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Strong Leadership or Strong Leadership: That is the Question

In a commentary on Business on the BBC World Service in January 2008, Lucy Kellaway, a columnist for the Financial Times, recounted her experiences (in the Headhunters’ Disease) spending a day with Korn Ferry pretending to be a headhunter. “I raced around London in taxis, sat in on interviews and drew up lists. When it was time to go home, I asked the woman I had been shadowing if she would give me a job. No, she replied after an indecently short pause. The main problem with me, she said, was that I said what I thought.”

Acknowledging that finding the right person for the right job is more important than most things, and anyone who can do it deserves not only a place in heaven (or similar) but also the thwacking great fee they extract for their efforts”, Kellaway went on to describe how one large executive search firm provides their clients, amongst other things, with a “Leadership Advantage Toolkit. This is intended “to assist them to define the kind of person they are seeking. Included were 66 characteristics that might be desirable in a leader, including “dealing with paradox” and “organisational agility” to be rated according to “mission critical”, “important” and so on.

“This is a low trick. It is about making clients think they are buying rigour in the hope this will make them less likely to protest when presented with the inevitably disappointing shortlist of candidates.”

Kellaway says, “In fact headhunting is both simple and difficult. The theory is simple: there are good managers and not-so-good ones. Alas, most are fairly mediocre, as managing isn’t easy. Choosing the good ones has nothing at all to do with 66 carefully weighted competencies: it is more a matter of finding three. The ability to think, the ability to act, and (most important) the ability to get others to act.”

That about sums it up I think! It is advice that is seldom considered. The vast majority of us pay the price of that.

Despite evidence to the contrary, some people still believe that leadership means giving direction rather than putting in place the processes which encourage above average performance by staff. We know centralized control doesn’t work. Remember also the story, told by Richard Feynman in “Surely You’re Joking Mr Feynman”, about the young army engineers doing the calculations of implosions in the early days of the Los Alamos Project. Several books published recently and reviewed by Simon Head of Rothermere American Institute at Oxford University give excellent examples of how intelligent and committed teams of people achieve results when centralised control does not.

Logia della Signoria, FlorenceBut first, some other examples! The US military provides good examples of the failures of attempts to exert control from a vast distance. One of them concerns the bombing of Syrian and Druze anti-aircraft positions in Lebanon in 1983.

Very early in the morning of 4 December 1983, 28 US warplanes took off from the aircraft carriers Kennedy and Independence in the eastern Mediterranean. Their mission: the destruction of Syrian and Druze anti-aircraft weapon sites in the hills of Lebanon sighted just two days earlier on routine fighter patrols. Sudden and unexpected flashes led to suspicions of something dangerous and detailed inspections of photos confirmed them. The new weapon emplacements must be taken out! Since the planes would be flying east, those on the carriers planning the mission determined it to be imperative that they launch after mid-morning so that the sun would not be in the pilot’s eyes. Getting planes onto the deck of a carrier takes hours: careful planning is required. But Washington decided otherwise: the planes would launch at sunrise! By the end of the mission two of the planes had been shot down: one pilot had died, another parachuted out and was picked up at sea. A navigator was captured and imprisoned in Damascus; he was released later by Syrian President Assad after a visit by US presidential candidate Jesse Jackson.

Another concerns the exit from Vietnam in 1975. At the end of the Vietnam War in April 1975 troops and sympathetic civilians had to be evacuated from Saigon. The start of the exercise was delayed an hour because the commencement time was not specified as to whether it was Greenwich Mean Time, Washington time or whatever. And later critical decisions were made by President Ford, Secretary of State Kissinger and Defence Secretary Schlesinger. Further complications arose when the command center in Washington, DC sought to impose a time to cease flying. The perception in Washington was that chaos reigned in Saigon and a stop had to be made on evacuation. The exercise ended up leaving 450 sympathisers (including firemen whose families had already been evacuated) in the US Embassy Compound.

Villa Romana del Casale, Sicily. (More)

Centralised control is based on the proposition that people generally can’t be trusted and that only those at the top of the hierarchy have the knowledge and experience to make the right decisions. The belief is bolstered by increasing use of words like “accountability” and “transparency”, often no more than rhetoric! However, those at the top frequently do not have the most up-to-date information and what they have may not be relevant to the local situation at all. It turns out that co-ordination is most successfully achieved, not by managers enforcing rules and regulations, but by managers attending to building the organisation’s culture, by emphasising trust and seeking above average performance. Increasingly, flexible teams are recognised as necessary, indeed as the only workable proposition The standards in such groups are set by the members of the group themselves on the basis of what they understand to be best practice from their own observations.

And instead of a vast set of questions to be asked every time a decision is to be made, a few very simple questions will often serve the purpose better. Management expert Peter Drucker cites a particular company where, for many years, a planning staff of 45 brilliant people carefully prepared strategic scenarios in minute detail. The documents were first-class and made stimulating reading. But they had a minimal impact on operations. Then a new CEO asked, “What is the task?” and answered, “To give our businesses direction and goals and the strategy to attain these goals.” It took four years of hard work and several false starts. But now the planning people (still about the same number) work through only three questions for each of the company’s businesses: What market standing does it need to maintain leadership? What innovative performance does it need to support that standing? And what is the minimum rate of return needed to earn the cost of capital? Then the planning people work with the operating executives in each business to map out broad strategic guidelines for achieving these goals under various economic conditions. The results are far simpler and much less elegant, but they have become the “flight plans” that guide the company’s businesses and its senior executives, says Drucker.

Simon Head is a Senior Fellow at the Rothermere American Institute at Oxford University. His most recent book is The New Ruthless Economy: Work and Power in the Digital Age. (August 2003).

(The audio of an interview with Simon Head on the Brian Lehrer Show on New York Public Radio on December 18, 2003 can be heard here).

In the New York Review of Books for August 16, 2007 (“They’re Micromanaging Your Every Move”) he reviews three books, The Social Life of Information by John Seely Brown and Paul Duguid (Harvard Business School), Bait and Switch: The (Futile) Pursuit of the American Dream by Barbara Ehrenreich (Owl Books) and The Culture of the New Capitalism by Richard Sennett (Yale University Press). Head reviews the background and gives two excellent examples of staff of enterprises – Xerox and the Regenstrief Institute in Indianapolis – solving the problems themselves with excellent results.

This is a summary/extract from that review.

From the time of the digital revolution of the 90’s, which seemed to mark a definitive break with the manufacturing economy of the late nineteenth century, economists assumed that with 80 percent of the workforce in white-collar service industries there was no longer any need for a large industrial proletariat with limited skills, passively taking orders from above. But since the long economic boom of the 1990s came to an end around 2001 there has been growing evidence that this view of recent economic history is flawed. In fact, recent research suggests that methods of production based on top-down standardization and tight control of work are as influential in the digital economy as they were in the industrial economy. Drawing upon the virtually unlimited powers of computers to monitor the activities of employees and their use of information, these methods have simply been readapted for the white-collar workplace.

What is striking is how they have been used in ways that put skilled workers in many professions at a disadvantage. In an economy more and more populated by “knowledge workers”””people who work primarily with information, for which they develop special skills and expertise””one would expect the productivity, or output per person, and real income of employees to move upward together, as an increasingly skilled workforce benefits from its own improved efficiency. But since 1995, the year when the “new economy” based on information technology began to take off, incomes have not kept up with productivity.

This is being driven by technologies known as “enterprise systems,” or ES, which bring together computer hardware and software to standardize and then monitor the entire range of tasks being done by a company’s workforce. The industry leaders in these systems are the Big Three of corporate computing: IBM, SAP, and Oracle. Also prominent are management consultants such as Gartner and Accenture who advise corporations and public bureaucracies about which ES system to buy.

ES relies on electronic tags, sensors, and “smart” chips to identify goods and components at different stages of the production and distribution chain, a practice that has brought enormous gains in productivity. Such innovations allow managers to find out immediately not only that production and distribution are falling behind schedule, but also why.

But during the last ten years ES has been more and more applied to complex white-collar businesses, public bureaucracies, and even universities. ES technologies are able to reduce these complex human activities and reasoning to a series of processes and outcomes that can be mapped out and programmed by a computer.

Nowhere have these technologies been more rigorously applied to the white-collar workplace than in the health care industry. The practices of managed care organizations (MCOs) have provided a chilling demonstration of how enterprise systems can affect the work of even the most skilled professionals, in this case the physician. The goal is to standardize and speed up medical care so that insurance companies can benefit from the efficiencies of mass production: faster treatment of patients at reduced cost, with increased profits earned on increased market share.

In the mid-1990s MCOs relied heavily on a procedure known as “utilization review” to contain costs and standardize treatments. Case managers without medical training, relying on guide-lines often derived from proprietary databases, ruled on whether a requested treatment would or would not be paid for.

A second and cruder method used by MCOs to enforce medical industrialization is to keep payments to doctors for patient visits so low that doctors must dramatically increase the number of patients they see to cover their overhead.

The managed care approach has been poorly suited to the realities of illness. For example, research published in 1999 by the Journal of the American Medical Association showed that for-profit health care providers that relied on this kind of standardization, such as Aetna and Humana, performed significantly worse than their counterparts in the treatment or prevention of cancer, diabetes, and heart disease. But many of these health care companies think that ES technologies have made them profitable, and it seems unlikely that these practices will be discarded anytime soon.

The spread of ES has resulted, according to Richard Sennett (The Culture of the New Capitalism, Yale University Press, 2007) in a declining emphasis on creativity and ingenuity of workers, and the destruction of a sense of community in the workplace by the ceaseless reengineering of the way businesses operate. The concept of a career has become increasingly meaningless in a setting in which employees have neither skills of which they might be proud nor an audience of independently minded fellow workers that might recognize their value.

“An organization in which the contents are constantly shifting,” Sennett writes of the new-model corporation,

“requires the mobile capacity to solve problems; getting deeply involved in any one problem would be dysfunctional, since projects end as abruptly as they begin”¦. “I can work with anyone” is the social formula for potential ability. It won’t matter who the other person is; in fast-changing firms it can’t matter. Your skill lies in cooperating, whatever the circumstances”¦.”

These changes produce social deficits of loyalty and informal trust, they erode the value of accumulated experience and the hollowing out of ability.

Head goes on to summarize two examples from a book “The Social Life of Information” which explores the limitations of ES in the service economy, and give a fascinating account of how the technologies of ES might be more effectively used there.

“At Xerox’s Palo Alto Research Center (PARC) Brown and a team of researchers developed a technology to support the technicians who repair and service Xerox machines. Like many other large US corporations Xerox tried in the early 1990s to transfer the work practices of the assembly line to the very different world of the service economy. Technicians were supplied with an automated system specifying the various ways in which a Xerox machine could break down, along with the remedy to be followed in each case. The problem was that the machines kept going wrong in ways that the automated system hadn’t anticipated; and often the machines developed several problems simultaneously. The technicians responded by throwing away the rule book and relying on their own knowledge. Brown and Duguid’s description of the technicians’ thought processes is similar to accounts of diagnostic reasoning given in medical textbooks. First examine the patient’s symptoms; then consider all the possible causes in order of probability; treat each of these until the right one is discovered and the correct remedy prescribed.

“Brown and his team at PARC persuaded Xerox management that these ad hoc practices should be incorporated into a new system called Eureka. Any technician who had solved a difficult case would simply write up his findings and a committee of technicians would decide whether the material merited inclusion in the Eureka database. Since Xerox adopted it, Eureka has achieved spectacular results. In its first three years, it logged 30,000 case histories from employees, and is estimated to have saved Xerox $100 million. Eureka is a striking example of how the old workplace values described by Sennett can be preserved and even enhanced by the use of information technology. For the technicians, Xerox became a more desirable place to work because it recognized and rewarded their own creative contributions, while Xerox’s managers found that more employees were loyal and productive.

“Very few corporations have an in-house think tank comparable to PARC, but the Xerox case, though rare, is not unique. At the Regenstrief Institute in Indianapolis, a center for medical research affiliated with the Indiana University School of Medicine, a team of doctors and technologists led by Dr. Clement McDonald have used information systems to improve dramatically not only the efficiency but also the quality of health care. Using a database that has been shaped by the people who use it””patients, primary care physicians, specialists in fields such as oncology and cardiology, hospital managers, and local health officials””the system can immediately provide a physician with a complete medical history of practically any resident of Indianapolis. It also contains a software program that tracks patients’ histories against current procedures, sending a warning when a physician prescribes a drug that is incompatible with the patient’s other medicines, or reminding the physician that a patient has already undergone a procedure which the physician has requested. Moreover, the Regenstrief system leaves the final decision about patient care to the physician””in contrast to the practice of many HMOs in which physicians can only reverse the decisions of case managers after a time-consuming wrangle.

A 2006 Rand Corporation report estimates that the Regenstrief system accounts for nearly half of the gains in quality of health care in the United States that can be attributed to the use of information technology. No HMO or public health authority in the US has matched the Regenstrief Institute’s achievement in integrating within a single database patient information drawn from the separate IT systems of five hospital chains, twenty primary care clinics run by county and state public health departments in Indiana, thirty public school clinics, and three thousand medical specialists. In all, some 900 million items of medical evidence for more than three million patients. By comparison, the UK’s National Health Service, a single unitary authority, has squandered $23 billion in a failed attempt to computerize its patient records.”

Barbara Ehrenreich became well known for her books Nickel and Dime based on her experience as a member of America’s “working poor” and Bait and Switch: The (Futile) Pursuit of the American Dream, based on her experiences as an undercover white-collar job seeker. In Bait and Switch, Ehrenreich writes about employees who have been discarded by the corporate machine and are trying to regain what they have lost. She describes how her quest for a white-collar job in corporate public relations gets absolutely nowhere and leads, in her own words, to “a life of unrelenting rejection.”

“When the victims of “downsizing” and “re-engineering” are pushed out of their jobs, they often turn to the “career coaches” of the “transition industry” who are supposed to restore their morale and send them back in good shape to the corporate suite. “¦ [Coaches] rely on personality tests to find out what kind of jobs she might be best suited for. In one such test, Ehrenreich’s answers to two hundred multiple-choice questions apparently revealed that she was Original, Effective, Good, and Loving, but also Melancholy, Envious, and Overly Sensitive. The test concluded that she probably didn’t write very well, and should attend intensive journalistic workshops to “polish her writing skills.” After a ten-month search the only work Ehrenreich could find was selling insurance or cosmetics on her own””jobs with no office, no salary, no benefits, and for which income primarily depends on elusive sales commissions.”

There need to be some major changes in decision-making and delegation of authority for it. Whilst this is recognized in some quarters they clearly aren’t in many others. Too often those with authority pursue simplistic solutions like efficiency drives through downsizing, reorganizations, restructuring and re-engineering, including amalgamations to bring all similar organizations under the control of one office ““ such as the Department of Homeland Security in the US. How dreadfully unsuccessful that was!

When changes, even dramatic ones, are proposed, we can’t expect that the knowledge to manage the change will be effectively transferred through training and development because it generally isn’t provided. The point is we ought to! That is why reorganizations fail. The key is not reorganizing or detailed prescriptions but clear statements of values and expectations communicated constantly together with training and development and above all constant demonstration of the validity of the values held by the leaders of the enterprise. Enterprise systems are no more effective, they are just more efficient!