Leaders and leadership as a competitive edge

At a time of increasing competition in an ever-more complex work environment, businesses have to grow to survive.

While it’s no guarantee on its own, the quality of leadership seems to differentiate companies that flourish from those that don’t.

Without strong and capable leaders, it’s very difficult for companies to develop new directions for the future. Leaders are needed to think about the future of the organization, to scan the environment for threats and opportunities, and to shape a vision and sense of direction. But a vision is no good if only a few people share it.

It’s important to have everyone enthused about new strategies and new ways of working. It’s even more important to translate these ideas into action. This is where the second key contribution of leaders is felt. Great leaders create environments in which people can be creative, take the initiative, and get results. In other words, they create environments where change happens. They mobilize change.

Some leaders are superb at inventing and then promoting a compelling picture of the future. Others excel in implementing change. The truly world class leaders do both.

But they never do all this on their own. The other quality of truly great leaders is that they grow the leadership capability of their organization, so that the load of leadership is carried on many shoulders, not just a few.

Leaders are both the product and the architect of the organizations they live in. Some organizations make it impossible for leaders to emerge or to act. They do so by punishing risk taking, by forcing everyone into a common mould, by withholding the authority that people need to fulfill their accountability, and by promoting a culture of criticism.

Other organizations have benefited from leaders who promoted healthy debate, maintained a tolerable level of distress, rewarded those who showed personal courage, pushed decision-making as close to the front line as possible, encouraged people to act independently, and promoted a culture of appreciation.

Leaders of the second kind of organization find it much easier to introduce new ways of doing things when they need to. Their legacy will be a far more resilient and robust organization — one that will adapt to changing circumstance more easily, both in the present and in the future.

Great leaders create a leadership capability that is baked into the organization. An organization’s leadership capability is a key competitive strength, and must be developed as thoughtfully and deliberately as any other competitive advantage.

Leaders succeed when other people in the organization give them permission to lead and agree to follow. Position power gives immediate face validity to a leader, but is not enough to sustain the role of leader if other people decide to withdraw this permission. We’ve all seen what happens when an organization doesn’t want a CEO to lead — the result is debilitating and sometimes devastating. Jack Welch had position power and built on it, while Chainsaw Al Dunlap started on the same basis, but eventually lost permission to lead.

Other leaders in an organization act with no position power — they just do it naturally. They’re the ones who speak up and get listened to in meetings, who lead task forces, who write the influential reports, whose opinion is solicited in times of uncertainty. Nobody specifically appoints these people to a position of leader, people around them just expect them to act like one. Leadership behaviour is what makes leaders.

To summarize, leaders have three major roles.

First, leaders set direction. To do this they start by defining the agenda. Change starts when people begin to share a sense of what’s important.

But just admiring the problem isn’t enough. Leaders also develop and transfer a compelling vision for the future. Leaders transfer the vision through their personal interaction with others — they also do it by ensuring that the vision is baked into critical management systems. For example, changing the key indicators used to track success sends a pretty strong signal that the organization is on a different path.

To act on the vision, leaders mobilize change. Leaders can make some change happen directly. But leaders can also change the system, and thereby create change indirectly. It’s one thing to say, “I believe in creating shareholder value.” It’s quite another to mandate the use of value based management as the planning and decision-making discipline for the organization.

But there’s a limit to how much change leaders can or should seek to make through their own individual efforts.

Real, sustainable change comes when people in the organization do the work themselves. Leaders get teams mobilized and resourced, give them direction, support and protect them, and insist on results. Besides generating change initiatives, it’s also important to encourage people throughout the organization to develop change initiatives themselves — the trickiest part of this is to ensure that there’s enough alignment between all the initiatives without stifling innovation.

Leaders insist on accountability and collaboration. One CEO described his management team as a group of very talented race horses. “My mistake,” he said, “was taking them out into the middle of a field and letting them go. Now look at them — they’re running all over the place! I should have pointed them all in the same direction, put them into harness, and then made them run as a team.”

He hadn’t insisted on accountability. If he had, individual managers would have known what was expected of them, would have committed to deliver agreed-upon results, and would have received consequences (positive and negative) for effort or achievement that reinforced or damaged the strategies of the company. But there was no collaboration. Each manager did what he or she wanted, without regard to the impact on others. He could have insisted on collaboration through a total refusal to countenance behaviour that: was selfish, let functional priorities override contributions to the enterprise, created difficulties for a colleague, or ignored helping someone out.

One of the most powerful things that a leader can do is nurture a high-performance work environment. Leaders do this by acting with personal authenticity, challenging the prevailing organizational wisdom and showing others that it’s OK to do so, rewarding people who take risks and learn from their mistakes.

People need to be able to express a contrary opinion without being made to feel like a traitor.

It’s also important to ensure that reward systems acknowledge courage and risk-taking and that the organization has rituals to celebrate change milestones along the way and acknowledge high performance individuals and teams. Finally, decision-making must genuinely occur as close to the front line as appropriate. No second guessing by staffers at the corporate office!

Making change happen can’t be accomplished by one leader. The third element of leadership is building leadership capability throughout the organization. Great leaders are always on the lookout for potential leaders, to give them the opportunity to demonstrate what they can do. Great leaders are also great teachers, and invest significant time and effort in helping others develop their leadership skills. Leaders at the top must make it clear to leaders throughout the organization that they are all expected to identify and develop future leaders. In part, this is done by ensuring that leadership development requirements are integrated into strategic resourcing, staffing, succession planning, and performance management processes.

It’s clear from the list of leaders’ responsibilities that they have two major avenues open to them.

First, leaders make a huge impact though their personal behaviour — this is how they affect other people, either individually or in groups. It’s only when a worker sees the CEO in person that he or she can decide whether this is someone to trust, put their faith in and follow. So leaders have to consciously get out there and use every vehicle at their disposal to interact directly with as many people in the organization as possible.

The second avenue is much more indirect since it involves changing the environment in which people work. By changing the system, leaders can create immense pressures for change. Most people will work hard to achieve success — provided that they know what success looks like and that all the annoying organizational barriers and confusions are removed. People will not exert themselves for leaders who appear confused, whose walk is inconsistent with their talk, or who are manifestly unable or unwilling to deal with the issues that concern regular people.

Show them someone who knows where he wants to go, is willing and able to make the changes necessary to get there, and who makes it possible for people throughout the organization to do their best work and reach their full potential and then watch an organization that succeeds.

Michael Anderson is a director with Johnston Smith International, a strategic change consulting firm based in Toronto. He can be reached at [email protected]

Brian Brittain is also a director with Johnston Smith International and he can be reached at [email protected]

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