Leadership : Art of Leadership - Human Side of Enterprise (Part Two)

Douglas S. Fletcher's extensive hands on management background include profit responsibility at the general management level as well as broad management experience in production, product management, human relations, sales and marketing manage ment. He has been a principal of Performex since it was founded in 1978. His performance management methodologies have been successfully implemented in numerous firms including: American Honda, Bank of America, Carnation-Nestle production facilities, and multiple divisions ( both domestically and internationally ) of Unocal. Performance, process, and networked organizations are his specialty.


View Douglas' website www.performex.com



There are three basic levels of leaders.


Executive leaders ( CEOs ) are responsible for articulating the vision and direction of the firm. CEOs make speeches and reorganize but have very little impact on the day-to-day operation of any kind of business. This is the job of line-leaders.


Line leaders are the lynch pins connecting lower levels to the top. They have a great deal of influence on what is important. They can act as filters or amplify the message executive leaders want communicated. Through their actions and even their non-verbal behavior they communicate what they think is important. They can kill any change program or they can take a leadership position and promote change. Unfortunately, this group of leaders can possess a mindset conditioned by years of adversarial relationships and can be wary of using interactive leadership techniques. Change programs often fail because of this groupís lack of effective leadership skills.


Network-leaders are the third type. They are the invisible force behind how the firm really operates. Whether union representatives or a covey of technical experts, these individuals create a web of relationships and alliances that penetrate departmental walls. Often they represent communities having similar interests. They typically come together voluntarily, drawn by a common social and professional force. There are no bosses, diverse agendas, and no expected results. The egalitarian nature of these groups promotes openness to exchange knowledge, to listen, and to support disagreement. These natural work groupings with their network- leaders need identification and their networks formalized. Accepting and legitimizing these communities of interest is formalizing the informal organization. This is where "tribal knowledge" is created. In order to promote new leaders, change, and innovation, these communities must be strengthened to leverage the benefits in todayís network organization.




The need for leaders at all levels is being aided by the increasing filled by women. Faith Popcorn of BrainReserve tracks business and personal trends for Fortune 500 companies. In the 1996 book Clicking, she and Lys Marigold identify one of these trends to be the growing importance of women in business. They label this trend Female Think. In business, it manifests itself as a change from traditional, goal-oriented, and hierarchical models of interaction to more caring and familial ones. Since women tend to think differently than men, they interact with employees differently, in what has been called a more people-centered way.


Researchers Raquel and Ruben Gur at the University of Pennsylvania have concluded that the typical female manages information, emotions, and relationships differently than the typical male. Their research concludes, "Where crossfunctional collaboration is the medium for managing innovations, then individuals most comfortable with facilitating discussion and smoothing conflicts may be [women]." The Gurís peer-review research suggests that because female managers typically display those virtues best, project team leadership will shift more and more to women. When this prediction is coupled with the fact that for the first time as we leave the 20th century behind women between the ages of 25 and 35 will have more education than their male counterparts, it appears that women may just have the right skills for the evolving New Economy.


Similarly, in her book The Female Advantage, Sally Helgesenís findings reveal that organizations run by women do not take the form of the traditional hierarchical pyramid, but more closely resemble a web, where leaders reach out, not down, to form an interrelating matrix built around a central purpose. A later book, The Web Of Inclusion, takes her spider web analogy further and gives the reader a glimpse of the postindustrial organization: it is fluid, technology-driven, based on creativity and relationships. As an analogy, webs of inclusion perfectly mesh with the ever-changing demands of the information age, diversity, and strategic alliances. Women, more so than men, seem to function well in this environment. The women Helgesen studied in her research "had built profoundly integrated and organic organizations, in which the focus was on nurturing good relationships; and in which the niceties of hierarchical rank and distinction played little part; and in which lines of communication were multiplicitous, open, and diffuse."


One of the nationís leading experts on the subject of women in business is Judith Rosner, faculty member at the Graduate School of Management, University of California, Irvine. Her 1990 HBR article "Ways Women Lead" suggests is that generally men view job performance as a series of individual transactions with subordinates, with rewards given for good work and punishment meted out for substandard performance. Women, on the other hand, encourage employees to align their self- interests by identifying with the group. In exchange, these leaders share power, encourage participation, and allow for what employees what out of the job. This people-centered way favored by women stems from a belief that allowing employees to contribute and to feel important is a win-win situation.


New studies find that women managers outshine their male counterparts in almost every management performance measure. 21 A recent Business Week article documents that out of 31 measures of performance, women raked higher on 28 of them. The researchers werenít looking to ferret out gender differences. While gender differences were small, and men sometimes got higher scores in some critical areas, such as strategic planning and technical problem solving, "female executives were judged more effective than their male counterparts." The researchers stumbled on this finding while compiling hundreds of routine corporate performance appraisals.


One of the reasons women are better leaders is that the essence of what women leaders do is to interact with people. They do all the things that good leaders do, men or women, but women seem to actively work harder to make their interactions with associates positive for everyone involved. More specifically, they share power and information, enhance other peopleís self-worth by listening, and get others excited about the task at hand. These characteristics sound a lot like "participative management," or McGregorís Theory Y.




The number of women in business, especially at the top, is exploding. In the next few years, according to the U.S. Department of Labor, half of all business will have a female owner. Most women-based businesses are small sized, where womenís people-centered leadership is not only appropriate, it is a significant factor in attracting and retaining key employees, with the economy strong and unemployment low. It is also appropriate because, as noted in Chapter 1, entrepreneurs use their natural leadership to build the business.


A positive sign that women are making it to the top with their interactive leadership style is the outside selection of Carleton "Cindy" Fiorina for the top job at high-tech firm Hewlett Packard Co. A least two out of the four finalists for the top job at HP were women. In other words, not only was a women chosen, but the odds favored that result. Among the candidates, she had the clearest grasp of the "HP Way" referring to the companyís value system and its emphasis on the people side of business. She joins an elite group of women heading Fortune 500 companies. This is a first, since the biggest and best known high-tech firms such as IBM, AOL, Intel, and Microsof are run by men.


Two of the most important factors propelling women into positions of corporate power are the two giant forces that are shaping the economy itself; rapid technological change and the shift to the horizontal corporation. The resulting organizational structure favors workers who excel at influencing others and are team players.




In large complex organizations, one person may not have the requisite skills to be both a professional manager and an inspiring leader. In such a difficult role, manager - leaders tend to leave their leadership skills aside. Kotter, in fact claims, "Most U.S. corporations today are over-managed and under- led." But the opposite is also true. Being overled and undermanaged is just as dangerous as Apple Computer found out under its founder Steve Jobs. Because the abilities to lead and manage are so different, aptitude for both roles is rarely found in one larger-then- life individual. Jack Welch, Chairman of General Electric is the poster boy of this dual role. Another corporate chief falling into this category is Sam Walton of Wal-Mart. Both Welch and Walton excel at being leaders and managers. But because their kind is so hard to find, corporate America is witnessing the emergence of co- leaders. In this new model, the boss and subordinate act more like peers.


With leadership partners, one often excels as the interactive leader; the otherís focus is management. Bennis and Heenan, in their book Co-Leaders: The Power of Great Partnerships, make the point that power sharing can work if the chemistry is right. From Abbott and Costello to the short-lived duo of Orvitz and Eisner, or the long-term relationship between Bill Gates and Steve Ballmer, differing skills and a willingness to share power are fundamental to any such successful partnership.




Chapter 3 describes Microsoft as an example of a company smart enough to reinvent itself, jump the curve, and realize its need for co- leaders at the top. As weíve described, Microsoft had hit its own corridor of crisis. Steve A. Ballmer, the new president, was convinced he had to reinvent the company. Ballmer and his boss, Chairman Bill Gates, have come up with a sweeping overhaul of the thinking and structure of Microsoft. This is leadership at its best. The Internet changed everything for Microsoft must. They had to take a leadership position and jump the technological curve or face the prospects organizational decline. Their "DNA Strategy" as it is called, sets a new direction and organization structure for the firm.


Gates and Ballmer realized that they themselves were the bottleneck. Decisions large and small were being funneled to the top. Typical of this centralized control was a practice of reviewing key features of soon to be released software and the response records from the company's customer support lines. This undermined the confidence of managers below they didnít feel as though they were in control of their own destiny. To achieve the new vision, Microsoft is decentralizing into eight separate entities. The roles at the top change too. While Gates envisions the technology of the future, Ballmerís job is tending to the performance management of the business. He is the nuts and bolts guy; Gates is the leader. That is not to say that Balmerís job isnít leadership. Microsoft of the future will need many leaders as it manages its network of internal groups and external alliances. As Ballmer says, "I have to grow from being a leader to being a leader of leaders" as he manages the business.




When it comes to famous co-leaders, the Larry and Ray show certainly qualifies. It has been around longer than Gates and Ballmer. Larry Ellinson and Ray Lane together ran Oracle Corp., the worldís second-largest software company, for many years. Ellinson is a promoter of grand new strategies, the consummate leader. Lane looked after day-to-day operations while he painstakingly built the organization. He was Mr. Process. While Ellinson tries to change the computing world, Laneís focus was on changing Oracle. As Bill Marshall, an Oracle Consulting manager, says, "As a combination, theyíre much stronger than they are as individuals." Both Oracle and Microsoft provide examples of the interesting openness in high- tech companies to share power.




A very young Internet consultancy uses a CO CEO approach. Neither have anything in common with the other, yet that helps explain why it works. Sapientís Jerry Greenberg is Mr. Outside. He heads up sales and marketing. He facilitates board meeting, talks to Wall Street traditional CEO stuff. On the other hand, Stuart Moore is Mr. Inside. His focus is how to make the firm a great place to work, and hiring talent. He is the one that can dialogue with the techies in their own language and relate to their needs;COO stuff.




While co- leaders are often complementary, power sharing can get sticky. Ray Lane and Ellinson parted company in 2000 when Ellinson wanted to improve operations, cut costs, and fatten the bottom line. Co- leadership is often structured out of a merger. When Weill of Travelers and Reed of Citicorp finally put their merger together, they were appointed CO-CEOís. A 1999 Business Week article entitled "Is This Marriage Working" pointed out the tension paradox created at the top of Citigroup. Both Weill and Reed are good at what they do, but couldnít share power. Even though joint leadership appeared to be the best solution, old-line managers had too much difficulty with the new arrangement. Eventually Weill got the top job and Reed quit.


However, the time-honored notion that all great organizations are the lengthened shadows of a great man or women is ending. It will be the maturity of partnerships like that of Gates & Ballmer, the co-stewardship of Greenberg & Moore, or the hundreds of alliances being formed around the world that determine if teamwork at the top is viewed as a key component of corporate strategy. Neither flipping a coin nor selecting one CEO over the other is a viable solution. Can organizations expect teamwork at lower levels if the very concepts of teamwork arenít practiced at the top?




One of the reasons for the emergence of co-leaders and power sharing is a reduction in either/or thinking. When picking an operating philosophy the balance between a concern for production and a concern for people there is a tendency among business people to fall into the trap of relying on one approach at the expense of the other. The dilemmas of bigger or smaller, controlling vs. delegating, planning or spontaneous creativity, leading with vision or encouraging entrepreneurism, being self sufficient or out-sourcing, downsizing or building trust with employees are typical of those facing management- leaders. As more and more successfully co-lead companies are established, the drawbacks of either/or thinking are becoming clearer.


For example, Levi Strauss & Co. fell into either/or thinking and lost its way in the late-90s. Family heir Robert Haasí decision in the mid-90s to focus on touch-feely people techniques at the expense of hard nosed performance requirements led the once ever-cool Leviís jean manufacture to lose half its menís market share. No question, Levi Strauss was renowned as one of the best places to work. It made Fortuneís top ten lists many times, but in an editorial, Fortune editors laid much of the blame for loss of market share on Haas for mismanagement. Haas, they said, lost sight of Leviís main management goal: "to sell as many jeans as possible by keeping brand fresh."


Either/or thinking creates an unbalance. Purpose ( maintaining or increasing market share ) canít take a back seat to people ( and their needs ). Both requirements must be fulfilled at the same time. While this creates tension, resolving what appear to be mutually exclusive approaches precipitates a new set of solutions. High-performance organizations ñ whether they have co- leaders or larger-then- life individuals like Jack Welch ñ seem to deftly balance the tension between pairs of opposites. The good ones allow these tensions to exist. They understand that tensions generated by work-related differences are the source of creative ideas that add value. Instead of arguing which ways are best, successful companies and their management-leaders strive to integrate different points of view. They use their pragmatism and influencing skills to defuse polarization.




The other skill managementñleaders will need to master is effectively utilizing intellectual capital. As we discussed earlier, todayís worker is no different from his or her counterpart of 50 years ago. He or she wants the same things out of a job; the only problem is that 50 years ago the perception of work was radically different than it is today. However, over this half-century, survey results about what motivates workers and what makes a company a great place to work have been very consistent. Time and time again, the results come back that challenging work and opportunity to continually grow in the job are what produce job satisfaction. Pay and employee benefits are fundamental to job satisfaction, but they are not key motivators. So, whatís the great workplace secret?




Developing human capital and converting it into useful products and services is fast becoming the critical executive skill of the age. A developed human capital yields a professional intellect that creates most of the value in the new economy, in service and manufacturing industries alike. But few managers have systematic answers to even these basic questions: What is professional intellect? How can we develop it? How can we leverage it? This chapter has provided answers to these questions. Managers that understand these answers know that the secret to a great workplace is to create selforganizing networks.


These networks draw on all aspects of a knowledge workerís activity. According to James Brian Quinn, the first author to write about intellectual capital, an organization's knowledge workers operate on four levels within a networked organization: tribal knowledge, advanced technical skills, an understanding of business process, and selfmotivated creativity. Tribal knowledge speaks to how things are done in the organization, how people are expected to relate and communicate to one another, and ways developed to get the work out the door. Doing a job well means that technical skills must be constantly upgraded. Investing in formal technical skill development is good both for the firm and for the individual. Knowledge workers know this for it is what creates their value. Understanding end-to-end business processes provides the rational for why work needs to be done in a certain sequence. Having this macro view provides knowledge workers with the big picture and demonstrates how their job contributes to the customer satisfaction. Finally, when decision- making authority is coupled with peer collaboration, managers find an increase in self- motivated creativity.


Quinn and his co-authors argue that organizations that nurture self- motivated creativity are more likely to thrive in the face of today's rapid changes. They illustrate how organizations as diverse as Merrill Lynch and NovaCare have leveraged professional intellect by providing analytic software tools, incentive systems, and organizational redesigns. The authors contend that organizations can tailor themselves to the particular way their professional intellect creates value by creating self-organizing networks. When a few technical experts team up to meet a specific challenge, they create a temporary team. These webs of inclusion tap the talent and the knowledge scattered around the company. For example, when major oil companies have an exploration problem and knowledge is dispersed among many specialists scattered around the world, like British Petroleum they assemble a virtual team. Because telecommunications and Intranets are widely available throughout the world, communication in real time to help workers share their knowledge. The more technical experts assembled for a discussion the better. As Quinn et.al. claim, "A basic tenet of communications theory states that a networkís potential benefits grow exponentially as the nodes it can successfully

interconnect expand numerically."


Managing intellectual capital requires a long view. It takes leaders with a vision about what the future holds. Managing a network organization, where knowledge is a strategic advantage, means that how workers are viewed and how they are developed will be the key to long-term corporate success.




Running a business well, like any other human activity, requires a balance between two different and often contradictory approaches: management and leadership.


In ever more turbulent environments, executive leadership matters more than ever before. Speed, flexibility, and the ability to manage discontinuous change require excellent leadership skills. Leadershipís job is to articulate vision. Leaders need to communicate a shared picture of the future that fosters genuine commitment and motivation. Leadership must be augmented through attention to details on roles, performance measures, reviews, but always with an eye on strategy. Management charts a course for control, stability, and practicality; with the other eye on the day-to-day operations, the customer, and market share. Balancing these two requirements is what the management- leader is asked to do. Interactive leadership relies heavenly on communication skills. It is about creating the space for dialogue and thinking together for the common good. It requires a level of maturity in which you + me = let us work together. By listening, supporting, and encouraging people to differ, leaders ensure a constant dialogue over future directions and resolving the tensions between competing and often opposing ideas. These leaders have a sensitivity to others and respect their ideas, feelings, and emotions. Interactive leadership is all about creating an emotional connection with people. One of the reasons why women are finding their way into more and more leadership jobs is that they tend to know better how to create webs of inclusion and environments for open communication. While these skills may come more naturally to women, they may be the most important ingredients for success in the 21st century as male dominated organizations struggle to find a new "touch stone" to release the talent locked within their diverse workforce.




  1. Thomas A. Stewart, "Have you got what it takes," Fortune, 11 October 1999: p.322.
  2. Ibid. p.318.
  3. "The Changing Nature of Leadership," The Economist, 10 June 1995: p. 57.
  4. Ibid.
  5. Sumantra Ghoshal and Christopher A. Bartlett, "Changing the Role of Top Management: Beyond Structure to Processes," Harvard business Review, January-February 1995: pp.87-96. and "Changing the Role of Top Management: Beyond Systems to People," Harvard business Review, May-June 1995: pp.133-142.
  6. Ibid. p. 135.
  7. Ibid, "Changing the Role of Top Management: Beyond Structure to Processes," p.55.
  8. Jill Rosenfeld, "Want to Lead Better? Its Simple," Fast company, March 2000: p 58.
  9. Charles M. Farkas and Phillippe De Backer, "There are only Five Ways To Lead," Fortune, January 15, 1996: p.109.
  10. "Walking the Talk of People-Centered Management," an interview with Jeffrey Pfeffer, from Harvard Management Update, Harvard Business School Publishing, February 1998: Vol. 3, No. 2, p.7.
  11. John P. Kotter, "What Effective General Managers Really Do," Harvard Busines Review, March-April 1999: p.145.
  12. John A. Byrne, "How Jack Welch Runs GE," Business Week, 8 June 1998: p.105.
  13. Ibid, "Changing the Role of Top Management: Beyond Systems to People," p. 142.
  14. Faith Popcorn and Lys Marigold, Clicking: 16 Trends to Future Fit Your Life, Your Work, and Your Business, ( New York: HarperCollins, 1996 ): p.159.
  15. 1Michael Schrage, "Why Canít a Woman Be More Like a Man?" Fortune, 16 August 1999: p184.
  16. Christopher Farrell, "Women in The Workplace: Is Parity Finally in Sight," Business Week 9 August 1999: P.35.
  17. Sally Helgesen, The Female Advantage: Womenís Ways of Leadership, ( New York: Currency/ Doubleday, 1995 ).
  18. Sally Helgesen, The Web of Inclusion, ( New York: Currency/Doubleday, 1995 ).
  19. Ibid. p.10.
  20. Judy B. Rosner, "Ways Women Lead," Harvard Business Review, November-December, 1990: p.120.
  21. Rochelle Sharpe, "As Leaders, Women Rule," Business week, 20 November 2000: p75.
  22. Ibid.
  23. Kedric Francis, "Women CEOs: Leading business to the future," O C Metro, 15 July 1999: p 34.
  24. Joseph Menn, "First Woman Named to Lead Blue-Chip Firm," Loa Angeles Times, 20 July 1999: p.A.1.
  25. John P. Kotter, "What Leaders Really Do," Harvard Business Review, MayñJune 1990:p.104.
  26. David A. Heenan and Warren G. Bennis, "Co-Leaders: The Power of Great Partnerships," amazon.com book review.
  27. "Remaking Microsoft," Cover Story, Business Week, 17 May 1999: p 106.
  28. Charles Piller, "Microsoft Shifts Its Emphasis to the Web with ëDNAí Strategy, Los Angles Times: Orange County Edition, 14 September 1999: C 1.
  29. "Remaking of Microsoft," p 109
  30. Steve Hamm, "Behind the Larry & Ray Show," Business Week, 3 August 1999: p.88.
  31. David Whitford, "The Two-Headed Manager," Fortune, 24 Jan
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