What Leaders Really What Leaders Really DoDo

What Leaders Really What Leaders Really DoDo

Leadership and Management• Leadership

– Not mystical and mysterious– Not charisma or personality traits– Not province of chosen few– Not better than management or replacement

• Leadership and Management– Distinctive and complementary systems of

action– Own function and characteristic activities– Necessary for success in volatile complex

environment

Leadership and Management

• Most cos. Over managed and under led• Need to develop capacity to exercise

leadership-identifying and grooming potential leaders

• Strong leadership with weak management

• The real challenge: combine strong leadership with strong management

• Strong cos. Develop leader- managers

Diff :Leadership & Management

• Management: coping with complexity– Practices and procedures– Without good magmt. - cos. go chaotic– Good magmt.- degree of order

• Leadership: coping with change– Reason for importance

• More competitive and volatile business

– Many factors contributed to this shift• Net result?

– More change: More Leadership

Diff :Leadership & Management

• Two different functions shape characteristic activities

• Each system of action involves– Deciding what needs to be done– Creating networks for accomplishment– Ensure that people actually do the job

• But each accomplishes these tasks differently

Management and Leadership

• Planning & Budgeting– Setting targets– Establishing detailed steps– Allocating resources

• Setting a direction– Developing a vision– Developing strategies

• Organizing and staffing– Creating organizational structure/set of jobs– Staffing jobs– Communicating the plan– Delegating responsibility– Devising monitor systems

• Aligning people– Communicating new direction

Management and Leadership

Management and Leadership

• Controlling and problem solving– Monitoring results vs. plans– Identifying deviations– Planning and organizing

• Motivating and inspiring– Keep people moving in right direction

despite obstacles• By appealing to basic human needs, values and

emotions

Setting Direction vs. Planning and Budgeting

• Fundamental to leadership• Inductive• Not plans but vision and strategies

– Visions and strategies: need not brilliantly innovative e.g. SAS CEO Joe Carlzon

– Crucial about vision: not originality but serving its constituencies and translating into strategy

– Bad visions

Setting Direction

• Not the same as planning

• Jan Carlzon. Fmr CEO Scandinavian Airlines– Wanted to make the

airline accommodating for the frequent business traveler

Planning and Budgeting• Management process• Deductive• Designed for orderly results and

not change

Setting Direction vs. Planning and Budgeting

Lou Gerstner at American Express• President of TRS-arm of AE in 1979• Challenges a) Credit cards by many

banks b) Lot of financial cos. in travelers cheques business

• Crafted a vision and saw potential to become a dynamic and potential firm

• Focused on global marketplace, affluent customer of AE, served with top products

Setting Direction: Case Study

• Gerstner Method/Vision:– Questioned business principles & mental models– Instituted entrepreneurial culture

• Results:– New markets, products and services– Card and travel services combined for corporate

clients– Am Ex 5th largest direct mail merchant in US– Other unique products and services– TRS net income: rise by 500%- ’78-’87; a

compounded annual rate of growth of 18%– Outperformed many high tech/growth cos.– 1988’s ROE of 28% outperformed most low

growth but high profit business

Aligning People vs. organizing and staffing

• Alignment –different from organizing and staffing: more of a communication challenge than a design problem

• Involves talking to lot of people• Credibility-getting people to believe

the message while delivering it• Leads to empowerment better than

organizing• Helps to overcome the problem

of people feeling powerless

– Lower levels initiate action without feeling vulnerable when direction is there

– Stalling probability less since ’target’ is there

• Managers “organize” to create human systems that can implement plans efficiently and precisely

• Talking to less people

Aligning People

• Getting everyone in the company to work together toward a common goal

• Fedex CEO Fred Smith took the company to the next level– And won the

Baldrige Award

Aligning People: Case StudyChuck Trowbridge and Bob Crandall at

Eastman Kodak• Situation

Entry of Kodak Eastman in copy business in early 1970’s concentrating on technically sophisticated machines costing $60000

This business grew approx. $1 billion in revenues in 10 years

But costs high, low profits and problemsKodak had to write off $40 million in inventoryPeople agreed on probs. But not how to solve

them

• ChangesChuck Trowbridge, GM met everyone imp. to business-crucial area of engg.& manfg.

head BobVision: to become a world class manfg.

Operation & to create a less bureaucratic and more decentralized organization

Bob set up no. of vehicles to empower vision and to align to it-weekly, monthly, quarterly meetings

Trowbridge and Bob did written communication “Copy Products Journal,” “Dialog Letters,” “Charts”

• ResultsAppeared within 6 months, more after a

yearSuccesses: message more credible:

more people on boardQuality of one main product line up by

100 fold: 1984-1988Defects per unit: down from 30 to .3Costs on another product line down

nearly 24% in three yearsDeliveries on schedule increased 82% in

1985 and 95% in 1987 Inventory levels dropped over 50% Productivity more than

doubled:1985- 1988

Motivating People vs. Controlling and Problem

Solving• Change function of leadership-energized behavior-coping with barriers to change

• Leadership is different. Grand visions: burst of energy. Motivation and inspiration energize people

• Good leaders motivate people in:– Articulate organization vision by stressing values

of audience addressed– Support employee efforts by coaching,

feedback and role modeling– -Recognize and reward success

Motivating People vs. Controlling and Problem

Solving• More ‘change’ in business envi. :more leaders must motivate people to provide leadership: Multiple Leadership Roles (MLR) thru out hierarchy –Highly valuable

• For MLRs to converge not conflict- different mechanisms than the traditional Mangmt. Roles reqd.– Strong network of informal relationships

• Multitude of commun. Channels &trust allows accommodation and adaptation

– Strong networks across groups necessary. If not exist, function of leadership

Motivating People vs. Controlling and Problem

Solving• Control mechanisms: Compare system behavior with plan and act if deviation

• Control is central to Management: Highly motivated or inspired behavior irrelevant

• Purpose of systems and structures: help normal people to complete routine jobs successfully day after day: Not exciting or glamorous

• Management processes: fail- safe and risk-free

Motivating People

• “Generating highly energized behavior while coping with the inevitable barriers to change.”– Wal-Mart

constantly motivates its employees

Richard Nicolosi at Proctor & Gamble• Situation

– No competition for Paper prods. Division for 20yrs – New market thrusts hurt P&G badly– Richard, AGM in 1984 finds bureaucratic and centralized

organization• Focus

– Aug.: i. Stresses the need for market driven & creative instead of low cost producer

ii. New direction: Team work & Mul. L’ship Roles iii. Strategy: Groups to manage- Oct.: Team designated ‘ Paper division Board’- Nov.: i. Established “ Category Teams.” “Shun incremental.

Go for leap” ii. Involves himself more in certain activities iii. “Meet” of everyone. Vision: “Each of us is a leader”

described by ‘Board’, video graphed and sent to all to see

Motivating People: Case Study

• Results– Creation of entrepreneurial envi. Where large no.

of people motivated to realize vision– Most innovations from people dealing with new

products– Ultra Pampers pushes Pampers market share to

58% from 40% & profitability from break-even to +ve

– Luvs Deluxe market share up by 15% within few months of its intro.

– Other employee initiatives– - End 1988, revenues(40%) and profits(68%)

up despite tougher competition

Motivating People: Case Study

Ability of some cos. To develop people into outstanding leader managers

Recruiting people with leadership potentialManaging their career patternsSuccessful individuals in leadership roles share

o Face significant challenge early in careero Broadening happens later: lateral career moves,

promotions, special task force assignments or a General Management Course : breadth of knowledge and network of relationships

Cos. that do ‘better than average’ job of developing leaders

emphasize creating challenging job opportunities for young employees

Creating a Culture of Leadership

– Decentralization is the key: pushing responsibility lower in organization creates more challenging jobs• Johnson and Johnson, 3M, HP, GE, etc used

this approach quite successfully

– Addl. Challenging assignments thru new products and services e.g. 3m

Such practices prepare small and medium sized leadership roles

-More work by Senior executives –long time for preparing people for important leadership positions

Creating a Culture of Leadership

Methods 1. Young employees visible to Sr.

management2. Judging of potential and development needs3. Discuss tentative conclusions for more

accurate judgments4. Spend time planning their development

For encouragement of managers: recognize and reward people who successfully develop leaders

Creating a Culture of Leadership

“Such strategies create a corporate culture where people value strong leadership and strive to create it. Just as we need more people to provide leadership in the complex organizations that dominate our world today, we also need more people to develop the cultures that will create that leadership.

Institutionalizing a leadership centered- culture is the ultimate act of leadership.”

Creating a Culture of Leadership

MANAGE FROM THE LEFT…...LEAD FROM THE RIGHT

Management:

Planning and Budgeting

Organizing and Staffing

Controlling and Problem-Solving

Producing Predictability and Order

Leadership:

Establishing Direction

Aligning People

Motivating and Inspiring

Producing Change

MANAGE FROM THE LEFT…...LEAD FROM THE RIGHT

Management:

is about copying and maintaining the status quo

is about efficiency

is about how

is about controls, procedures, policies

is about hierarchy

is mechanistic

Leadership:

is about innovating, initiating and creating

is about effectiveness

is about what and why

is about trust

is about teams, collaboration

is holistic

MANAGE FROM THE LEFT…...LEAD FROM THE RIGHT

Kotter’s Approach

• Set directions

• Align constituencies

• Motivate and inspire

Setting Directions

• The “vision thing”

Setting Directions

• The “vision thing”– Is not planning– Attuned to environment & its direction– Broad view– Involves choosing– Involves changing the status quo

• Visions are pictures in the mind

Aligning Constituencies

• Communicates the vision & strategy• Keeps message simple• Repeats the message --- a lot• Allows challenges and questions• Recognizes/acknowledges the size of

the task

Motivating & Inspiring

• Appeals to the values of the group• Provides autonomy needed to do

the job• Encouraging and cheerleading• Recognizing and rewarding

Kotter Has Identified Some Differences Between

Management and LeadershipLeadershipLeadership

Establishing Direction — Developing a vision and strategies for accomplishing the vision

Aligning People — Communicating the direction by words and deeds to all those whose cooperation may be needed so as to influence the creation of teams and coalitions that understand the vision and strategies, and accept their validity

Motivating and Inspiring — Energizing people to overcome major obsticles by tapping often unfulfilled, human needs, values and emotions

Produces change, often to a dramatic degree, and has the potential of producing extremely useful change (e.g., new products, systems or processes)

ManagementManagement

Planning and Budgeting — Setting targets and goals; establishing detailed steps and timetables for achieving results

Organizing and Staffing — Establishing structure for accomplishing plan requirements; staffing and identifying responsibility and authority for carrying out the plan; providing policies and procedures to help guide people; and creating methods or systems to monitor implementation

Controlling and Problem Solving — Monitoring results vs. plan in some detail; identifying deviations; and planning and organizing to solve problems

Produces a degree of predictability and order, and has the potential of consistently producing key results expected by various stakeholders (e.g., for customers, always being on time; for stockholders, being on budget)

Source: Kotter, What Leaders Really Do

Leadership vs. Management

• Management: Coping with Complexity– Brings Degree of Order and

Consistency

• Leadership: Coping with Change– Can’t manage people into battle– Must LEAD into battle

Leadership vs. Management

• Leadership Sets the Direction– Vision of the Future– Strategies to Achieve the Vision

• Management Develops Capacity to Achieve the Vision– Organizing– Staffing– Controlling and Problem Solving

Leadership / Management

• Set the Direction• Align People• Motivate

• Plan and Budget• Organize and

Staff• Control and Solve

Problems