LiNE Zine Fall 2001 - The Changing Nature of Leadership by Jay Cross

Not so many years ago, banks were peeking out from under regulations that had blanketed them since the Great Depression. Before the nineties, banks had prospered if they executed well. Afterward, they excelled only at the expense of their competitors. The competitors were ferocious—no longer simply other banks, they included aggressive insurance companies, stockbrokers, financial planners, credit card firms, finance companies, leasing companies, credit unions and more.

Six years ago, I was managing marketing and special projects for a company that enjoyed wide success training bankers. Our programs had taught more than a million bankers to make sound loan decisions, serve customers well, and sell services.

By 1995, however, bank customers were taking their business to innovators, not rule-followers. Our standard sales training wasn’t doing the trick for bankers. How could we help them become more innovative and customer-focused? How about leadership? Bingo! A course in frontline leadership would set us apart and help our customers think out of the box. That’s how I came to invest two months studying leadership.

Intellectual daredevil that I am, I set out to identify what top-performing leaders do. From March through May of 1996, I discussed leadership with dozens of people and read Drucker, Bennis, Kouzes & Posner, Schein, Schon, Argyris, Depree, Katzenbach, Blanchard, Gellerman, Handy, Hamel & Prahalad, Senge, and even Tom Peters. I concluded that exemplary leaders inspire followers, leverage the power of people, continuously improve performance, and feel personally empowered.

Front-line leaders thrived on change. They opened people’s eyes to marketplace realities and converted higher-level objectives into a vision everyone could understand. They used “localized reengineering” to reinvent the workplace. They intuitively applied the 80/20 rule and eliminated the inconsequential. They transformed the way business was done.

It struck me that leaders needed not only to work on skills but also to work on themselves. Leading a team into uncharted territory required confidence and self-knowledge. Successful leaders knew who they were, were mindfully aware of what was going on around them, and exuded confidence that they could get the job done. My marketing antennae told me this personal empowerment angle would also make for a popular course.

At the time I was doing my research, Harvard Business School’s John Kotter was championing the concept that leaders and managers are entirely different breeds. The manager keeps things on track; the leader breaks through obsolete boundaries. Managers control; leaders inspire.

2001

Now leadership is popular in business.

Books teach you leadership’s 108 skills, 101 Innovative Ways, 30 Marine Management Principles, 22 Vital Traits, 21 Indispensable Qualities, 21 Irrefutable Laws, 21 Most Powerful Minutes, 18 Workshops, 17 Indisputable Laws, 17 Principles, 15 Secrets, 11 Lessons, 12 Principles, 10 Traits, Ten Keys, Nine Keys, 7 Acts of Courage, Seven Habits, Six Fail-safe Strategies, Six Strategic Principles, Five Temptations, Five Giant Steps, Five Decision Styles, Five Practices, Four Disciplines, Four Practical Revolutions, Three Keys, One Minute, and the Other 90%.

You can learn from such luminaries as Jack Welch, Abraham Lincoln, Ernest Shakleton, Sun-Tzu, Dean Smith, Attila the Hun, John F. Kennedy, Carl von Clausewitz, George Patton, Jesus, Theodore Roosevelt, Vince Lombardi, Robert E. Lee, Admiral Lord Nelson, Ben & Jerry, Shakespeare, Bill Russell, God, Hannibal, Niccolo Machiavelli, Gandhi, Ronald Reagan, Elizabeth I, the Founding Fathers, and Heraclitus. (Sun Tzu leads the pack but perhaps that’s because his work went out of copyright several thousand years ago.)

Why the current interest in leadership? For one thing, the boundaries are no longer clear. They shift all the time. Nothing, but nothing, is rock solid any more.

Wide, ever-shifting boundaries change all the rules. We once rewarded compliance; today we reward innovation. We once praised obedience; today we praise ad hoc solutions. Yesterday’s subversive employee is today’s innovator. Leadership—creating value by hopping outside boundaries—used to be the province of a well-paid, well-educated few somewhere near the top of the pyramid.

Turbulent times have converted leadership into a responsibility shared by all members of the organization.

These leaders realize the importance of the web where everything is connected. Savvy companies share information far and wide. As Jan Carlzon says, “Information tells you about your possibilities. A person who has source information cannot escape taking responsibility.” In his book, Moments of Truth, Carlzon explains:

“We [once] controlled people at work by giving orders and instructions, telling them down to every detail what they should do out there—although we never had any real feeling for or information about what the customer really wanted. The worst of it was that the instructions really amounted to telling people what they were not allowed to do; it was just a way of limiting their responsibility.

“But what you need to do today is open things up so people can take responsibility. You have to give them the authority they need to make decisions on the spot. You do that by telling people where you want to get to as a company, and the strategy you want to use to get there. Then you give the people the freedom within the limits of your business strategy to act on behalf of the company.”

Networks have made information both inside and outside the organization abundant, and this shifts the burden of leadership to everyone’s shoulders.

The world has speeded up. Everything’s faster. Andy Grove says the Internet is the reason. The flowering of the knowledge economy is certainly a co-conspirator.

Intellectual capital has become more valuable than physical assets. Wall Street funds expectations, not cash earnings. Companies build relationships with customers instead of selling them things. A firm’s process know-how is its core strength. The information imbedded in a product is more valuable than the physical product itself. Intangibles rule. They are mind-matter. They can combine, reconfigure, deconstruct, and morph into new forms. A single good idea can eradicate old value and create new wealth. Intangibles are bits, not atoms. Bits travel at network speeds. The net girdles the earth. As a result, the entire world is rocking to a higher beta—more variations, faster cycles, greater extremes.

Uncertainty shakes everyone’s foundation. Stress is rampant. Everyone needs a Plan C and a Plan D to supplement Plan A and Plan B. A friend mentioned that since he had small children, he was looking for a steady job with a big company. These days he might find more security free-lancing.

It used to be easy to tell the good guys from the bad. For example, when I was working for UNIVAC, the competition was IBM, Burroughs, NCR, Control Data, and Honeywell. Rarely did I encounter an outlier like Nixdorf or Fujitsu.

If you’re in the computer business today, who’s your competition? It could be a services firm, an ASP, a telephone company, an online auctioneer, or an upstart you’ve never heard of. Competition could come from Europe, Asia, or anywhere else on the planet.

Your worst competitor over the long haul is not even in your business yet. That’s the nature of disruptive technologies. Ceaseless innovation plants more seeds of disruption than ever before, one of which will undercut your core business. A tricky thing about disruptive technology is that it loads the dice against established players. Disruption spreads from where you least expect it. Leaders must challenge conventional wisdom at every step.

Competitors used to be companies you tried to beat. Now you make them your partner; you seek opportunities together; you share the load because there are too many options to consider.

Ten years ago, tapping the keys of a computer was secretarial work. Today computer literacy is a prerequisite to leadership. Not only must the leader do email and surf the web for news, she must also grok the potential of it to shift the playing field. Every business that is not an e-business is threatened by e-business.

Business today is unpredictable. The leader confronts an avalanche of information. It’s difficult to filter the signal from the noise. This favors the generalist leader who can mentally hop from one field to another-the specialist is too likely to be blind-sided.

Peter Drucker tells us that the defining characteristic of leaders is followers. Followers, however, have changed, big time.

As democracy swept the political world, it simultaneously dismantled the autocratic corporation. Today’s workers are out for themselves. Not selfishly but realistically. Free agents. They recognize that their careers will last many times longer than their employer. Fast Company exhorts them to look out for “Brand You.” Tom Peters rants that the ideal structure is the “unit of one.” The Cluetrain has stopped to pick up people unabashedly loyal to themselves before all others. Our market-driven world drives people to increase their personal marketability.

While some decry high turnover, other companies turn the mindset of the new recruit to their advantage. After all, the companies want innovators, not followers. They prefer self-starters who will do what’s right rather than those who wait for instructions. They need people more concerned with getting the job done than punching the clock.

Corporations used to bribe workers who had critically needed talents to stay on board. High-tech companies have learned that money doesn't necessarily talk to a young person who drives a Porsche, watches a giant-screen TV, and owns a nice home. What keeps people on board is the opportunity to develop, to build valued skills, to achieve certifications, and to add to their store of intellectual capital.

What’s a leader to do? The job seems to be to keep people on the right path, but keep them from being stuck in ruts.

John Seely Brown tells us that, “An organization is a knowledge ecology; it is fundamentally dynamic and gains robustness through diversity. But ecologies cannot be designed; they can only be nurtured. The key to nurturing these ecologies is finding the balance between spontaneity and structure. People need both the latitude to improvise and the business processes to apply their knowledge. Thus, creative leaders must learn to be bold yet profoundly grounded. It's easy to be conservative and grounded, or to be radical and impulsive. It's hard to be both grounded and radical (and the literal meaning of the word—going to the root—suggests exactly the right approach).”

To be effective, leaders must shift their focus from static to dynamic, from physical to virtual, from financial results to financial expectations, from machines to people, from goods to services, from analytical to intuitive, and from institutions to individuals.

How can we get them there? While I’m generally an advocate of eLearning, I don’t think it’s the right way to nurture leadership skills. In my own case, a one-week intensive workshop at the Center for Creative Leadership taught me more about leadership than reading thousands of pages of Drucker, Bennis, and Kouzes.

To become a great leader, most of us will need to observe a great leader in action. A personal mentor is invaluable.

The ultimate way to transform ordinary folks into leaders is to convince them to define themselves as leaders. Leaders learn by doing.

Jay Cross is a leader of the highest order: he leads himself around in circles and pulls people into his learning vortex with grace and fun. That’s why we love him. You will too. Check out www.jaycross.com.

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2001

Now leadership is popular in business.

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