executive behavior: classical and existential

Executive Behavior: Classical and Existential

Joe Kelly

There' a new type of CEO out there: existential, focused "on the market, and intent upon survival.

~ xecutive behav-

.L ior is simply what managers

do. Managers get things done. Sometimes they even get great things done, and the best do them with such style and elegance that others get a kick out of working with them. The best managers not only manage efficiently ("do-

ing things right") and effectively ("doing the right flaing"), but riley also achieve a vision for their organization, which can transform not only themselves but society as well. Like Lee Iacocca or Jack Welch, they communicate this vision by their actions and their behavior. Thus, executives never simply act or behave.

Other business executives wonder what is going on around them and are puzzled by what is happening "up front." An easy way of con- founding adherents of traditional management is to ask them to define the term "managing." The answers tend to be shrouded in cliches: "Manag- ing is getting results through people." "Managing is the coordination of such functions as planning and organizing to reach a measured objective." "Managing is . . . . "

What is managing? Two kinds of managers will be discussed here: the classical and the existential. The characteristics of both are outlined in F igure 1.

THE CLASSICAL ANSWER

F or the traditional classical manager, managing is the art of delegation, of getting results through people. It is the formula-

tion and execution of policy through the func- tional activities of Planning, Organization, Lead-

ing, and Evaluating--POLE. This leads to a definition of managing as teamwork; people really matter. At the shop floor level, as EW. Taylor would say, "managing is discovering how tasks should be performed and seeing that they are performed in that way."

T h e Class ica l M a n a g e r as O r g a n i z a t i o n M a n

This view sees the manager as the person who sets objectives, plans the work, organizes people into tasks according to their age, aptitudes, and abilities, leads them in a way that turns work into fun, and evaluates performance in a way that ensures correspondence between plan and action. That is, managers do things through people: they POLE the efforts of other people.

"Manage" is a verb, a doing word. But what do managers do? They talk. We know from scientific studies of executive behavior that they spend tremendously long hours working (12-14 hours a day plus "homework"), most of it at what psy- chologists call "interacting time." The time spent with others is made 6p of a myriad of fleeting, superficial, and often distracting contacts. A lot of these contacts are in meetings, but most are swift touching-base signals that terminate with the manager giving an "OK---Ca W on" signal.

This managerial lifestyle can be disturbing to outsiders. They are likely to view managers as having sold their services to the highest bidder (usually the image of a bloated capitalist smoking a cigar is invoked) or as a kind of powerbroker who gets people together to do what the manager wants.

One such outsider was W.H. Whyte, an edi- tor of Fortune, who wrote a brilliant and widely read book called The Organization Man (1956). Managers like to think of themselves as tough individuals who go in and do it their way, win the order, get a coronary, and are fired, then make it all the way back to become chairman of

16 Business Horizons / January-February 1993

Figure 1 Characterist ics o f Classical a n d Existent ia l Execut ives

CLASSICAL EXECUTIVE

Structure Hierarchical, pyramidal, multi-level; limits access

Style Three-piece suit

Process POLES (plans, organizes, leads, evaluates) Reflective, systematic planning

Information MIS complex print-outs, sales reports, etc.; Long monthly, quarterly meetings

Vah~es "No-nonsense, let's get on with this job." "We are one big happy family." Denial of political dimension

Incidentals No computer hands-on skills, apprehensive about women and minorities

Cars: Cadillacs and Lincolns

Sports: golf

Patron Saints Harold Geneen Reginald Jones

EXISTENTIAL EXECUTIVE

Structure Controlled anarchy and adhocracy; almost unlimited access

Style ShE sleeves

Process Agenda setting, networking; brief encounters, full of wit, gossip, soft in/o--all at high speed; brevity, variety, discontinuity

Information High verbal, non-verbal, electronic mail, faxes; Extremely short one-on-ones and brief meeting

Values "Work smarter not harder." Exploit visibility like Iacocca to sell cars

Incidentals Computer skills, gets along with minorities, high-tech ambience, modern attitudes to marriage in young

Cars: German Driving Machines

Sports: tennis and skiing

Patron Saints Jack Welch Lee Iacocca Steven Jobs

BOTH

High pay, rich in stock and acquisitions Age: indeterminate Social and geographical origins anywhere Both can and do co-exist

the board. Whyte, however, painted another pic - ture: a guy with a crewcut, in a but toned-down collar, grey flannel suit, and polished leather shoes, who drove a Buick or an Oldsmobile (a Cadillac would be conspicuous consumption), tutored his wife on how to toady up to the boss, and was an all-around conformist.

A B e h a v i o r a l P o r t r a i t

One of the first studies of American chief executives was made by Whyte (1954), who reported a study of 52 company presidents, 23 vice presi- ' dents, and 53 middle managers identified as "comers." Whyte found that they worked excessive hours, included evenings in their work time,

and spent most of their time interacting with or influencing people. The question was not how much executives work; it was how they found time to work.

The findings of a later study by Dale and Urwick (1960) largely confirmed Whyte's data. Dale and Urwick studied ten executives and ana- lyzed in detail the working week of a bank president. More than half of his time was taken up with outside contacts, and a lot of it was spent on public relations.

The whole idea of making executive behavior studies by observation was invented by Sune Carlson, a professor of business studies in Swe- den. Carlson (1979) was preoccupied with the idea that management studies were largely theo-

Chief Executive Behavior: Classical and Existential 17

• : . ~

"Success is dependent on manipulating the vast intricacy of human relationships that make up the political universe

. . of top dog executives. They know how to play fhe game. "

logical, sterile, and based to a large extent on anecdotes. Carlson was fighting the idea-- then and still widely current--that what a manager did could be summed up in the acronym POLE-- plan, organize, lead, evaluate. Carlson's questions were:

• How do you recognize managers when they are POLEing?

• What are their behavioral characteristics? • Do they have an identifiable profile? When nobody could answer him, he set out

to discover the answers for himself. Carlson col- lected his data under five headings: place, person, technique of communication, question handled, and action taken. What he found confirmed the clich6. He discovered that top executives worked long hours, rarely visited their facto- ries, spent long hours travelling, were slaves to

• their diaries, and had little time for leisure and contemplation.

Henry Mintzberg, a professor of management at McGill University, set out in 1968 to study the work of the chief executives of five large Ameri-

can corporations. Using a technique called structured observation, he ob- served each CEO for a period of one week. Mintzberg showed that Ameri- can chief executives were, on the surface, very superficial people who worked long hours, largely because they were nodes in a complex information system• Virtually everything in

the business, usually in a digested form, had to pass across their desks.

What Mintzberg is telling us is that grand theories of management are irrelevant: managers don't act; they react. The stuff of managerial life seems to be made up of "brief encounters" and "brief activities" (49 percent of executives' activities in Mintzberg's study lasted less than nine minutes). To get business done, managers concentrate on issues that are current, well-defined, and non-routine; they work mainly through the spoken word.

Behavior

Behavioral studies of executives strongly indicate that managers feel compelled to work excessive hours at an unrelenting pace, with few opportu- nities for breaks or recreation. This critical executive fetish becomes more pronounced at higher

levels in'the hierarchy and must be regarded as a function of the kicks, rewards, and challenges senior executives get out of their jobs. The manager's life is suffused with brief contacts and fleeting interactions; it is highly fragmented with a fair level of noise. Managers appear to operate at several levels simultaneously, or at least in rapid succession.

Managers apparently spend most of their time communicating. For most, writing letters is not a major activity. Managers have a preference for immediate, concrete, and specific problems, which they immediately simplify through some model• The scheduled meeting is the mainstay of their days.

The Game Is the Thing

The classical imperialist drama theory of the organization views executives and their hangers-on as players in the great game of realpolitik. The great thing about the metaphor of game playing is that by reducing personal responsibility it frees individuals to make decisions.

These top dog executives, whether in business, government, education, or the church, have power; they understand the drama of power, and they use it. They maneuver and manipulate to get the job done and, in many cases, to strengthen and enhance their own position. They revel in being seen as fascists, but in a humorous sort of way- - "He is somewhat to the right of Attila the Hun." Success is dependent on manipulating the vast intricacy of human relationships that make up the political universe of top dog executives. They know how to play the game.

ORGANIZATIONAL PRINCIPLES

T he "organization as a whole" has a logic peculiarly its own, and when working effectively it is a sight to be seen. Sus-

tained by ideological fictions ("This place is more than brick and mortar, it has a heart"), serving both unique ("makes a big buck") and accessory ("keeps you out of the cold") functions, held together by a powerful coalition (the inner circle) that none will challenge, organizations can be understood only in their own terms. "You don't believe, but believe that everybody else believes" is what everyone believes.

With this type of pluralistic ignorance, organizations are not only hard to buck, but on occa- sion are capable of mobilizing and directing resources in such a way that dramatic achievements become the order of the day, leaving both par- ticipants and spectators gasping in awe. Further- more, organizations can g e t people to overcome their anxieties and learn to love them. Why? Be- cause the organization has principles!


1. Organizations exist; they are bigger than people; they may be immortal. Organizations can be managed through human resource management.

2. Organizations have "structure, process, and values." Organizations affect perceptions, emo- tions, and behaviors of individuals and groups. Organizations develop a culture.

3. Organizations can be designed and managed.

J o h n Akers and IBM

IBM is just such an organization. But IBM is in a disaster mode right now. Both its stock price and its profits are falling. At one time IBM stock was the bellweather for the Dow Jones Industrial Average. Now it is performing well below expec- tations. Nevertheless, IBM's profits are still the biggest of any company of the world: in 1990 it made 6 billion dollars on 69 billion dollars of revenue. In 1984, it made even more profit on 46 billion dollars worth of revenue.

John Akers' answer to the charge that IBM is in crisis is simply that IBM is caught up in an industry that is moving so fast it is difficult to adjust quickly enough. IBM is fighting for its life. Moreover, the company has failed both in product development and in marketing.

Akers is going to be remembered as the man who let IBM falter. He has had a career of accomplishments, first as a navy flier, then as an outstanding IBM salesman. As a junior executive he was picked out as a star. The trouble is that when Akers took over IBM from his immediate predecessors, Frank T. Cary and John R. Opel, he received a company that was fat and overconfi- dent. In addition, it has 50,000 competitors---most of w h o m are niche players. IBM is often described as an asset-heavy, people-laden, bureaucracy-ridden organization. For many years it has been operating as a huge citadel surrounded by a moat; now that moat is drying up. IBM must now face harsh criticism from its many competitors. No longer can it depend on its history.

The computer that has been giving IBM most problems is the PC, which sells in a price-driven market. Teaming up with Apple is an attempt to overcome some of the technical difficulties that IBM PCs face in the marketplace because they are not seen as being use>friendly. All this interest in PCs has come at a time when IBM has retained its focus on mainframes.

How Akers manages information flow for the company is of considerable interest. Around the middle of each month management information people deliver to headquarters a quarterly ford- cast based on orders received. For example, business in January and February 1991 was poor, but the February forecast showed that IBM still could

have a reasonable quarter bolstered by sales in March. Yet in this world of computers nothing is certain. When "white knuckles" time arr i~ed--a term IBM people use to describe the waiting days of a quar ter - - the business wasn't there.

The essence of the matter is that for IBM, marketing has always been more important than technology. For example, Thomas J. Watson, Jr. (1990) spells out how IBM was able to out-per- form Univac, which had a better computer, simply because Watson's salespeople had the ability to tell the customer a story, install the machine properly, and hang on to the customers once they had them. Unfortunately, John Akers cannot manage to mobilize IBM's marketing resources effectively to get the type of performance

"John Akers" answer to the charge that IBM is in crisis is simply that IBM is caught up in an industry that is moving so fast it is difficult to adjust quickly enough. IBM is fighting for its life. "

needed to stop the stock price from plummeting. In an interview in Fortune (Loomis 1991), Akers said that the company was finally facing reality.

According to Loomis, a major problem for IBM is how to reduce its enormous staff. Having always pursued the policy of job security for its employees, the company has invented a whole bureaucratic language to explain how it over- comes problems of assured job security while retaining the right to fire employees. Examples of this "IBMSPEAK" are "MIS" (Management Initiated Separation), which is used to describe a reduc- tion in the work force not caused by voluntary resignation or retirement (translation: "You're fired."); the verb "non-concur," meaning to with- hold approval: "I non-concur with this proposal"; and "tree-hugger," referring to an employee who resists a move or any other change. Technically, IBM's well-established principle of full employ- ment is "no layoff system in place." Nevertheless, in the era of Akers the company has been forced into the use of MIS.

John Akers has been compared unfavorably with Jack Welch of General Electric, who is run- ning a revolution in his company. Akers answers, "This is simplistic. You can't compare IBM and GE." But he does admit that IBM was slow in getting into personal computers, that it missed the beat in mid-range systems, and that it was late in workstations. As Loomis notes, to counter all these criticisms, Akers is cutting IBM's ex- penses to the bone. He is striving for growth in software services and in what is called OEM, Original Equipment Manufacturing, meaning production of IBM hardware for resale under


another company's name. Akers has also de- clared war on the competition. "We're going to ship one spiffy product, and we're going to price it to maintain or gain market share."

Lee Iacocca and His General Managers at Chrysler

'!Execufive personality is • , • e t the organtztng cen er

• a r o u n d wh ich p e o p l e ' s • :,motives form a unified : :.,endintegrated-- system • .: a n d the strategy of the

firm becomes manifest. "

The existential image presented to us of Lee Iacocca on television his eyes glinting behind his aviator frames, his chin jutting forward, his finger poking the air excitedly--alerted America in the 1980s to the idea that Chrysler cars are made in America and are worth considering. Now the Chrysler Corporation is once again facing a real crisis. The trouble has come because Iacocca failed to follow his own maxims. As he pointed out in his autobiography (1984), "In the

• end, all business operations can be reduced to three words: people, product, and profits. People come first. Unless you've got a good team, you can't do much with the other two."

At Chrysler, Lee Iacocca had a good team of strong-willed, dynamic executives, which included Gerald Greenwald, the accounting genius from Ford, and Harold Sperlich, an outspoken maverick and very creative executive who had helped design the Mustang at Ford. Sperlich

would have been weeded out of a conformist type of corporation. And Iacocca, a very demanding boss, is willing to fire people who don't measure up to his standards. Never- theless, he was able to manage this unique group of people he had brought together. He could command their loyalty and spend sufficient time to re-

strain their egos and reconcile competing visions. The recovery of Chrysler was spearheaded

by Sperlich, who designed the K-car, the platform from which all the other early 1980 products came, including the minivan. Because of the K- car, Chrysler's share of the Noah American market climbed from 7.8 percent in 1980 to 10.8 percent in 1985. The enormous success turned Lee Iacocca into a celebrity and a glamorous party-goer. His autobiography, which was pro- jected to sell a few hundred thousand copies, sold nearly 6 million copies and stayed on the best-seller list for one year.

Unfortunately, Iacocca did not stick to his knitting but, as John B. Judis (1990) points out, he decided to engage in a series of acquisitions. Chrysler already owned 24 percent of Mitsubishi

Motors, but Iacocca's thirst for expansion had not been quenched. In 1984 he decided to buy a 3.5 percent share in Maserati to begin joint development of a luxury sports car, the TC. In 1986 he upped the share to 15.2 percent. In that same year, he bought Gulf Stream Aerospace for $637 million. In 1987, he bought American Motors for $757 million, as well as the Italian sports car manufacturer, Lamborghini.

Harold Sperlich opposed the purchase of AMC because he believed the money was needed to build a new platform, similar to the K-car, if Chrysler was going to survive. But Iacocca was not willing to get involved in developing a new platform at this time. In addition, Sperlich was loudly opposed by Greenwald, and the two team members entered into a real conflict. Unfortu- nately, Iacocca, by now caught up in his own whirlwind of celebrity appearances and personal affairs, wasn't around to resolve the fight and focus their attention On the survival of Chrysler. In the end, Iacocca asked Sperlich to step aside so a new team could be formed. Thus, Chrysler lost a brilliant product man and marketing genius who had been behind many of Iacocca's suc- cesses. And Greenwald left Chrysler in 1990 to join United Airlines. Of the original trio who re- built the corporation--Iacocca, Sperlich, and Greenwald---only Iacocca remains, and he is retiring soon. Faced with these problems, Iacocca has been forced to sell off many of his acquisitions and invest heavily in building a new platform.

These development problems at Chrysler and the personal difficulties Lee Iacocca faces seem to be a repetition of history. When Iacocca was president at Ford under Henry Ford II, a major personal conflict broke out between the two men. In the midst of one heated quarrel, Ford ended the argument simply by suggesting that Iacocca step outside the building to see whose name was actually on the wall. Cooler heads in the 1990s believe that Ford was jealous of Iacocca's accomplishments, and that the latter's self-promotion had become a threat to the company.

Much the same thing has happened at Chrysler. Since losing the battle to control and retain his general managers, Iacocca has been unable to fuse together a successful new team that functions well together over an extended period of time. Instead, he has been caught up in the celebrity business, weaning himself away from daily attention to "people, product, and profits." For a firm to be successful, executives have to keep working at what they do best. For Iacocca, this was designing, manufacturing, and marketing cars. When he allowed himself to be sidelined into the celebrity track, he lost sight of what he should have been doing.

20 Business Horizons January-February 1993

MOVING BEYOND THE CLASSICAL CEO

C lassical CEOs make extensive use of organizational charts, role descriptions, and rule books. They assume organizations

are like orchestras, with the chief executive as the conductor who runs the whole show; only he knows the entire score. The classical CEO is still the most widely employed of all CEO types.

For example, until very recently North Ameri- can auto companies were organized along classical lines, with maximal task breakdown and with individual effort tied to the speed of the assembly line. On the other hand, Sweden's Volvo has come up with an existential auto assembly line where people work in teams--a system that al- lows job enrichment and job exchange. The first step now is to define the job in terms of duties, physical and mental requirements, and tools; this implies job analysis. The next step is to organize jobs into groups according to some principle, such as function or geographical area. The old type of organization is called bureaucracy; the new type is called adhocracy.

The Exis ten t ia l Ch i e f Execu t ive

Realizing the limitations of the classical approach, chief executives have switched their efforts to redefining the CEO's style. The advantage of the existential approach is that it does not reject the organization model built on the accounting and industrial engineering analogy; it goes beyond the analogy to give pride of place to the transformational style.

Why don't they concentrate their efforts on production? When we ask such questions regard- ing executive behavior, we are trying to explore questions of motivation. Motivation is concerned with the study of the direction and persistence of action. Executive personality is the organizing center around which people's motives form a unified and integrated system and the strategy of the firm becomes manifest. The aim here is to present an organized review of some of the outstanding contemporary chief executives that are interesting and relevant for the study of executive behavior and personality.

Allport (1937), having examined many different definitions of "personality," offers the cleanest, most penetrating, and most frequently cited definition: "Personality is the dynamic organization within an individual of those psycho- physical systems that determine his unique ad- justments to his environment." For Allport, personality is dynamic and descriptive of something that is always in the process of becoming. He ' sees executive personality as an expanding system seeking new and better levels of order and transaction. Thus his definition emphasizes the

ideal of organization and of how people perceive themselves and the world. For a firm to function properly, subordinate managers must have in- sight into how the CEO's personality works if they are to mobilize their energies and resources around it to focus them in a productive way.

The Existent ia l A n s w e r

The ancients compared the plot of a drama to, tying and untying a knot. Corporate life has become a knot, and existentialism offers a way of untying that knot. The new entrepreneurial society has revealed a new type of existential execut ive--a young upwardly mobile manager, or "yummy"-- who sees the organizational sea as boiling hot with opportunity. This "Pepsi Generation" of executives is young in years, seasoned in experience, and knowledgeable about conflict. A recent Bus i -

ness Week article (Carey and Smith 1989) describes these yummies:

"The old type of organization is called bureaucracy; the n e w type is called adhocracy. "

They were raised on Rice Krispies and "Father Knows Best" in the homoge- neous streets of suburban America, only to come of age during the turbulent 1960s. They danced to the Beatles, pro- tested the Vietnam War and the Establish- ment, and experimented with drugs and new lifestyles. In the 1970s and 1980s they witnessed the sobering decline of smokestack America and the rapid growth of the national debt.

Soon, they will take over the leadership of Corporate America. The typical CEO of America's largest companies takes power at the age of 51. That means that by the year 2000, CEOs of even the biggest, most conservative companies will be drawn from the ranks of the post- war baby boom.

These new corporate chieftains are likely to be strikingly different from their predecessors. Current chief executives, who average 56 years old, were born during the low-fertility years of the 1930s and came of age during the post-World War II economic boom. "They were the beneficiaries of a highly favorable combi- nation of high demand for labor and labor-supply shortages. It was a generation that reached the top fairly easily," says University of Southern California Professor Richard Esterlin.


Managers Are Samurai Ballet Dancers

"The yummies" cognitive style emphasizes lateral hinking and the search for an alternative. Existentialists want to stand outside the self to 'existere ' or to move beyond self-actualization. "

New types of managers have a different optic and a distinct perspective. Existentialism, as an executive style and a manner of thinking, is of great interest to these entrepreneurial managers because so much of contemporary consumer choice is mandated by the new existential ways and lifestyles that "creative people" have con- sciously and unconsciously built into advertise- ments, both electronic and print.

The yun~rnies' cognitive style emphasizes lateral thinking and the search for an alternative. Existentialists want to stand outside the self to "existere"---or to move beyond self-actualization. This implies a new value system and new attitudes.

New managers have a different attitude to- 'ward authority, computers, women, minorities.

They do not function a crisply in defined black-and- white geometric environment. In the world of organizational "Mice," they use intuition and the right hemi- sphere of the brain. Because organizations and markets behave counter- intuitively, it is useful to glance at the executive as a

samurai ballet dancer, to whom existentialism, entrepreneurship, intuition, and disciplined analysis are all vital.

John Sculley exemplifies this managerial type. He excels in the art of corporate self-actualization. The following describes John Sculley's mission at Apple (Rose 1989):

Reinventing the corporation: that's what John Sculley had been doing these past few months. It was three years since he'd first flirted with the idea of coming to Apple Computer, and now, with the man who'd lured him there expelled from the company, the time had come to talk about his own plans, his own blueprints, his own vision. It was January 1986. Apple was on the rebound after the most disastrous year in its history, and Sculley's job was to get that across while simultaneously promoting the idea that the company's vision--its most important product, in a way- -had not merely sur- vived the messy and unpleasant departure of Steven Jobs, its founder and

chairman, but had in fact been trans- muted into this new and improved vision that he, John Sculley, would not articu- late. As a package-goods guy, as the marketing man behind the "Pepsi Gen- eration," he knew about communicating intangibles. What he had to do now was make the leap from intangible benefit to intangible product. He had to talk about the Apple Vision.

The New Manager's Patron Saint: Jack Welch

John S. Welch, Jr., chairman of General Electric Company, also exemplifies the new manager. He has been dismantling the organizational structures built by his predecessor, Reginald Jones. Jones had built up GE in the 1960s and 1970s by using classical organizational structures and formal strategic planning. For example, he tried to reduce the number of levels in the organization to only six or seven. He also introduced the idea of strategic business units (SBUs), which were developed solely for the purpose of strategic planning. Each SBU had to have a unique business mission with a clearly identified set of competitors, and the ability to accomplish strategic planning and implementation independent of the other SBUs. The strategic manager in charge of a particular SBU had to make crucial decisions to ensure its success.

This strategic planning at General Electric represented a formalized process for establishing corporate goals, and it turned out to be extremely successful. It is widely accepted that Jones' formal, almost bureaucratic, strategy in his approach to the organization was appropriate for the 1960s and 1970s.

Jack Welch, in a series of dramatic moves in the 1980s, has instigated a major effort to mod- ernize the company by shutting down unproduc- tive plants, which he describes as marginal. Welch believes that if a plant is marginal, it must either be fixed or sold. The financial evidence shows quite clearly that GE is moving ahead quite briskly.

The new entrepreneurial and dramatic style of Jack Welch is a strong contradistinction from the bureaucratic style of Reginald Jones. General Electric has an outstanding reputation for using modern management techniques, including value analysis, strategic planning, and new decentral- ized organizational structures. Welch is currently redesigning the company using a personal dramatic style that is very informal but rigorous and appropriate for the highly competitive environment of the 1990s. He is trying to transform GE into a high-flying entrepreneurial organization, which he feels must grow to succeed. His tough, hard-nosed style has earned him the reputation


of being one of the hardest charging managers in the United States. Whereas Reginald Jones was perceived as a polished, disciplined, and rather formal man who rose through GE from its accounting and finance departments, Jack Welch is much more of a "shirt-sleeves" manager. Accord- ing to Thomas J. Lueck (1985). Welch confidently asserts that the company will reign supreme in foreign markets. "We have the smarts and the money," he says. "We ought to be able to win."

Translating Top Management Policy into Shop Floor Practice

Jack Welch is trying to run his company as if it were a small business. Welch's view is, "You've got to take out the boss element." In his mind, managers must set aside POLEing and take on responsibility as coaches and team leaders. As Welch points out, "We're going to win on our ideas---not by whips and chains." For Welch it is a question of speed, simplicity, and self-confi- dence.

As Stewart (1991) points out, Welch has no intention of sacrificing profit for newa'nanage- ment ideas. He believes that a hard-nosed reputation for superior performance can coexist with such "soft" concepts as employee involvement. The idea is that power in the executive system has to be dismantled and allocated to "process- mapping" people, who could be in any level in the organization; these are the people respon- sible for pushing the product out the door.

General Electric uses three techniques: work- out, best-practices, and process-mapping. "Work- out" is used to get employees more involved in the decision making process; best-practices are used to get General Electric looking elsewhere for good ideas; and "process-mapping" is a technique for specifying the actual procedures used to produce or manufacture a particular product. This latter technique is used to identify where the actual bottlenecks exist.

Welch is challenging his employees to develop new ideas by taMng the boss element out of management. Yet Welch himself represents the quintessential boss, and is often described as capo di tutti capi ("chief of all chiefs"). Welch believes the future in management lies in the ability to mobilize employees ' good ideas. Gen- eral Electric focuses on these ideas to get things done.

This represents a radical departure for GE. The company has introduced such concepts as strategic planning, decentralization, and market research. In many respects it was widely believed that GE invented a whole spectrum of manage-' ment techniques. When Welch took over in 1981, the company had 350 different product lines; Welch has squeezed them into 13 big businesses.

He was so effective in reorganizing General Electric that he received the title "Neutron Jack."

Welch is trying to change GE's culture.. The objective is to get the company hierarchy to wither away and then replace it with a hori- zontal structure, but with accountability built in. In this system, as Welch points out, a manager's functions "are comfortable facilitating,

"Welch believes the future in management lies in the ability to. mobilize employees" good ideas. General Electric fobuses on these ideas to get things done. "

greasing, finding ways to make it all seamless, not controllers and directors. Work-out is the fundamental underpinning of training the next generation of managers."

THE NEW MANAGERIAL STYLE

T he turmoil in the offices of CEOs is forc- ing senior executives to undertake a radical reassessment of their understanding of

management concepts. The complexity of events and the complicity of players has made change and crisis the two constants in corporate life. CEOs are marching to a new drumbeat of rapid technological change and global competition.

Three things matter most to the CEO: market leadership, high profits, and a standout stock price. What is missing from this list is loyalty. In discussing the new managers, Carey and Smith (1989) ask and answer the question, "What influence will their past have on their executive style?"

Some argue that these business leaders will be less loyal to companies and more appreciative of leisure and family. Their views on environmental issues will differ from those of earlier generations. And others note that this group of executives will be the first to feel comfortable deal- ing with computers and the other trap- pings of the Information Age. Also, pre- dicts Drexel University sociologist Arthur B. Shostak: "They will be more self-confi- dent, more thick-skinned, and more outspoken than previous executives." Those leadership qualities may prove to be the most valuable assets of the baby boomer CEO. Columbia University business school Professor Donald C. Hambrick asked today's CEOs what qualities their successors ought to have. His findings? "One of the biggest was greater emphasis on the need for CEOs to be the energy


- force for the company," says Hambrick. With companies getting more complex, diverse, and geographically spread out, he explains, only a more charismatic leader can hold the whole enterprise together.

These CEOs are learning to cope with uncertainty and paradox by focusing on the nitty-gritty details of business with short time horizons. They are acting differently and refusing the straitjacket of corporate hierarchy. A new interpersonal cli- mate is emerging in which the emphasis is on "we" rather than "I." Yet something else is happening. It is becoming increasingly obvious to top managers that a new style of management is required if business is to succeed in the 1990s. Companies once again are realizing that when something is accomplished it is, as Peter Drucker (1984) put it, by a monomaniac with a mission.

Contrary to conventional wisdom, business decision making is not entirely rational; a great deal depends on intuition, hunch, and experience. If CEOs are to be successful, they must become visionary monomaniacs who can drive their companies forward. CEOs must be able to infuse their values into the system. The new manager:

1. uses a transformational style of leadership; 2. cuts an existential figure; 3. is a charismatic visionary; 4. is an actor w h o can handle conflict; 5. has a different value system.

Corporate M y t h o l o g y a n d the C h i e f E x e c u t i v e

Unfortunately, many CEOs are blinded by grandi- ose sell-images, and are unable to make rational choices relating to the economic realities that face their companies. Abraham Zaleznik (1990), a Harvard Business School professor who applied psychoanalytic techniques to corporations, has argued that a major reason why General Motors lost its market share was "the internalization of ideals, values and corporate structures and practices that can be traced back to the company ' s legendary chairman, Alfred P. Sloan, Jr." In other words, GM's chief executives have been so over- awed by Sloan's performance and the radical way in which he redesigned the corporation that they have been unable to adjust these legendary trans- formations to meet the present-day realities.

Because these CEOs are well established in the power structure and enjoy a protected position, they develop certain narcissistic gains from belonging to the organization; they become very difficult to influence. Middle managers and work- ers are excluded from the mythological structures that provide these narcissistic gains to chief executives, so it is often difficult for the executives to persuade subordinates to put their plans into action or accept criticism. For example, because the General Motors chairman has his eyes fixed on an ou tmoded structure that is no longer appropriate, he finds it difficult to compete with Japanese and German car manufacturers.

F igu re 2 C h i e f Execu t ives : D i f f e r i n g Pictures

Observational Studies

1. Unstructured: fragmented, ad hoc, brief, unplanned

2. Devoid of emotion

3. Absence of drama

4. Superiors are courtly and accept "noise" and criticism from subordinates

5. Nothing is said about telephone calls at home

6. Executives live in an "expletive deleted" environment---a "gee whiz, oh!" environment

7. An abstemious atmosphere; no sign of the liquor cabinet.

Media Reports

1. Structured: full of "white knuckle" time await- ing data for quarterly report

2. Emotionally charged: executives weeping at having to fire their boss (like Steve Jobs at Apple)

3. Charged with drama: flamboyant moments in board meetings when the chairman declares "VIC- TORY"

4. Subordinates don't speak back; in many cases they don't speak at all

5. Much of the vital business is done by telephone after or out of hours

6. The language of the executive suite sounds like a bunch of marines waiting to go into battle

7. As our famous chairman used to ask, "Where's the booze?"

24 Business Horizons /January-February 1993

Consultants are often brought in to an organization to help identify its culture and get behind the myths that are keeping it from adapting to meet the reality of situations. As Zaleznik argues, it is important for chief executives to re- main objective and have the capacity to look at the world as it is.

Roger Smith and General Motors

Roger B. Smith, former chief executive officer of General Motors, restructured the corporation in January 1984. Great hopes were expressed that the company was going to achieve a turnaround. Smith envisioned two supergroups (big and small cars) that would allow a more effective method for designing, engineering, and manufacturing cars. Unfortunately, General Motors is now going through a very difficult passage: its market share has dwindled considerably, profits are down, and Ford and Chrysler have moved more effectively into the market.

Roger Smith argues that GM lost market share because the company had to switch from manufacturing large rear-wheel-drive cars to mid-sized front-wheel-drive models. His critics argue that the problems are much more serious and relate to material labor and overhead costs in automobile production. Unfortunately, Smith would not adjust to the idea that General Motors had been losing market share. He began to shift General Motors away from automobile manufacturing to other areas. General Motors subsequently ac- quired Electronic Data Systems and Hughes Air- craft in an effort to diversify.

T here is a new breed of CEOs out there who are no longer preoccupied with a favorable trade balance or even manufac-

turing in America, but with ensuring the survival of their organizations. These new executives scorn loyalty in favor of market leadership, profits, and a high stock price. Their view is that change is the only constant in society, which casts them as global explorers in search of joint ventures with other companies. They are no longer involved in social concerns outside their areas of business but are up to their eyeballs in the nitty-gritty of the business.They are learning to deal with paradox and uncertainty and are focusing on back-to-the-basics. They are vitally preoccupied with the market.

To put this new style of CEO in context, it is necessary to reflect on the fact that American chief executives had it easy in the 30 years following World War II. German and Japanese in- ! dustries, destroyed by the Allies, could not compete effectively with the United States. In such circumstances, marketing didn't matter so much,

and Henry Ford's philosophy, "Give them any color they want as long as it's black," applied in many cases.

With the boom markets of the 1960s gone, however, chief executives have to focus more on what customers are 'demanding. Beginning in the late 1970s after the U.S. dollar began its swings, the oil market caused inflation and interest rates to soar. As a result, businesses became a lot more difficult to manage than before. With the invasion of foreign goods, market share has taken prece- dence over all other considerations because maintaining market share becomes synonymous with survival.

Unfortunately, most studies of chief execu- fives have little to say about the context in which managers actually operate (see F igure 2). They focus instead on the idea of the managerial job being ad hoc, fragmented, and of brief duration. Most chief executives today, by contrast, would argue that they have an obsession, an existential preoccupation with market leadership, profits, and that high stock price. CI

References

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Joe Kelly, Organizational Behavior: Its Data, First Principles, and Applications (Homewood, Ill.: Richard D. Irwin, 1980).

Joe Kelly and A.Bakr Ibrahim, "Executive Behavior: Its Facts, Fictions, and Paradigms," Business Horizons, March-April 1991, pp. 27-36.

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Joe Kelly is a professor of management at Concordla University, Montreal. This article is from his forthcoming book, Fact Against Fiction of Executive Behavior: A Critical Analysis of What Managers Do, to be published by Quorum In 1993.


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