beyond the charismatic leader - leadership and organizational change.pdf

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77

Beyond the Charismatic Leader:

Leadership

and

Organizational Change

avidA Nadler MichaelL Tushman

ike never before discontinuous organization change is an im-

portant determinant of organization adaptation. Responding

to regulatory economic competitive and/or technological

shifts through more efficiently pushing the same organization

systems and processes just does not work.^Rather organizations

may need

to

manage through periods

of

both incremental

as

well

as

revolu-

tionary change.^ Further, given the intensity

of

global competition

in

more

and more industries, these organizational transformations need to be initiated

and implemented rapidly. Speed seems

to

count.^ These trends

put a

pre-

mium

on

executive leadership

and the

management

of

system-wide

organization change.

There

is a

growing knowledge base about large-scale organization

change. This literature

is

quite consistent

on at

least one aspect

of

effective

system-wide changenamely, executive leadership matters. The executive

is

a

critical actor

in the

drama

of

organization change.^ Consider the follow-

ing examples:

At Fuji-Xerox, Yotaro Kobayashi's responsetodeclining m arket share, lackofnew

products,andincreasing customer complaintswas toinitiate widespread organization

change. Most fundamentally, Kobayashi's vision wastochangethe wayFuji-Xerox

conducteditsbusiness. Kobayashiand histeam initiatedthe New Xerox Movem ent

through Total Quality Control.

he

core values

of

quality, problem solving, team-

work,

and

customer emphasis were espoused

and

acted upon

by

Kobayashi

and his

Don Hambrick and CharlesO'Reillymade valuable sugg estions

on

earlier ve rsions

of

this


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78 C A L I F O R N IA M A N A G E M E N T R E V I E W Winter 199

team. Further, the executive team at Fuji instituted a dense infrastructure of objec-

tives,

measures, rewards, tools, education and slogans all in service of TQC and the

New X erox. New heroes were created. Individuals and teams were publicly cele-

brated to reinforce to the system those behaviors that reflected the best of the new

Fuji-Xerox. Kobayashi continually reinforced, celebrated, and communicated his

TQC vision. Between 1976-1980, Fuji-Xerox gained back its market share, developed

an impressive set of new products, and won the Demming prize.*

Much of this Fuji-Xerox learning was transferred to corporate Xerox and further

enhanced by Dave Keams and his executive team. Beginning in 1983, Keams clearly

expressed his Leadership Through Quality vision for the corporation. Keams estab-

lished a Quality Task Force and Quality Office with respected Xerox executives. This

broad executive base developed the architecture of Leadership Through Quality. This

effort included quality principles, tools, education, required leadership actions, re-

wards, and feedback mechanisms. This attempt to transform the entire corporation

was initiated at the top and diffused throughout the firm through overlapping team s.

These teams were pushed by Keam s and his team to achieve extraordinary gains .

While not completed, this transformation has helped Xerox regain lost market share

and improve product development efforts.'

At General Electric, Jack Welch's vision of a lean, aggressive organization with all

the benefits of size but the agility of sm all firms is being driven by a set of interrelated

actions. For exam ple, the wo rk-ou t effort is a corporate-w ide endeavor,

spearheaded by Welch, to get the bureaucracy out of a large-old organization and, in

tum, to liberate GE employees to be their best. This effort is more than Welch.

Welch's vision is being implemented by a senior task force which has initiated work-

out efforts in Welch's own top team as well as in each GE business area. These efforts

consist of training, problem solving, m easures, rewards, feedback procedu res, and

outside expertise. Similarly, sweeping changes at SAS under Carlzon, at ICI under

Harvey-Jones, by Anderson at NC R, and at Honda each em phasize the importance of

visionary leadership along with executive teams, systems, structures and proceses to

transfer an individual's vision of the future into organizational reality.'

On the other hand, there are many examples of visionary executives who are unable

to translate their vision into organization action. For example, Don Burr's vision at

People Express not only to make a better world but also to grow rapidly and expand

to capture the business traveller was not coupled with requisite changes in organiza-

tion infrastructure, procedures, and/or roles. Further, Burr was unable to build a

cohesive senior team to help execute his compelling vision. T his switch in vision,

without a committed senior team and associated structure and systems, led to the

rapid dem ise of People Ex press.

Vision and/or charisma is not enough to sustain large-system change.

While a necessary condition in the management of discontinuous chang e,

we must build a model of leadership that goes beyond the inspired indi-

vidual; a model that takes into account the complexities of system-wide

change in large, diverse, geographically complex organizations. We attempt

to develop a framework for the extension of charismatic leadership by build-


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Beyond the Charismatic Leader 79

Organizational Change and Re organization

Organizations go through change all the time. However, the nature, scope,

and intensity of organizational changes vary considerably. Different kinds

of organizational changes will require very different kinds of leadership

behavior in initiating, energizing, and implementing the change. Organiza-

tion changes vary along the following dimensions:

Strategic

and

Incremental Changes omechanges in organizations,

while significant, only affect selected components of the organization.

The fundamental aim of such change is to enhance the effectiveness of

the organization, but within the general framework of the strategy, mode

of organizing, and values that already are in place. Such changes are

calledincremental

changes

Incremental changes happen all the time in

organizations, and they need not be small. Such things as changes in

organization stm cture , the introduction of new technology, and signifi-

cant modifications of personnel practices are all large and significant

changes, but ones which usually occur w ithin the existing definition and

fram e of reference of the organization. O ther changes have an impact on

the whole system of the organization and fundamentally redefine what

the organization is or change its basic framework, including strategy,

stmc ture, people, processes, and in some cases) core values. These

changes are calledstrategic organizational

changes

The Fuji-Xerox,

People Express, ICI, and SAS cases are examples of system-wide organ-

ization change.

Reactive

and

nticipatory Changes anyorganizational changes are

made in direct response to some extemal event. These changes, which

are forced upon the organization, are called

reactive

The Xerox, SAS

and ICI transformations were all initiated in response to organization

performance crisis. At other times, strategic organizational change is

initiated not because of the need to respond to a contemporaneous event,

but rather because senior management believes that change in anticipa-

tion of events still to come will provide competitive advantage. These

changes are called anticipatory The GE and People Express cases as

well as more recent system-wide changes at ALCOA and Cray Research

are examples of system-wide change initiated in anticipation of environ-

mental change.

If these two dimensions are combined, a basic typology of different

changes can be described see Figure 1).

Change which is incremental and anticipatory is called

tuning

These


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8

C A L I F O R N I A M A N A G E M E N T R E V I E W

Winter 199

Tuning

Adaptation

Re orientation

Re creation

Figure 1. Types of Organizational Changes

Incremental Strategic

nticipatory

Reactive

change initiated in anticipation of future events is called

re-orientation

and

change which is prompted by immediate demands is called

re-creation.^^

Research on patterns of organizational life and death across several

industries has provided insight into the patterns of strategic organizational

change. Some of the key findings are as follows:

Strategic organization changes

are

necessary.These changes appear to

be environmentally driven. Various factorsbe they competitive, tech-

nological, or regulatorydrive the organization (either reactively or in

anticipation) to make system-wide changes. While strategic organization

change does not guarantee success, those organizations that fail to

change, generally fail to survive. Discontinuous environmental change

seems to require discontinuous organization change.

Re creations

are

riskier Re-creations are riskier endeavors than reorien-

tations if only because they are initiated under crisis conditions and under

sharp time constraints. Further, re-creations almost always involve a

change in core values. As core values are most resistant to change, re-

creations always trigger substantial individual resistance to change and

heightened political behavior. Re-creations that do succeed usually in-

volve changes in the senior leadership of the f irm, frequently involving

replacement from the outside. For example, the reactive system-wide

changes at U.S. Steel, Chrysler, and Singer were all initiated by new

senior teams.

Re orientations

are

associated more

w ith success.

Re-orientations have

the luxury of time to shape the change, build coalitions, and empower

individuals to be effective in the new organization. Further, re-orientations

give senior managers time to prune and shape core values in service of

the revised strategy, structure, and processes. For example, the proactive

strategic changes at Cray Research, ALCOA, and GE each involved

system-wide change as well as the shaping of core values ahead of the


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eyond the Charismatic Leader 81

require visionary executives. Unfortunately, in real time , it is unclear

who will be known as visionary executives (e.g., Welch, Iacocca, Roll-

wagen at Cray Research) and who will be known as failures (e.g., Don

Burr at People Express, or L arry Goshom at General Automation). In

turbulent environments, not to make strategic bets in associated with

failure. Not all bets will pay off, however. The advantages of re-orientations

derive from the extra implementation time and from the opportunity to

learn from and adapt to mistakes. *

As w ith re-creations, executive leadership is crucial in initiating and

implementing strategic re-orientations. The majority of successful re-

orientations involve change in the CEO and substantial executive team

change. T hose m ost successful firms, however, have executive teams

that are relatively stable yet are still capable of initiating several re-orien-

tations (e .g ., Ken Olsen at DEC and An Wang at Wang).

There a re, then, quite fundamentally different kinds of organizational

changes. The role of executive leadership varies considerably for these dif-

ferent types of organizational changes. Incremental change typically can be

managed by the existing management structures and processes of the organ-

ization, sometimes in conjunction with special transition structures.'^ In

these situations, a variety of leadership styles may be appropriate, depending

upon how the organization is normally managed and led. In strategic

changes, however, the management process and structure itself is the sub-

ject of change; therefore, it cannot be relied upon to manage the change. In

addition, the organization's definition of effective leadership may also be

changing as a consequence of the re-orientation or re-creation. In these

situations, leadership becomes a very critical element of change management.

This article focuses on the role of executive leadership in strategic organ-

ization change , and in particular, the role of leadership in re-orientations.

Given organization and individual inertia, re-orientations can not be in-

itiated or implemented without sustained action by the organization's

leadership . Indeed, re-orientations are frequently driven by new leadership,

often brought in from outside the organization.'^ A key challenge for execu-

tives facing turbulent environments, then, is to learn how to effectively

initiate, lead, and manage re-orientations. Leadership of strategic re-

orientations requires not only charisma, but also substantial instrumental

skills in building executive teams, roles, and systems in support of the

change, as well as institutional skills in diffusing leadership throughout the

organization.


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82 C A L I FO R N I A M A N A G E M E N T R E V I E W Winter 199

sions of leadership and organizational change is a picture of the special

kind of leadership that appears to be critical during times of strategic organ-

izational change. While various words have been used to portray this type

of leadership, we prefer the label charism atic leader. It refers to a special

quality that enables the leader to mobilize and sustain activity within an

organization through specific personal actions combined with perceived

personal characteristics.

The concept of the charismatic leader is not the popular version of the

great speech maker or television personality. Rather, a model has emerged

from recent work aimed at identifying the nature and determinants of a par-

ticular type of leadership that successfully brings about changes in an indi-

vidual's values, goals, needs, or aspirations. Research on charismatic

leadership has identified this type of leadership as observable, definable,

and having clear behavioral characteristics.'* We have attempted to develop

a first cut description of the leader in terms of pattems of behavior that he/

she seems to exhibit. The resulting approach is outlined in Figure 2, which

lists three major types of behavior that characterize these leaders and some

illustrative kinds of actions.

Figure 2 The Charismatic Leader

Envisioning

articulating a com pelling vision

setting high expe ctations

mod eling consistent behaviors

Energizing Enabling

demon strating personal expressing personal

excitement support

expressing personal confidence empathizing

seeking, finding, using expressing confiden ce

success in people

The first component of charismatic leadership is

envisioning

This in-

volves the creation of a picture of the future, or of a desired future state

with which people can identify and which can generate excitement. By

creating vision, the leader provides a vehicle for people to develop com-

mitment, a common goal around which people can rally, and a way for people

to feel successful. Envisioning is accomplished through a range of different

actions. Clearly, the simplest form is through articulation of a compelling


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eyond

th

Charismatic Leader

8

is also communicated in other ways, such as through expectations that the

leader expresses and through the leader personally demonstrating behaviors

and activities that symbolize and further that vision.

The second component is

energizing

Here the role of the leader is the

direct generation of energym otivation to actamong members of the

organization. How is this done? Different leaders engage in energizing in

different ways, but some of the most common include demonstration of

their own personal excitement and energy, combined with leveraging that

excitement through direct personal contact with large numbers of people in

the organization. They express confidence in their own ability to succeed.

They find, and use, successes to celebrate progress towards the vision.

The third component isenabling The leader psychologically helps people

act or perform in the face of challenging goals. Assuming that individuals

are directed through a vision and motivated by the creation of energy, they

then may need emotional assistance in accomplishing their tasks. This

enabling is achieved in several ways. Charismatic leaders demonstrate

empathythe ability to listen, understand, and share the feelings of those

in the organization. They express support for individuals. Perhaps most

importantly, the charismatic leader tends to express his/her confidence in

people s ability to perform effectively and to meet challenges.

Yotaro Kobayashi at Fuji-Xerox and Paul O Neil at ALCOA each exhibit

the characteristics of charismatic leaders. In Kobayashi s transformation at

Fuji, he was constantly espousing his New Xerox Movement vision for

Fuji. Kobayashi set high standards for his firm (e.g., the 3500 model and

the Demming Prize), for

himself

and for his team. Beyond espousing this

vision for Fuji, Kobayashi provided resources, training, and personal

coaching to support his colleagues efforts in the transformation at Fuji.

Similarly, Paul O Neil has espoused a clear vision for ALCOA anchored on

quality, safety, and innovation. O Neil has made his vision compelling and

central to the firm , has set high expectations for his top team and for indi-

viduals throughout ALCOA and provides continuous support and energy

for his vision through meetings, task forces, video tapes, and extensive

personal contact.

Assuming that leaders act in these w ays, what functions are they per-

forming that help bring about change? First, they provide a psychological

focal point for the energies, hopes, and aspirations of people in the organ-

ization. Second, they serve as powerful role models whose behaviors,

actions and personal energy demonstrate the desired behaviors expected

throughout the firm. The behaviors of charismatic leaders provide a stan-

dard to which others can aspire. Through their personal effectiveness and


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Limitations of the Charismatic LeaderEven if one were able to do all

of the things involved in being a charismatic leader, it might still not be

enough. In fact, our observations suggest that there are a number of inher-

ent limitations to the effectiveness of charismatic leaders, many stemming

from risks associated with leadership which revolves around a single indi-

vidual. Some of the key potential problems are:

Unrealistic

Expec tations

In creating a vision and getting people ener-

gized, the leader may create expectations that are unrealistic or unattaina-

ble.

These can backfire if the leader cannot live up to the expectations

that are created.

ependency and

Counterdependency strong, visible, and energetic

leader may spur different psychological response. Some individuals may

become overly dependent upon the leader, and in some cases whole or-

ganizations become dependent. Everyone else stops initiating actions

and waits for the leader to provide direction; individuals may become

passive or reactive. On the other extreme, others may be uncomfortable

with strong personal presence and spend time and energy demonstrating

how the leader is wronghow the emperor has no clothes.

Reluctance to

Disagree

w ith the Leader

The charismatic leader s

approval or disapproval becomes an important commodity. In the presence

of a strong leader, people may become hesitant to disagree or come into

conflict with the leader. This may, in tum, lead to stifling conformity.

Need for

Continuing

Magic

The charismatic leader may becom e

trapped by the expectation that the magic often associated with charisma

will continue unabated. This may cause the leader to act in ways that are

not functional, or (if the magic is not produced) it may cause a crisis of

leadership credibility.

Potential Feelings

of

etrayal henand if things do not work out as

the leader has envisioned, the potential exists for individuals to feel betrayed

by their leader. They may become frustrated and angry, with som e of

that anger directed at the individual who created the expectations that

have been betrayed.

Disenfranchisementof NextLevelsof Management

A consequence of

the strong charismatic leader is that the next levels of management can

easily becom e disenfranchised. They lose their ability to lead because no

direction, vision, exhortation, reward, or punishment is meaningful un-

less it comes directly from the leader. The charismatic leader thus may

end up underleveraging his or her management and/or creating passive/

dependent direct reports.


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Beyond the Cha rismatic Leader 85

when different types of issues demand different types of competencies

(e .g ., markets, techno logies, products, finance) which a single individual

may not possess. Different types of strategic changes make different

managerial demands and call for different personal characteristics. There

may be limits to the number of strategic changes that one individual can

lead over the life of an organization.

In light of these r isks , it appears that the charismatic leader is a necessary

componentbut not a sufficient componentof the organizational leader-

ship required for effective organizational re-organization. There is a need

to move beyond the charismatic leader.

nstrumental Leadership

Effective leaders of change need to be more than just charismatic. Effective

re-orientations seem to be characterized by the presence of another type of

leadership behavior which focuses not on the excitement of individuals and

changing their goals, needs or aspirations, but on making sure that individuals

in the senior team and throughout the organization behave in ways needed

for change to occur. An important leadership role is to build competent

teams, clarify required behaviors, built in measurement, and administer

rewards and punishments so that individuals perceive that behavior consis-

tent with the change is central for them in achieving their own goals.' We

will call this type of leadershipinstrument lleadership since it focuses on

the management of teams, structures, and managerial processes to create

individual instrumentalities. The basis of this approach is in expectancy

theories of motivation, which propose that individuals will perform those

behaviors that they perceive as instrumental for acquiring valued out-

comes. Leadership, in this context, involves managing environments to

create conditions that motivate desired behavior. '

In practice , instrumental leadership of change involves three elements of

behavior (see Figure 3). The first is

structuring.

The leader invests time in

building teams that have the required competence to execute and implement

the re-orientation^^ and in creating structures that make it clear what types

of behavior are required throughout the organization. This may involve

setting goals, establishing standards, and defining roles and responsibilities.

Re-orientations seem to require detailed planning about what people will

need to do and how they w ill be required to act during different phases of

the change. The second element of instrumental leadership is

controlling.

This involves the creation of systems and processes to measure, monitor,

and assess both behavior and results and to administer corrective action.


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86 C A LI FO R N LA M A N A G E M E N T R E V I E W Winter 199

Figure 3

Instrumental Leadership

Charismatic Leadership

Structuring Envisioning ontrolling

Energizing Enabling

Rewarding

Instrumental leadership focuses on the challenge of shaping consistent

behaviors in support of the re-orientation. The charismatic leader excites

individuals, shapes their aspirations, and directs their energy. In practice,

however, this is not enough to sustain pattems of desired behavior. Subordi-

nates and colleagues may be committed to the vision, but over time other

forces may infiuence their behavior, particularly when they are not in direct

personal contact with the leader. This is particularly relevant during periods

of change when the formal organization and the informal social system may

lag behind the leader and communicate outdated messages or reward tradi-

tional behavior. Instrumental leadership is needed to ensure compliance over

time consistent with the commitment generated by charismatic leadership.

At Xerox, for example, David Keams used instrumental leadership to

further enliven his Leadership Through Quality efforts. Beyond his own

sustained behaviors in support of the Leadership Through Quality effort,

Keams and his Quality Office developed a comprehensive set of roles,

processes, teams, and feedback and audit mechanisms for getting customer

input and continuous improvement into everyday problem solving through-

out Xerox. Individuals and teams across the corporation were evaluated on

their ability to continuously meet customer requirements. These data were

used in making pay, promotion, and career decisions.

The Role of Mundane BehaviorsTypical descriptions of both charis-

matic and instmmental leaders tend to focus on significant events, critical

incidents, and grand gestures. Our vision of the change manager is fre-


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day-to-day activities and mundane behaviors serves as a powerful determin-

ant of behavior. Through relatively unobtmsive acts, through sustained

attention to detail, managers can directly shape perceptions and culture in

support of the change effort. Examples of mundane behavior that when

taken together can have a great impact include:

allocation of time; calendar management

asking questions, following up

shaping of physical settings

public statements

setting agendas of events or meetings

use of events such as lunches, meetings, to push the change effort

summarizationpost hoc interpretation of what occurred

creating heroes

use of humor, stories, and myths

small symbolic actions, including rewards and punishments

In each of these ways, leaders can use daily activities to emphasize impor-

tant issues , identify desirable behavior, and help create pattems and mean-

ing out of the various transactions that make up organizational life.

The Com plementarity of Leadership pproaches

It appears that effec-

tive organizational re-orientation requires both charismatic and instmm ental

leadership. Charismatic leadership is needed to generate energy, create

commitment, and direct individuals towards new objectives, values or

aspirations. Instmm ental leadership is required to ensure that people really

do act in a manner consistent w ith their new goals. Either one alone is in-

sufficient for the achievement of change.

The complementarity of leadership approaches and the necessity for both

creates a dilemma.^* Success in implementing these dual approaches is as-

sociated with the personal style, characteristics, needs, and skills of the

executive. An individual who is adept at one approach may have difficulty

executing the other. For exam ple, charismatic leaders may have problems

with tasks involved in achieving con trol. Many charismatic leaders are

motivated by a strong desire to receive positive feedback from those around

th em . They may therefore have problems delivering unpleasant messages,

dealing with performance problem s, or creating situations that could attract

negative feelings.^^

Only exceptional individuals can handle the behavioral requirements of

both charismatic and instmmental leadership styles. While such individuals

exist, and altemative may be to involve others in leadership roles, thus com-


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everaging the Senior Tea m

The group of individuals who report

directly to the individual leaderthe executive or senior teamis the first

logical place to look for opportunities to extend and institutionalize leader-

ship.

Development of an effective, visible, and dynamic senior team can be

a major step in getting around the problems and limitations of the individual

leader.

Examples of such executive teams include the Management Com-

mittee established at Com ing by Jamie H oughton or Bob Allen's Executive

Committee at AT&T. Several actions appear to be important in enhancing

the effectiveness of the senior team.

Visible Empow erment of the Team

A first step is the visible empower-

m ent of he team , or ano inting the team as extensions of the individual

leader. There are two different aspects to this empowerment: objective

and sym bolic. Objective empow erment involves providing team mem bers

with the autonomy and resources to serve effectively. Symbolic empow er-

ment involves communicating messages (through information, symbols,

and mundane behaviors) to show the organization that these individuals

are indeed extensions of the leader, and ultimately key components of

the leadership. Symbolic empowerment can be done through the use of

titles, the designation of organizational structures, and the visible presence

of individuals in ceremonial roles.

Individual Development of Team Mem bers

Emp owerment will fail if

the individuals on the team are not capable of executing their revised

leadership roles. A major problem in re-orientations is that the members

of the senior team frequently are the product of the very system s, struc-

tures, and values that the re-orientation seeks to change. Participating in

the change, and more importantly, leading it, may require a significant

switching of cognitive g ea rs . Re-orientations dem and that senior team

members think very differently about the business and about managing.

This need for personal change at the most senior level has implications

for the selection of senior team members (see below). It also may mean

that part of the individual leader's role is to help coach, guide, and sup-

port individuals in developing their own leadership capabilities. Each

individual need not (and should not) be a clon e of the individual leader;

but each should be able to initiate credible leadership actions in a manner

consistent with their own personal styles. Ultimately, it also puts a demand

on the leader to deal with those who will not or can not make the per-

sonal changes required for helping lead the re-orientation.

Com position of the Senior Team

The need for the senior team to imple-

ment change may mean that the composition of that team may have to be

altered. Different skills, capabilities, styles, and value orientations may


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90 CALIFORNIA MANAGEMENT REV IEW Winter 1990

may require outplacement of people as well as importing new people,

either from outside the organization, or from outside the coalition that

has traditionally led the organization.^^

The Inducement ofStrategic nticipation

A critical issue in executing

re-orientations is strategic anticipation. By definition, a re-orientation is

a strategic organizational change that is initiated in anticipation of signifi-

cant extemal events. Re-orientation occurs because the organization's

leadership perceives competitive advantage from initiating change earlier

rather than later. The question is, who is responsible for thinking about

and anticipating extemal events, and ultimately deciding that re-orientation

is necessary? In some cases, the individual leader does this, but the task

is enormous. This is where the senior team can be helpful, because as a

group it can scan a larger number of events and potentially be more crea-

tive in analyzing the environment and the process of anticipation.

Com panies that are successful anticipators create conditions in which

anticipation is more likely to occur. They invest in activities that foster

anticipation, such as environmental scanning, experiments or probes

inside the organization (frequently on the periphery), and frequent con-

tacts with the outside. The senior team has a major role in initiating,

sponsoring, and leveraging these activities.^*

The Senior

Team

as a

earning

System

For a senior team to benefit

from its involvement in leading change, it must become an effective

system for leaming about the business, the nature of change, and the

task of managing change. The challenge is to both bond the team to-

gether, while avoiding insularity. One of the costs of such team stmctures

is that they become isolated from the rest of the organization, they

develop pattems of dysfunctional conformity, avoid conflict, and over

time develop pattems of leiimed incompetence. These group processes

diminish the team's capacity for effective strategic anticipation, and

decreases the team 's ability to provide effective leadership of the re-

orientation.

There are several ways to enhance a senior team's ability to leam over

time.

One approach is to work to keep the team an open system, receptive

to outside ideas and information. This can be accomplished by creating a

constant stream of events that expose people to new ideas and/or situations.

For example, creating simulations, using critical incident techniques,

creating near histories, are all ways of exposing senior teams to novel

situations and sharpening problem-solving skills.^* Similarly, senior

teams can open themselves to new ideas via speakers or visitors brought

in to meet with the team, visits by the team to other organizations,


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Beyond the Charismatic Leader

91

effective group leadership, building effective team member skills, creating

meeting management discipline, acquiring group problem-solving and in-

formation-processing skills, and ultimately creating norms that promote

effective leaming, innovation, and problem solving.^

David Keam s at Xerox and Paul O Neil at ALC OA made substantial

use of senior teams in implementing their quality-oriented organization

transformations. Both executives appointed senior quality task forces

composed of highly respected senior executives. These task forces were

charged with developing the corporate-wide architecture of the change

effort. To sharpen their change and quality skills these executives mad e

trips to Japan and to other experienced organizations, and were involved in

extensive education and problem-solving efforts in their task forces and

within their own divisions. These task forces put substance and enhanced

energy into the CEO s broad vision. These executives were, in tum, role

models and champions of the change efforts in their own sectors.

As a final note , it is imp ortant to rem em ber that frequently there are

significant obstacles in developing effective senior teams to lead re-

orientations. The issues of skills and selection have been mentioned.

Equally important is the question of power and succession. A team is most

successful when there is a perception of common fate. Individuals have to

believe that the success of the team will in the long run be more salient to

them than their individual short-run success.

In many situations, this can

be accomplished through appropriate stmctures, objectives, and incentives.

But these actions may fail when there are pending (or anticipated) decisions

to be made conceming senior management succession. In these situations,

the quality of collaboration tends to deteriorate significantly, and effective

team leadership of change becomes problematic. The individual leader must

manage the timing and process of succession in relation to the requirements

for team leade rship, so that conflicting (and mutually exclusive) incentives

are not created by the situation.

roadening Senior Management

A second step in moving beyond indi-

vidual leadership of change is the further extension of the leadership beyond

the executive or senior team to include a broader set of individuals who

make up the senior management of the organization. This would include

individuals one or two levels down from the executive team. At Coming,

the establishment of two group s the C orporate Policy G roup (approxi-

mately the top 35) and the Corporate Management Group (about the top

120)are examples of mechanisms used by Houghton to broaden the defi-

nition of senior management. This set of individuals is in fact the senior


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92 CALIFORNIA MANAGEMENT REVIEW Winter 1990

participants at best) and victims at worst). This group can be particularly

problematic since they may be more embedded in the current system of

organizing and managing than some of the senior team. They may be less

prepared to change, they frequently have molded themselves to fit the

current organizational style, and they may feel d isenfranchised by the very

act of developing a strong executive team, particularly if that team has been

assembled by bringing in people from outside of the organization.

The task is to make this group feel like senior management, to get them

signed up for the change, and to motivate and enable them to work as an

extension of the senior team. Many of the implications are similar to those

mentioned above in relation to the top team; however, there are special

problems of size and lack of proxinndty to the individual charismatic leader.

Part of the answer is to get the senior team to take responsibility for devel-

oping their own teams as leaders of change. O ther specific actions may

include:

Rites of Passage

Creating symbolic events that help these individuals

to feel more a part of senior management.

Senior Groups

Creating structures councils, boards, committees, con-

ferences) to maintain contact with this group and reinforce the ir sense of

participation as members of senior management.

Participation

in Planning

hange nvolvingthese people in the early

diagnosing of the need to change and the planning of change strategies

associated with the re-orientation. This is particularly useful in getting

them to feel more like owners, rather than victims of the change.

Intensive ommunication aintaininga constant stream of open com-

munication to and from this group. It is the lack of information and

perspective that psychologically disenfranchises these individuals.

eveloping Leadership in the Organization

A third arena for enhancing

the leadership of re-organizations is through organizational structures,

systems, and process for leadership development consistent with the re-

orientation. Frequently leadership development efforts lag behind the re-

orientation. The management development system of many organizations

often works effectively to create managers who will fit well with the o rgan-

izational environment that the leadership seeks to abandon. There needs to

be a strategic and anticipatory thinking about the leadership development

process, including the following:

Definition

of M anagerial ompe tence

A first step is determining the

skills,

capabilities, and capacities needed to manage and lead effectively


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Sourcing Managerial Talent

Re-orientations may require that the or-

ganization identify significantly different sources for acquiring leaders or

potential leaders. Senior managers should be involved in recruiting the

hiring. Because of the lead time involved, managerial sourcing has to be

approached as a long-term (five to ten years) task.

Socialization

As individuals mov e into the organization and into pos i-

tions of leadership, deliberate actions must be taken to teach them how

the organization's social system works. During periods of re-orientation,

the socialization process ought to lead rather than lag behind the change.

Managem ent Education

Re-orientation may require ma nagers and lead-

ers to use or develop new skills, competencies, or knowledge. This

creates a demand for effective management education. Research indi-

cates that the impact of passive internal management education on the

development of effective leaders may be minimal when compared with

more action-oriented educational experiences. The use of educational

events to expose people to external settings or ideas (through

out of

company education) and to socialize individuals through action-oriented

executive education may be more useful than attempts to teach people to

be effective leaders and managers. *'

Career Managem ent

Research and experience indicate that the m ost

potent factor in the development of effective leaders is the nature of their

job experiences. *^ The challenge is to ensure that middle and lower level

managers get a wide range of experiences over time. Preparing people to

lead re-orientations may require a greater emphasis on the development

of generalists through cross-functional, divisional, and/or multinational

career experiences. *^ Diverse career experiences help individuals develop

a broad com mu nication network and a range of experiences and com pe-

tences all of which are vital in managing large-system change. This

approach to careers implies the sharing of the burden of career manage-

ment between both the organization and the employee as well as the

deliberate strategy of balancing current contribution with investment for

the future when placing people in job assignments.'*^

Seeding Talent

Developing leadership for change may also require

deliberate leveraging of available talent. This implies thoughtful placement

of individual leaders in different situations and parts of the organization,

the use of transfers, and the strategic placement of high-potential leaders. ^

Perhaps the most ambitious and most well-documented effort at developing

leadership throughout the organization is Welch's actions at GE. Welch has

used GE's Management Development Institute at Crotonville as an important

lever in the transformation of GE. Based on Welch's vision of a lean, com-


18/22


GE.

With Welch's active involvement, Crotonville's curriculum has moved

from a short-term cognitive orientation towards longer-term problem solving

and organization change. The curriculum has been developed to shape

experiences and sharpen skills over the course of an individual's career in

service of developing leaders to fit into the new GE. **

Summary

In a world characterized by global competition, deregulation, sharp tech-

nological change, and political turmoil, discontinuous organization change

seems to be a determinant of organization adaptation. Those firms that can

initiate and implement discontinuous organization change more rapidly

and/or prior to the competition have a competitive advantage. While not all

change will be successful, inertia or incremental change in the face of

altered competitive arenas is a recipe for failure.

Executive leadership is the critical factor in the initiation and implemen-

tation of large-system organization change. This article has developed an

approach to the leadership of discontinuous organization change with par-

ticular reference to re-orientationsdiscontinuous change initiated in

advance of competitive threat and/or performance crisis. Where incremental

change can be delegated, strategic change must be driven by senior manage-

ment. Charismatic leadership is a vital aspect of managing large-system

change. Charismatic leaders provide vision, direction, and energy. Thus

the successes of O'Neil at ALCOA, Welch at GE, K eams at Xerox, and

RoUwagen and Cray are partly a function of committed, enthusiastic, and

passionate individual executives.

Charisma is not, however, enough to effect large-system change. Charis-

matic leadership must be bolstered by instmmental leadership through

attention to detail on roles, responsibilities, stmctures, and rewards. Fur-

ther, as many organizations are too large and complex for any one executive

and/or senior team to directly manage, responsibility for large-system

change must be institutionalized throughout the management system. The

leadership of strategic organization change must be pushed throughout the

organization to maximize the probability that managers at all levels own

and are involved in executing the change efforts and see the concrete

benefits of making the change effort work. O'Neil, Welch, Keams, and

Rollwagen are important catalysts in their organizations. Their successes to

date are, however, not based simply on strong personalities. Each of these

executives has been able to build teams, systems, and managerial processes

to leverage and add substance to his vision and energy. It is this interaction


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Beyond the Charismatic Leader 95

this transition period, mistakes are made, environments change and key

people leave. Given the turbulence of competitive conditions, the complexity

of large-system change and individual cognitive limitations, the executive

team must develop its ability to adapt to new conditions and, as importantly,

leam from both its successes and failures. As organizations can not remain

stable in the face of environmental change, so too must the management of

large-system change be flexible. This abihty of executive teams to build-in

leaming and to build-in flexibility into the process of managing large-system

organizational change is a touchstone for proactively managing re-orientations.

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eyond the Charismatic Leader

9

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Ham brick, op. cit.

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