuals are likely to offer their skill sets to the organization most closely aligned with their ethics, principles, and interests.

As a result of these two key changes, the role of leader has had to shift dramatically from one of knower-doer to that of knower-learner. Leaders no longer have all the information they need to make intelligent changes, and what they do have is equally accessible to every employee. Leaders no longer have a stable capital market in which to work, nor do they have a stable employee base. Knowledge—once the basis of all their power—is still valuable, but provides only a minimum platform.

As leaders, you can create but cannot control strategy. You cannot tell everyone what to do, but you can be prepared to teach and learn appropriately. You cannot rely on a small set of institutional investors to support and determine the value of the company, but must build a variety of relationships within the markets as a whole. You cannot control the model of the organization, but can instill a set of principles and ethics upon which it must run. You cannot control other people’s thoughts and actions, but you can control their ability to learn and grow. You cannot absolutely know the right direction of the company, and must therefore be open and curious to new ideas. You cannot control decisions, because the infinite number of decisions inherent in each email, page, and voice mail is mind-boggling.

You can, however, build relationships to help influence your employees to make the right decisions. You have to be able to learn and then apply those new ideas through action and teaching, and learn from your experiences. You must be able to develop your employees’ capabilities in two different areas: Intrapersonal and Interpersonal.

Framework of the Knowing-Learning Model

Before we grapple with interpersonal skill, it is important to understand the background of a leader’s ability to grow and learn.

Intrapersonal abilities are best defined as a leader’s ability to expand their mental categories, be open and curious to new ideas, and be open to different perspectives. In the book Mindfulness, Ellen Langer gets to the heart of a leader’s capability to learn. Humans organize their thoughts into categories. A little girl, for example, learns the word “dog” at the age of one, and over the next several years expands that category of thinking to include a variety of dogs, from Schnauzer to Labrador to Rottweiler. In each category, she then can make sweeping judgments (all Rotweilers are dangerous and thus should be avoided) or she can expand her categories to include multiple types of Rottweilers. The girl’s willingness to extend beyond her initial experience defines her willingness to learn. As we learn, we expand our categories in all facets of life. 

Applying this concept to leadership, Langer argues that leaders must be mindful to constantly expand their categories. Leaders have to be interested in the new ideas and concepts that their employees raise. A leader must also be open to different perspectives. A leader’s willingness to listen and learn from others’ experiences speaks to her capability for growth. A leader, often beset by different perspectives, must be able to listen, learn, and in many cases make effective decisions that navigate these views. Leaders who choose not to adopt new concepts or accept new ideas also fail to inspire employees or develop strong relationships. That means they can’t raise capital, create or communicate a vision, or effect change. In a world where ideas, intellectual capital, and an inspired and talented workforce are key competitive differentiators, a company whose leader is unwilling to listen to new ideas can be a cataclysmic disaster.   

Interpersonal skills are the leader’s capability to create, articulate, and communicate an agenda or vision for the company. Learning and teaching skills enable leaders to effectively share their vision. Leaders can develop relationships with their colleagues, their employees, and their investors who can execute the plan. At the core of interpersonal skills is a leader’s ability to develop relationships. Strong, meaningful relationships require effective communication skills. The leader must have the capacity to create and communicate a vision and inspire employees. The leader focuses her energy on creating opportunities to listen, to share her intent, and to learn from her team. Phil Harkins, whose writings focus on the interpersonal skills of a leader in Powerful Conversations, writes, “The leader, through his or her conversations, aims to foster relationships, build support networks, and sharpen organizational focus.” Harkins lays the groundwork for how leaders can listen, learn, and communicate effectively in a tumultuous, ever-changing, and stressful environment. Today, that describes every working environment. A leader’s role is to create the support network of an inspired workforce by building trust. Trust implies making and following through on personal and organizational commitments. Built day-by-day, trust builds relationships between leaders and individuals within an organization. While the social contract may have changed dramatically, it is now possible to accomplish more in less time with the help of a committed, informed, and inspired team. 

Conclusion

Not only are the new market forces of technology, information, and capital changing the political and cultural structures in each country, they are also fundamentally altering the structure and culture of organizations. As a consequence, your role as the leader is shaped less by that which you “know” and “control” and more by how you share knowledge, learn from your actions, and reshape your own knowledge based on new experiences, perspectives, and ideas. Inherent in this change is your intrapersonal ability to grow through the knowing/learning process

Leaders who have the interpersonal capabilities of powerful conversations and the intrapersonal capacity to be mindful of their own learning and knowledge shortcomings will be able to lead in today’s turbulent times.

William Luckert is Director of Technology Initiatives for Executive Education at the Darden Graduate School of Business and a lifelong learner. He is responsible for helping Darden’s clients learn more effectively in online environments. Prior to working at Darden, he was a sales executive at Ninth House Networks and Achieve Global. He is entering the Darden School’s MBA program next fall, and can be employed as early as May of 2004. Email him at luckertw@darden.virginia.edu.

Alec Horniman, Ph.D. has been a member of the Darden Business School faculty
since 1967. He has taught in the areas of Organizational Behavior, Managerial Psychology, Career Management, Business Ethics, Strategy, Leadership, as well as Change and works with Darden’s Executive education program designing and leading programs. These interests are supported by a lifetime commitment to ethical/moral and principle issues that sustain the other interests. Contact him at hornimana@darden.virginia.edu

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