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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
WLAH093001GR
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