Organizational Challenge - Race, Equity, Diversity & Inclusion

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5 Leading Organizations

Learning Objectives

After reading this chapter, you should be able to

Explain three areas of focus for organization leaders: ef�iciency and process reliability, adaptation and innovation, and human resources and human relations. Apply strategic approaches to team leadership, speci�ically collaborative and adaptive leadership. Explain the leader's role in creating the key components of the organization's strategic plan. Discuss organization change and the leader's role in managing change efforts. Discuss organization culture and how leaders create cultures that embody employee engagement, innovation, ethics, and a feedback focus. Describe succession planning and leadership development and what it takes for leaders to make those processes effective. Analyze the challenges facing leaders today.

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The hierarchical approach to organization leadership empowers from the top down. The "emergence" approach involves empowering employees to organize at every level.

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Introduction

There are two general ways to frame leadership at the organizational level. One is a top-down hierarchical approach. This is the way we commonly think about organizational leadership. Executives at the top of the organization, led by the CEO, chairman of the board, member of the executive team, or head of a business unit, create the vision, make decisions, and set action strategies. Heads of smaller organizations make similar decisions and set actions in motion, even though they might not necessarily have the whole support structure of a Fortune 500 company.

Another way to view organizational leadership is from the perspective of emergence, where the leader acts by enabling employees to self-organize at every level. From this perspective, leaders provide organizational members with the resources and authority to act (Burnes, 2005; Smith & Graetz, 2011). Morning Star, a large tomato processor and food manufacturer, works this way. Employees at Morning Star manage themselves, initiating communications and coordinating with their colleagues without management control. They establish personal mission statements and negotiate commitments with the associates who are most affected by their work, so everyone knows what is expected of him or her (Hamel, 2011). These statements and commitments change from year to year as employees accept more responsibility and shift their job assignments to match company needs and their career interests. Morning Star business units operate the same way, with employees negotiating customer-supplier agreements with each other, paying attention to the unit's pro�it and loss.

Of course, the preferred leadership model is not one or the other. Remember our discussion of balanced team leadership in Chapter 4. Leaders balance creating the vision with recognizing team members' vested interests. Leaders balance maintaining control with engaging team members to act. And leaders balance acting with taking time for re�lection about what is working well and what can be improved. Organizational leaders engage in a continuous balancing act because organizations are in an ongoing state of action, reaction, and accomplishment, and organizational routines constantly undergo adjustments to better �it changing circumstances (Weick, 2001). The hierarchical approach must be balanced with emergence.

So we begin this chapter with the following question: What does it take to be an effective leader of organizations? In this chapter, we discuss a number of considerations for effective organizational leadership. First, we provide an overview of three broad areas effective leaders focus on to help ensure organization success. Then, we discuss strategic approaches to leadership that are particularly relevant to leading organizations. Recall that Chapter 1 introduced you to three strategic leadership approaches: full range leadership, balanced leadership, and principled or ethical leadership. Our discussion in this chapter will add two more approaches to your repertoire.

The majority of this chapter, however, will be devoted to the four key competencies that leaders must demonstrate in the role of leading organizations:

1. Leading the strategic planning process and knowing how to create the organization's mission, vision, strategies, goals, and core values 2. Leading organization change 3. Leading culture change and knowing how to create cultures that embody employee engagement, ethical behavior, innovation, and a feedback focus 4. Leading succession planning and development processes to identify and develop the next generation of leaders

How well do you understand each of these competencies? How well prepared are you to demonstrate them when the opportunity arises? Each competency will be discussed, in turn, in the following sections, providing you with insight and how-to suggestions for using these competencies as you consider your role in leading organizations.

Note that the focus of this chapter will be on both emergent and assigned leadership. We will, of course, touch on the competencies speci�ic to C-level executives, but we will also observe how lower-level organizational leaders or the leads of business units and small businesses can contribute to leading organizations. After the competency discussion, the chapter will close with a look at two timely and relevant leadership challenges—leading a multigenerational workforce and leading in times of crisis and adversity.

Although this chapter is about the role of leading organizations, you will �ind that it reinforces the themes established for this book:

Leaders need to lead themselves, other individuals, teams, the organization, and networks of associates within and outside the organization. Leaders need to assess their own skills, knowledge, and abilities and those of others and determine the gap between these competencies and the competencies needed to be effective in their organizations. Leaders create the culture in their organizations; as such, they can inculcate the kind of culture needed to ensure organizational success. Leaders need to use technology to communicate effectively across cultural boundaries. Leadership is a balancing act. Ethical leadership is critical at all times.

Before we begin, we must �irst lay some groundwork. As in previous chapters, the Mone-London model will be used to depict and explain the leadership role. We applied this general model in previous chapters to conceptualize how leaders lead themselves, their individual employees one to one, and teams. In this chapter, the model describes the relationship among the leader, the direction the leader sets for the organization, and the leader's role in creating, developing, and managing performance (see Figure 5.1).

Figure 5.1: The Mone-London organization model applied to leading organizations

The Mone-London organization model illustrates the cyclical process of organizational leadership: The senior leadership, at the top of the �igure, strives for innovation, growth, and pro�itability and determines the direction-providing components (mission, vision, goals, strategies, and core values) through the strategic planning process. These direction-providing components then drive decisions for the role-performance components (strategic planning, organization and culture change, leadership development, and sound relationships), using key performance enablers. The organization and its members produce results, which,

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in turn, in�luence the senior leadership in setting future goals and strategies. All of this takes place in the context of the environment.

As depicted in the Mone-London organization model, the leader's role in leading organizations and striving for innovation, growth, and pro�itability is to use the strategic planning process to provide direction: creating a clear mission, vision, set of strategies and goals, and core values to support the organization's success and its ability to adapt to changes in the environment. The results of the strategic planning process provide the guidance for how the strategic business units and different functional departments in the organization stay aligned and contribute to the organization's overall success. These strategic plans are then interpreted by executives and managers at lower organizational levels and used to direct actions and behaviors (performance) that ultimately produce results. Situations in the environment within and outside the organization affect all of these components.

The components of the leader's role performance in an organization include the action-based leadership competencies we will discuss in this chapter. Today, these competencies may be used to support a global enterprise, to recognize the value of a diverse workforce at home and abroad, to act ethically and in a socially responsible way for long-term viability, and to deliver on the promise of both employee and customer satisfaction. In addition, these competencies give rise to a leadership that produces innovation, sustains organizational growth, and plans for the future.

In an organization, factors that can enable performance include key performance measures that are communicated and cascaded throughout the organization (as discussed in Chapter 3). In addition, the organization has policies and programs that enable leader and employee performance, thereby helping leaders to successfully carry out their roles. One example is a performance management system, which typically includes goal setting, feedback, development, and performance appraisal processes. The human resources and training departments may develop these systems, but it is up to individual managers to implement them. As discussed in prior chapters, leaders review performance, provide feedback to direct reports on a regular basis, and create a climate in which their direct reports can discuss performance issues with them and together identify ways to improve.

Having an engaged workforce is another factor that enables the leader to produce results. Of course, the leader produces and supports an engaged workforce through performance management methods, a respectful and considerate leadership style, and mentoring and coaching.

For more perspective, consider watching at least the �irst 5 minutes of this video on leading industrial organizations: http://www.youtube.com/watch? v=4zUq7tnKeD8 (http://www.youtube.com/watch?v=4zUq7tnKeD8) . The video is from INSEAD, a leading European business school located in France, and it contains an interview with Henri-Dominique Petit, CEO of Bacou-Dalloz, a multinational company that manufactures industrial safety equipment. In the interview, Petit describes characteristics that are needed for leaders today at all levels of an organization, not just at the CEO level. One key characteristic he mentions is the importance of building bridges across the organization and with other organizations, especially in our increasingly global environment.

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This clip discusses why it is necessary for leaders to have a vision that can be shared by those who follow them.

Adapting to Change

Adapt to Change From Title: Nurturing Leadership

(https://fod.infobase.com/PortalPlaylists.aspx?wID=100753&xtid=65018)

Critical Thinking Questions

1. What might happen if a leader neglected to get others on board with his or her vision?

2. As a leader, how would you help to incorporate your vision into the culture of your organization?

5.1 Performance Dimensions for Organization Leaders

To enhance organizational effectiveness and ensure organization-level success, leaders at all organizational levels in large and small organizations tend to focus on three major areas, or determinants of performance: ef�iciency and process reliability, adaptation and innovation, and human resources and human relations. This idea is based on a theory developed by Yukl and Lepsinger (2004) called �lexible leadership theory, in which leaders are able to alter behavior and action as necessary in these three broad areas to drive organization effectiveness.

The importance of these areas will vary by organization and time, and these areas are affected by the external environment. They also interrelate, so efforts to enhance effectiveness in one organization factor will affect the others. Flexible leaders need to carefully monitor and evaluate these three performance dimensions to determine when and where to intervene and to understand the impact of that intervention on all performance dimensions. Leaders should recognize that their direct task and relationship behaviors will have a positive effect when used appropriately within a performance dimension, and that those leaders' behaviors can be reinforced and enhanced by virtue of the implementation of various supporting programs, processes, and systems. Each of the performance dimensions is discussed in the following sections.

Ef�iciency and Process Reliability

Ef�iciency is the use of people and resources to perform work in the organization in the most cost-effective manner, avoiding waste and unproductive activities. Being ef�icient becomes more strategic when the organization decides to compete on price. Leaders can enhance organization ef�iciency in a number of ways, such as restructuring the organization by reallocating personnel, redesigning processes to eliminate redundancies, and improving coordination between team members. Leaders also enhance effectiveness through the use of task-focused behaviors and styles (see Chapter 1). Further, leaders can in�luence ef�iciency through the types of organization programs, systems, and processes they implement and support (for example, Six Sigma and outsourcing).

Process reliability refers to consistency in quality or performance. It is necessary to ensure there are no delays in service, product defects, or production errors. Process reliability becomes most strategic when unreliable processes could result in signi�icant harm to employees (e.g., on-the-job accidents), harm to customers (e.g., Volkswagen's scheme to override emission testing equipment, making its cars seem more ef�icient than they actually were), or a major negative impact on the bottom line (e.g., requiring costly recalls or reducing sales). Leaders can enhance process reliability by ensuring quality and product standards are maintained and by emphasizing a task focus. Leaders can also introduce programs, such as goal setting and recognition (see Chapter 3), that emphasize safety and process improvement.

Adaptation and Innovation

Adaptation is a response to the environment that typically requires changes in the organization's mission, strategy, overarching goals, products, processes, or services. These changes may be due to the identi�ication of important threats or opportunities in the environment; adaptation may also be proactive, as an outcome of the organization's strategic planning process, or reactive, as a response to major organizational change. Leaders can help position their organizations for greater adaptation by promoting organization learning, knowledge sharing between team members, and �lexible work processes, such as �lexible work schedules to accommodate employees' personal needs.

Innovation is a form of adaptation that involves modifying or creating products and services to better meet current or evolving needs or, in some instances, to give birth to entirely new markets (e.g., Apple's iPad). It involves both continuous improvement and breakthrough change. Sometimes this requires being inef�icient, at least for a time. Often, a leader may need to be temporarily inef�icient in order to facilitate innovation, and then buckle down to turn innovation into ef�iciency.

Innovation is most important in turbulent, uncertain markets. For example, consider how manufacturers of �lat-screen televisions sought to survive increased competition by debuting various innovations, particularly with an emphasis on large screens and 3D technology. Innovation is often driven by signi�icant technological change or the entrance of new competitors and is used to differentiate the company from its competitors. Leaders can drive innovation through the implementation of creativity and innovation programs and setting goals for innovation that can be tracked through performance management systems. For instance, a business unit might set up a research and development team to review the competition and new technology and design product innovations. A leader might aim to bring a new product, or a substantially revised product, to market within a designated period of time, similar to how Apple introduces new iPhone models or how it sought to develop a smart-watch. We address how to build a culture of innovation in Section 5.5.

To better understand innovation, watch Carl Bass's TED Talk about how innovation is taking risks and breaking the rules and how this happens in companies—which by nature are risk averse—by hiring the right talent. Bass is president of Autodesk, a leader in 3D design, engineering, and entertainment software. He talks about how innovations create new products and services that respond to what people want and how organizations are doing business differently: https://www.youtube.com/watch?v=YKV3rhzvaC8 (https://www.youtube.com/watch?v=YKV3rhzvaC8) .

Human Resources and Human Relations

As we stated earlier, leaders at all organizational levels, in both large and small organizations, tend to focus on three major determinants of performance: ef�iciency and process reliability, adaptation and innovation, and human resources and human relations. As the repeated use of the word human suggests, the third determinant of performance focuses on how well people in the organization work together to accomplish the organization's goals.

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Apple's iPad is an example of innovative change. Can you think of any other products that exemplify innovative change?

Westend61/SuperStockHuman resources refers to the skills and experiences of organization members that can help the organization achieve its goals. Knowing what work needs to be accomplished and knowing how to accomplish it is strategically important to the performance of all organizations. Leaders can build effective human resources through effective selection, training, and employee development.

Human relations refers to the levels of cooperation, trust, commitment, and engagement in an organization. When team and collective efforts are required for success, more effective human relations result in higher levels of performance. Leaders can strengthen human relations by building trust and empowering others (see Chapter 3), creating a culture of engagement among the people in an organization (see Section 5.5), and using a measure for evaluating those efforts.

Human resources and human relations skills are most important when the work requires complex skills, when the skills are dif�icult or take signi�icant time to develop or acquire, and when the requisite skills and knowledge are not readily available or prevalent in the labor force. An organization that has a competitive strategy primarily based on the knowledge and skills of employees, such as a consulting �irm, demands strong human resources and human relations.

Leaders can demonstrate relationship-focused behaviors and styles to increase the effectiveness of human resources and relations (see Chapter 1). Leaders can also build talent and enhance cooperation through performance management practices, as well as through leadership development and succession planning programs.

Leadership in Review

Re�lect on your learning by answering the following questions:

1. What are the three broad areas of leadership focus? 2. When is innovation most important? 3. Is process reliability important only in manufacturing organizations? Why or why not? 4. What kinds of situations might demand strong human resources and human relations?

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Leaders are more effective when they use in�luence, rather than power.

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5.2 Strategic Approaches to Organizational Leadership

Let's take a moment to consider the difference between power and in�luence. In Chapter 1, we de�ined power as "a person's capacity to in�luence others" and observed that power can stem from various sources: Power can be described as reward, coercive, legitimate, referent, or expert, and certain types of power tend to be more effective when leading others. While the word in�luence is used to de�ine power, the word refers more to referent power. A leader who uses in�luence instead of power to direct followers' behavior is able to inspire and motivate without forcing or imposing her or his will or manipulating others. Leaders will be more successful when they focus on in�luence over power and recognize the value of their followers expressing their opinions and in�luencing decisions. This is true especially when followers' commitment and expertise are needed for an organization to be successful as a whole. (For more perspective on this, see Spotlight: Bing Gordon and In�luence.)

The importance of in�luence over power is increasingly evident as leaders move upward in an organization's hierarchy and must focus on leading over managing, as we noted in our discussion of Hunt's framework in Chapter 1. Why? When attempting to shape the hearts and minds of thousands of people, leaders are most effective when they use transformational behaviors, such as idealized in�luence and inspirational motivation (see Chapter 1). It is almost impossible to motivate an entire organization of employees through the use of contingent rewards. The following is a list of tactics that leaders at all levels can use to in�luence others (Yukl, 2010):

Use rational arguments based on logic or facts. Show how taking an action is a positive step for the person. Appeal to the values and ideals held by the person. Be inclusive and participative regarding plans and decisions. Provide an appropriate "quid pro quo." Make a personal appeal (for example, "Do it for me as a favor"). Offer sincere praise that recognizes the other's ability to carry out a dif�icult task. Rely on the support of others to persuade the person to take action.

Spotlight: Bing Gordon and In�luence

According to Bing Gordon, a graduate of Stanford Business School, the former chief creative of�icer at video game company Electronic Arts, and now a partner at venture capital �irm Kleiner Perkins Cau�ield & Byers, leadership is about being a teacherconsultant more than a wielder of power:

There's a cost to having power, which is that the people you have sway over actually own you, especially if you're in a business where there are more jobs than there are good people. I like having in�luence. I like being with interesting people and helping them become better and being part of the �low of ideas. And that's a little bit uncomfortable as a boss. It doesn't make sense to people that the boss, who is kind of a �igurehead and maybe a con�idence-giving parent �igure, just wants to be an experienced helper. (Bryant, 2011a, p. BU2)

Of course, Gordon is a venture capitalist, which is a different sort of leadership role, one that requires nurturing good ideas and the people who develop and implement them. A venture capitalist needs to be a "guide on the side" for those he or she invests in, rather than someone who directs their performance. However, the people who work in the venture capital �irm for Gordon also have their own ideas, contacts, goals, and strategies. Gordon recognizes that these characteristics bring value to the �irm and need to be tightly integrated with the �irm overall. However, these ideas, contacts, goals, and strategies depend on individuals' drive, intelligence, and insight. Thus, Gordon aims to in�luence and shape their direction, as opposed to exerting power.

Re�lection Questions

1. What can leaders do to be teacher-consultants to their subordinates? 2. How can leaders at the top of their business unit or organization encourage all leaders in the organization to be teacher-consultants? 3. How does being a teacher-consultant as a leader add value to an organization?

Discussing power and in�luence demonstrates how organization-level leaders must sometimes take a different approach to leadership or account for different factors. Recall how we talked about strategic approaches to leadership in Chapter 1, speci�ically full range leadership, balanced leadership, and ethical (principled) leadership. Unlike leadership styles, which describe what leaders should do, strategic approaches to leadership provide a higher-level framework for considering how to approach the problems and challenges leaders face in organizations. In this section, we discuss collaborative and adaptive leadership, two strategic approaches that are particularly applicable to leading organizations.

Collaborative Leadership

Collaborative leadership is an approach that emphasizes using leadership skills across functional and organizational boundaries. The goal is to create, through collaboration, more value than one could create acting alone. Business leaders often form alliances in response to the competitive business landscape in the United States and globally. Leaders at all levels need to have a collaborative mindset and always be on the lookout for potential partners. At the executive levels, collaboration can eventually lead to mergers, buyouts, or closely knit customer-supplier relationships (see, for example, Spotlight: Chris Viehbacher and Collaborative Leadership).

Anyone can be a collaborative leader by promoting close working relationships. At the lower levels, collaboration can build relationships between leaders and between units and teams, both within the organization and between organizations (e.g., customers and suppliers). Collaborative relationships at any level of the organization can increase the likelihood of shared goals, clear communication, and avoiding misinterpretations or assumptions that lead to costly mistakes.

Finding a Partner

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In order to collaborate successfully, partners must have chemistry.

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The �irst step in successful collaboration is to �ind a good partner. Note that a good partner is not simply someone who wants to collaborate with you. David Archer and Alex Cameron, in their book Collaborative Leadership: How to Succeed in an Interconnected World (2008), speci�ied that leaders should recognize that there are some people or organizations that they just can't partner with. Instead, leaders should have the courage to act for the long term. In other words, partnership is a two-way street. Leaders should �ind people who want to collaborate. If the prospective business partner is not responsive, move on, just as you would in a personal relationship. The individual may not see the value or may have other goals to accomplish that are different from the shared goals that could result from collaboration. Or, at least, the prospective partner fails to see the bene�it of collaboration at the time when the leader suggests a partnership.

Rosabeth Moss Kanter, whose 1994 Harvard Business Review article about collaborative leadership is now a classic, has indicated that there are three key ingredients to a successful collaborative relationship. First, the partners need to know themselves and, if they are high- ranking executives, their industries. They need a clear and accurate self-analysis to know what they are capable of accomplishing. Second, the partners need chemistry—rapport that makes them believe they can work together. As Archer and Cameron (2008) noted, leaders should �ind the personal motive for collaborating. Having common personal and social interests can help build this rapport. Third, the partners must be compatible: They must have common experiences, values, and principles, as well as shared goals for the future. At the

organization level, it is of course of utmost importance that the partners have �inancial compatibility, which is often determined by the companies' �inancial analysts. Executives usually need to focus on evaluating the less tangible aspects of compatibility.

For Kanter, a business or corporate collaboration is much like a romantic partnership. "Relationships between companies begin, grow, and develop—or fail— much like relationships between people," she wrote (1994, p. 98)—and it is true that couples' patterns of courtship and engagement are not unlike those of organizational partnerships. In her article, Kanter outlined eight characteristics of an effective collaboration—"eight I's that create successful we's" (1994, p. 100):

1. Individual excellence. Both partners are strong and have positive reasons for entering into the alliance. 2. Importance. The leaders recognize the strategic advantages of the alliance. 3. Interdependence. The leaders need each other. 4. Investment. The leaders are willing to invest in each other. 5. Information. Both partners engage in ongoing communication and information sharing. 6. Integration. The partners share ways of operating for smooth interaction of work processes. 7. Institutionalization. The responsibilities of each party in the alliance are clear. 8. Integrity. The leaders are honest with each other (they do not mislead or misuse information).

Implementing and Integrating Like a newly married couple, partners must set up housekeeping after entering into a collaboration. In other words, there needs to be operational integration, meaning ways to carry out the collaborative work on a daily basis. This requires explaining and involving others in the organization who need to be committed to the alliance, understand its purpose, and envision its potential to create future value for all the parties involved. Employees or direct reports on both sides usually will need to collaborate, sometimes merging or sequencing work processes, sometimes relinquishing responsibilities in favor of one partner or the other. For instance, in an international alliance, employees may need training and support in communication skills and cultural awareness to bridge differences and gain an understanding and appreciation of language and cultural differences. Employees can be empowered to do what is necessary to make the partnership a success, but they also need resources for learning support and cross-functional teamwork. Perhaps due to the multitude of ways we communicate electronically, there are also more chances for miscommunication and more ways for employees to undermine the collaborative effort if they are not fully on board. Archer and Cameron (2008) recommended that leaders �ind ways of simplifying complex situations for their people, prepare for how they are going to handle con�lict well in advance, and actively manage the tension between focusing on delivery and focusing on building relationships, including strong personal relationships at all levels.

In short, collaboration requires elements of transactional and transformational leadership. Any collaboration, especially a complex corporate merger, has thousands of details large and small to orchestrate. These details are all part of a backdrop of cultural differences—national culture, language differences, and corporate culture. Success also depends on overcoming uncertainty, fear, and resistance to the status quo. People at all levels need to accept the challenges, be fully engaged, and work willingly with others. Leader behaviors need to be transformational in nature to help employees to ultimately see the value in the alliance, to be committed to the overarching goals, and to be highly motivated to achieve them. Archer and Cameron (2008) suggested leaders inject energy, passion, and drive into their leadership style, have the con�idence to share the credit generously, and continually develop their interpersonal skills, in particular empathy, patience, tenacity, the ability to hold dif�icult conversations, and the ability to build coalitions.

What have you seen, and what is your experience with collaborative leadership? Consider the following questions:

Have you ever been in an organization that was involved in an acquisition or merger, or a strategic partnership? How would you characterize the behavior of the senior-most leaders during that change? Was their behavior effective? Have you ever led a team, or been on a team, that acquired new members? What leadership skills did you draw on, or did you see the leader draw on, to make everyone feel comfortable?

Some leaders may fear that building cross-organizational alliances will weaken integration of work processes within each partner organization. Kanter believes otherwise. She discovered that alliances can strengthen the local unit, as they prompt employees to acknowledge between-unit differences, respect local norms, and communicate frequently and clearly within each partner organization at all organizational levels (Kanter & Dretler, 1998). For example, the partnership may stimulate employees to analyze their work �lows within the organization to understand how they can best interface with those associated with the alliance.

For further perspective on the bene�its of collaboration, consider watching the following video featuring former Cisco CEO John T. Chambers: http://www.youtube.com/watch?v=9WX7BNnYTf8&feature=relmfu (http://www.youtube.com/watch?v=9WX7BNnYTf8&feature=relmfu) . Chambers explains how abandoning "command-and-control" leadership enabled this dynamic and pro�itable company to innovate more quickly, using collaboration and teamwork, as the Internet evolved.

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Adaptive leadership requires the ability to adjust to changing circumstances.

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Spotlight: Chris Viehbacher and Collaborative Leadership

In February 2011, Chris Viehbacher, the then-chief executive of Paris-based drug maker Sano�i-Aventis SA, announced that his company was purchasing Genzyme in Cambridge, Massachusetts, for $20.1 billion. Genzyme is the world's largest maker of biotech drugs for inherited diseases. This was the biggest drug acquisition since Merck & Co. agreed to buy Schering-Plough Corp. for $47.1 billion in 2009. Viehbacher explained that Sano�i was paying a premium price for Genzyme because the company wanted access to the best researchers and leading products.

This was the 29th and largest deal made under Viehbacher's relatively short tenure at Sano�i; he had joined Sano�i in December 2008. However, in just 2 years, Viehbacher made a wide range of acquisitions, including Gold Bond medicated powder, Chinese cough remedies, and an Indian vaccine maker. This was part of his plan to expand the �irm's revenue base, a strategy Viehbacher viewed as critical because Sano�i's bestselling pharmaceuticals, including its blockbuster blood thinner Plavix, faced generic competition (Mullin, 2011). Viehbacher understood the critical nature of collaboration. To make this collaborative venture successful, his board of directors, executives, and employees throughout the �irm, as well as their counterparts in the acquired �irms, needed to understand it as well. In fact, Sano�i's board members felt that Viehbacher had acted without them and further objected to Viehbacher initiating layoffs in France and moving his own of�ice to Boston. As a result, Viehbacher was ousted from Sano�i in 2014 (Herper, 2014) and in 2015 was hired to head a health care fund to invest in biotech and life science �irms.

Re�lection Questions

1. What do you think was required of CEO Viehbacher as a leader to convince his many stakeholders—from stockholders to executives within Sano�i and his merger partners—that this aggressive merger and acquisition strategy made sense? His experience shows this isn't always easy.

2. What leadership skills are needed to make these complex collaborations successful?

Adaptive Leadership

Adaptive leadership is an approach that engages and empowers followers to own and solve problems collectively, as a community, and to tackle problems that are hard to de�ine and have no clear, available solutions. For example, consider a community in which water is being polluted by local industry, though the community heavily depends on the jobs that the industry provides (Heifetz, 1994). Or consider Social Security in the United States, in which there is con�lict between those who feel entitled to receive bene�its and those who are anxious about the growing de�icit. Both of these examples are complex, nonroutine situations that reveal the importance of adaptive work, in which having all parties involved and engaged in the solution is essential to �inding resolution.

Thus, adaptive leaders often avoid using their own authority to solve the problem because the problem itself is not sharply de�ined and no ready, clear solutions are available. Instead, leaders energize and mobilize followers, helping them to engage in and face the realities and con�licts necessary to resolve these dif�icult problems. This might involve motivating organization members to face dif�icult situations, such as making the necessary trade-offs to bring closure to the situation, addressing con�licts in values, or mitigating the gap between the values they hold and the reality they face in the organization. Leaders might need to evaluate the failure of the organization's culture to address problems, which might stem from the organization's own culture and values. Adaptive leaders become expert at provoking learning by asking dif�icult questions and by creating the expectation that the followers will develop their ability to create a solution. According to Heifetz (1994), who �irst put forth this adaptive leadership model, "In situations that call for adaptive work . . . social systems must learn their way forward" (p. 87). In the end, leaders and followers share a joint responsibility for success.

Heifetz (1994) offered �ive strategic principles for the work of adaptive leadership:

1. Identify the adaptive challenge. 2. Keep the level of stress and discomfort at optimal levels so the adaptive work can continue. 3. Maintain the focus of attention on engaging issues and not on distractions that may arise. 4. Ensure the work is absorbed by the people involved at a rate they can manage. 5. Provide protection for those without leadership authority who raise the hard questions and challenge the status quo.

Essentially, adaptive leadership is knowing what to do, when. As we noted in Chapter 1, full range leadership is adaptive leadership: A leader must know when it is more appropriate to use transactional behaviors and when to use transformational behaviors. Flexible leadership, discussed in Section 5.1, is also adaptive: Leaders must know what behaviors and actions to implement to support the three broad areas of focus. Adaptive leadership provides leaders with a framework for thinking about how and when to exercise their authority. When problems are routine and can be solved by current methods and technologies, leaders can more effectively rely on their legitimate power. However, when problems are hard to de�ine and clear solutions are unavailable, leaders need to engage and empower followers to own and solve the problems collectively, as a community, an effort that is more transformational in nature. When goals are clear, all parties agree to them, and the method for achieving them is determined by the available technology, then leaders should use a computational approach to decision making. In other words, they should calculate the best alternative choice from the methods available. However, if goals are clear and agreed to but methods are complex and uncertain, leaders will need to exercise their judgment.

As an example, consider a newly appointed chief information of�icer (CIO) who wants to upgrade the technology throughout her organization by introducing an enterprise-wide system that integrates key aspects of the organization's operations, including budgeting and �inance, human resource systems, and project management. She meets resistance from department heads who have invested in their own systems and do not see the value of a single system that allows relating these different aspects of operations. As an adaptive leader, she can allow the department heads and their people to discuss opportunities for system integration, observe how it works in other organizations, and consider how they might improve their existing systems to accomplish some of the same goals if possible. The CIO not only listens to concerns, but also engages these stakeholders in the process of evaluating what is needed, designing customizations that could make them more ef�icient now and assessing whether an enterprise-wide system is indeed right for the organization. Although she believes such a system is the best solution, she is willing to adapt by recognizing different perspectives, expertise, and needs and empowering the stakeholders to arrive at their own solution with her and her staff's guidance and support.

Measuring the Gap in Strategic Leadership

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A leadership approach must be effective in producing the desired outcomes. For example, a collaborative leadership approach is useful when faced with mergers, acquisitions, or joint ventures. What determines the effectiveness of collaborative leadership is the extent to which the given partnership produces the desired results. If the results are not achieved, there is a gap in leadership. Measures, such as �inancial measures, market share measures, and others, are helpful for determining business results. Other measures, such as employee survey-based measures, can help to determine the extent to which the new organization culture is positive and includes a spirit of cooperation.

Adaptive leadership is useful at all organizational levels when faced with differences of opinion or resistance to change. What determines the effectiveness of adaptive leadership is the ability to recognize other points of view and ways others can contribute, as well as the ability to be �lexible enough to not just consider others' ideas but be willing to implement them. This shows trust in others, recognition of others' expertise, and a willingness to compromise. However, the adaptive leader does not just give up in the face of opposition. Rather, the leader may use a variety of strategies to allow others to express their opinions, test their ideas, and consider alternatives. The gap in adaptive leadership can be measured by the extent to which organization problems are resolved to the satisfaction of all parties.

To be successful overall, leaders need to establish a map for guiding the organization, which also establishes the requirements for using one or more of the various leadership approaches. This map is the organization's strategic plan, which is the result of the organization's strategic planning process. Leading this process is discussed in Section 5.3 and is one of the key competencies in the leading organization role.

Leadership in Review

Re�lect on your learning by answering the following questions:

1. How would you de�ine collaborative leadership, and when is it most effective? 2. How would you de�ine adaptive leadership, and when is it most effective?

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The strategic planning process must include the organization's goals, its core values, and its mission.

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5.3 Strategic Planning

Regardless of whether leaders are in a changing or a relatively stable environment, the direction for the future of the organization should be driven by the organization's strategic planning process. We introduced the idea of a strategic plan in Chapter 1 and discussed the fact that the plan should include the following components:

Statement of the organization's core values The organization's mission The organization's vision Strategies for achieving the mission and vision Overarching goals Long-term objectives critical to organization success, based on core values and derived from the mission and vision

In this section, we brie�ly describe the important components of a strategic plan and describe what it takes to create each component. Knowing how to develop each of these components is a leadership competency for the role of leading organizations. For the entire enterprise, leaders take a hands-on role in developing the strategic plan, although outside consultants may also be utilized in various stages of the strategic planning process. Most large organizations will schedule and track the process and timeline for plan completion in the corporate calendar, which includes key actions and events for the organization such as executive team meetings and budgeting. Regardless, senior leaders in most organizations, such as those heading large functional groups or business units, are almost always expected to carry out the strategic planning process for their direct organizations, in alignment with the overall enterprise direction.

How Core Values Are Developed

Core values are the deeply held beliefs that characterize and de�ine the behaviors necessary to ensure organization success. Some leaders need to be convinced that it is important to identify and communicate the company core values, while others invest in cascading a 360-degree feedback process, along with professional coaching, to managers throughout the organization to ensure that the managers' actions are aligned with the company's new core values. In fact, core values serve a speci�ic role in helping to shape the culture of the organization. Schein (1987, 2010) described core values as espoused beliefs—what leadership says about how employees will work and act together. Ideally, these espoused beliefs will be consistent with leadership's underlying and taken-for- granted beliefs and assumptions. According to Schein, core values are the deepest level of culture, meaning that they underpin the entire organization and will be expressed in all visible aspects of the organization, from its structure to its systems, processes, and policies.

Strategic planning starts with articulating the core values and behaviors that will underlie the organization's mission and how it is accomplished. Leaders start by discussing what they think their core values are or should be. As a result, the core values will be based in part on the leaders' cultural background and in part on the leaders' beliefs and conception of the type of company or business they want to lead. For example, Western culture emphasizes the values of individualism, creativity, and equality (Hofstede, Hofstede, & Minkov, 2010; House, Hanges, Javidan, Dorfman, & Gupta, 2004). Values emphasized in Eastern cultures include team-above-self (collectivism), respect for authority, and delaying grati�ication. Corporate values may incorporate such culturally based values and integrate values from different cultures, especially in a multinational corporation.

Once leaders have determined a proposed set of values, they can choose to further engage others for feedback by sharing and discussing them with their direct report teams or by engaging HR to conduct focus groups with employees about the appropriateness of the values. Being as inclusive as possible when soliciting input on the proposed draft of values and behaviors will go a long way in making sure employees commit to them.

Table 5.1 shows an example of one global Fortune 500 company's core values and samples of de�ining behaviors. Note how the company—one of the companies we worked with as consultants—chose to incorporate values from different cultures (e.g., the values innovation and working with others).

Table 5.1: Fortune 500 company core values and related behaviors

Core values Sample behaviors

Innovation We are constantly looking for ways to innovate and improve. We embrace change as an opportunity.

Challenges current ways of doing things and offers creative, alternative approaches Identi�ies opportunities and takes the initiative to create new products, services, systems, processes, etc. Anticipates and looks for creative ways to meet customer needs

Pursuit of quality We have a passion for pursuing continuous quality improvement and strive for excellence in all we do. We measure our progress and take fact-based action.

Maintains an optimistic outlook and demonstrates a high energy level Delivers results with ef�iciency and effectiveness in all areas of job performance Focuses on ensuring a quality customer experience that exceeds expectations

Working with others We communicate actively and openly and build trust by keeping our commitments. We respect and value diversity.

Collaborates effectively within and across departments to accomplish shared goals Communicates openly and clearly with people at all levels in the company Shows respect for others and their ideas regardless of department, position, or background

Acting with integrity We are honest in all interactions. We earn our reputation by adhering to the highest standards of ethics and integrity.

Is open and honest in dealing with others Makes decisions and acts responsibly, considering short-term and long-term results Operates within the letter and spirit of the law

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Performance above expectations We strive for, recognize, and reward outstanding performance. We hold ourselves and each other accountable for achieving our goals.

Provides feedback to others to improve performance Sets clear performance and development goals and assesses own performance against those goals Owns, takes accountability for, and achieves results

Articulating these values is the start of developing a values-driven strategic plan. Not articulating these values at the outset of the planning process can contribute to disagreements among the leaders or owners of the business. Even for individual proprietorships, not recognizing the values that underlie what they aim to accomplish may lead to goals and decisions that are confusing or con�licting. In addition, articulating the values helps leaders to be clear about what outcomes are of utmost importance to them and what types of decisions and behaviors determine how they will go about accomplishing their goals. See Considering HR's Role in Developing Core Values and Behaviors for a look at how HR professionals can play a role in developing a company's core values and behaviors.

Considering HR's Role in Developing Core Values and Behaviors

HR professionals are called upon to re�ine the core values and further clarify and develop the de�ining behaviors. This is typically done because those in HR will normally be expected to use the values and behaviors as the basis for 360-degree feedback processes, performance appraisals, and leadership development programs. Through statistical analysis, HR professionals can ensure that each core value and its respective behavior set align effectively, providing a valid and reliable base upon which to build the performance management and development processes and programs, as well as others.

Once re�ined and clari�ied, the set of core values and behaviors is reviewed, analyzed, and discussed again by the executive team to ensure agreement with and commitment to the values. This is an extremely important step because the values need to be accepted by people in senior leadership positions. Employees will look to them to see if their behavior is consistent with the values, or in Schein's framework, to determine if the basic assumptions and visible behaviors of those in leadership are consistent with their espoused values. This is how employees determine the integrity of the leadership within the organization. In other words, do the leaders do what they say is important to do?

How the Mission Is Developed

Mission is what the organization does to make the vision a reality, or what it strives to create. In Chapter 1, we de�ined mission as "the fundamental purpose of the organization, or its reason for being—the business that it is in." As Abrahams (1995) wrote, "Every company, no matter how big or small, needs a mission statement as a source of direction, a kind of compass, that lets its employees, customers, and even its stockholders know what it stands for and where it's headed" (p. 33).

Mission statements may come in a variety of forms. For example, a mission statement might be a short statement, such as A�lac's: "To combine aggressive strategic marketing with quality products and services at competitive prices to provide the best insurance value for consumers" (MissionStatements.com, n.d., para. 8). (For more mission statements, see https://www.missionstatements.com/fortune_ 500_mission_statements.html (https://www.missionstatements.com/fortune_500_mission_statements.html) .) Or, a mission statement might be a short statement followed by a number of qualifying statements, which are often about the nature of the company's employees, its customers, and the marketplace. Mission statements may also include statements related to the company's shareholders, communities they serve, business partners, and society as a whole. At one point, for example, the Baldor Electric Company's mission statement read as follows:

Our mission is to be the best (as determined by our customers) marketers, designers and manufacturers of electric motors and drives. To achieve this we must: provide better value to our customers than any of our competitors; attract and retain competent employees dedicated to reaching our goals and objectives; produce good, long-term results for our shareholders. (Funding Universe, n.d., para. 1)

Who should have input on writing the mission statement? Mission statements should be considered individually by each executive team member in preparation for a detailed discussion with the full executive team. The full team will usually set aside time to brainstorm elements of the mission statement and then leave the drafting of the statement to one of the team members. Alternatively, some executive teams go through arduous discussions and then draft several versions for the team to review and decide upon. Often during the process, the executive team will solicit input on the drafts from their direct report teams to test the meaningfulness of the mission statement. Some organizations may do something similar to what was described by Hempel (2006) as a "values jam" at IBM, with the top executive involving the entire employee population in an interactive, online dialogue to vet the mission statement. This latter technique can also be used for soliciting input on the vision statement, which we discuss next.

How the Vision Is Developed

In Chapter 1, we de�ined vision as the organization's "picture of the future, which clari�ies the direction for the organization in a high-level, general way." The vision addresses future aspirations and desired outcomes and often re�lects the emotions and passion that organizational members feel, especially the leadership (Burke, 2008). In addition, visions typically have a horizon of 3 to 5 years and act, in some ways, as a stretch goal for the organization.

Drawing on Kotter (1996), consider the following as characteristics of an effective vision:

It should be imaginable. It should convey a picture of the future— what it will look like. It should be desirable. It should appeal to all those who have a long-term interest or stake in the organization (employees, industry analysts, investors, bankers, customers, business partners). It should be feasible. Although it should pose a challenge or stretch for the organization, it still needs to be realistic and attainable. It should be focused. Along with the mission and other components of the strategic plan, it should be clear and plain enough to provide guidance to employees, managers, and leaders when making decisions. It should be �lexible. As a high-level guidepost, it should not be constrictive, as it needs to allow for employee autonomy and initiative across the organization. It should be communicable. It should be easy to describe and understandable to those outside the business, as it needs to be discussed and shared over and over again.

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An organization's vision re�lects the drive and direction of its members and, in particular, its leaders.

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This clip discusses why it is necessary for leaders to have a vision that can be shared by those who follow them.

Leading with a Vision

Vision From Title: Nurturing Leadership

(https://fod.infobase.com/PortalPlaylists.aspx?wID=100753&xtid=65018)

Critical Thinking Questions

1. What might happen if a leader neglected to get others on board with his or her vision?

2. As a leader, how would you help to incorporate your vision into the culture of your organization?

Cirque du Soleil is an example of an organization that adopted the blue ocean strategy. Besides Apple and Google, can you name any other organizations using blue ocean strategic planning?

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One good example of a short vision statement is the following: "To revolutionize the way IT powers business agility." Similar to the mission statement, the vision statement is generally discussed by the senior executive team and drafted by one of its members, and additional input is often sought from direct reports and employees.

How Strategies Are Developed

At the organization level, strategies answer the question "How will we achieve our mission and vision and lay the groundwork for setting organizational goals?" You may recall from Chapter 3 that goal statements de�ine the end result and strategies de�ine how the goals will be achieved. At the organization level, the mission and vision act as high-level goal statements, which then require the crafting of an initial, high-level strategy. Once that high-level strategy is determined, establishing more speci�ic goals, strategies, tactics, activities, and measures of success (as we discussed in Chapter 3) will follow. Strategies are determined at the overall corporate level for the entire organization and also at the level of its strategic business units; however, business unit strategies must complement one another and be congruent with and supportive of the corporate strategy.

Managers and leaders are often confused about what a strategy is, as well as how to construct one. An effective strategy is neither too abstract nor all encompassing; it should be speci�ic and clarify the major priorities for the organization. For example, a company that wishes to achieve its vision by having the right people and organization in place might de�ine its initial, high-level strategy as "Build a talented, global workforce and an organization with the capability to learn and grow." From that statement, high-level goals would be developed and the unique, speci�ic strategies put in place. Essentially, the leader is working backwards by developing these strategies from the organization's overarching goals, which is the topic of the following section.

Strategies are usually derived as a result of discussion among the organization's leaders based on the analysis of data (e.g., available market share), number and size of competitors in a product area, market needs, and the like. The discussion would focus on de�ining the current business, performing external and internal audits of how well things are working now and where they are working better (e.g., competitors), and formulating a new direction (Dessler, 2011). There are a number of strategic areas for companies to consider as they develop their strategies. For example, Tregoe and Zimmerman (1980) presented nine basic strategy areas, grouped into three major categories:

Products/markets: products offered, market needs Capabilities: technology, production capability, method of sale, method of distribution, natural resources Results: size/growth, return/pro�it

However, these and most other current strategic planning processes revolve around industry boundaries. A boundary for the fast-food industry, for example, is that fast food is sold largely through fast-food restaurants; you won't �ind a Big Mac on the menu at a Four Seasons Hotel. These boundaries are de�ined and accepted as the status quo, with known rules of engagement, or how companies will compete with each other. So, for example, the fast-food industry competes on price and speed of service. Companies will try to win from each other a "bigger piece of the pie" or market share, which becomes increasingly harder to accomplish. Kim and Mauborgne (2005) referred to this approach as the red ocean strategy (working in a red, or limited, body of water). Although it is important to compete in a red ocean, Kim and Mauborgne suggested pursuing a blue ocean strategy, where companies focus on untapped market space (blue, unchartered waters), where they can create demand and the opportunity for highly pro�itable growth. Companies following a blue ocean strategy are often outgrowths of expanding red ocean industry boundaries. For example, consider Cirque du Soleil, which does not compete against Ringling Brothers and Barnum & Bailey in the strongly held market for children. Cirque du Soleil revamped the standard circus offering and now successfully serves the adult and corporate client market. Apple and Google are two other �irms that have been successful in blue ocean strategic planning.

How Overarching Goals Are Developed

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At the organization level, overarching goals de�ine the high-level results the organization and business units and departments within it commit to and expect to achieve. These are established at the top of the organization and begin the process of empowering others at all levels of the organization through goal setting, which we discussed in Chapter 3.

The head of human resources may contribute to drafting the organization's overarching goals. The goals typically include the �inancial targets, and the board of directors ultimately approves the goals with or without some modi�ication. Recall the four goal statements for a top executive presented in Chapter 3:

Ramp up growth Delight all customers Become a thought and technology leader Develop employees and the organization

Once these goals are in place and communicated by the CEO and the leadership team, the entire process of cascading the goals and aligning the efforts of all employees with the strategic direction of the business can be successfully achieved.

Measuring the Gap in Strategic Planning

The ultimate success of a company's strategic plan can be measured by the extent to which it was achieved. However, senior leadership is also accountable for the overall effectiveness and logic of the strategic plan.

To evaluate whether the plan itself was successful, it is important to validate the logic and alignment of the core values, mission, vision, strategies, and goals. This is helpful to determine whether the fault lies with the plan or with the execution of the plan. To determine this logic and alignment, one might ask questions such as the following:

Are the strategies aligned with achieving the vision? Are the goals aligned with the strategies? Are the goals focused on what it takes to be successful? Are the core values helping to guide appropriate and necessary behavior?

Plan success is typically measured by objective �inancial results. However, the goals of the organization must go beyond the �inancial, and the achievement of all the goals should be measured. Therefore, all metrics, even more subjective ones such as a company's annual employee opinion survey, should be identi�ied in the strategic planning process.

One outcome of the strategic planning process can be a need for organization change or a change in the organization's culture. Organization change is addressed in Section 5.4, and a speci�ic discussion of organization culture change follows in Section 5.5.

Leadership in Review

Re�lect on your learning by answering the following questions:

1. What is the primary purpose of strategic planning? 2. What role do an organization's core values serve? 3. What is an organization's mission statement? 4. What is the purpose of an organization's vision? 5. What is an overarching goal?

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Leading change is embedded in the history of industry; therefore, the ability to effectively manage change is crucial to leading an organization.

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5.4 Leading Change

Leading and managing change in organizations was not always a high priority, but it became much more of one beginning in the late 1970s with the onset of global competition and major structural changes to various industries, such as the telecommunications and auto industries. Today, the business world is growing increasingly complex, with a global economy and an often turbulent environment across most industries. Indeed, leading change is probably the most critical competency necessary for the role of leading organizations.

Change in an organization can run the gamut from a modi�ication to one small system, such as the processing of customer invoices in the sales department, to changes in the organization's mission, vision, leadership, or culture, which are more signi�icant in that they affect the fundamental way things are done across the entire organization. Just consider the impact on the United States when a new president is elected—a change in leadership—and the widespread rami�ications experienced not only in the United States, but around the world.

Types of Change

Change can be planned. Apple's iPad is certainly the result of a planned change to introduce an exciting new product to the marketplace. According to Burke (2008), planned change is de�ined as a deliberate, proactive, conscious decision to change. Unplanned change is an organization's response to unanticipated external events. For example, the introduction of the inexpensive digital watch in the 1970s with ongoing changes up to the smartwatch of today radically reshaped the Swiss watchmaking industry. Swiss watchmakers, known for expensive watches such as Rolex and Breguet, eventually had to change their strategy and instead successfully market their complex, mechanical watches as heirloom luxury goods that are passed down from generation to generation. We focus in this section on leading planned change, given that the signi�icant task when leading organization change is ensuring that the entire organization is aligned around the change and that the necessary mechanisms are in place to support and drive the change to a successful conclusion.

The challenge of leading and driving planned change has been an important topic in the organization development (OD) literature for some time. In fact, one of the founders of the OD �ield, Dick Beckhard, wrote in 1969, "A universal preoccupation of enterprise managers is to develop and adapt their organizations to better cope with and shape the environment in which the enterprise operates" (p. 2).

When planned change efforts focus on modifying existing characteristics in an organization, such as changing the sales commission process or offering leadership training, it is considered to be incremental change, or transactional change. Fundamental or transformational change is a radical planned change in the organization's mission, vision, strategy, culture, or leadership. Table 5.2, adapted from Burke (2008), depicts the various descriptions of change based on the type of change (incremental or fundamental) and whether it is planned or unplanned.

Table 5.2: Types of organization change

Type of change Planned change Unplanned change

Incremental Transactional Evolutionary

Fundamental Transformational Revolutionary

Source: Adapted from Organization change: Theory and practice (2nd ed.), by W. W. Burke, 2008, Thousand Oaks, CA: Sage Publications.

The Change Process

Change involves altering or radically modifying some aspect of the organization, from its processes and systems to its more fundamental direction-providing components described in the Mone-London organization model. However, change also needs a process—a way for it to be planned, implemented, and sustained by the leaders of the organization. Figure 5.2 is a model that simpli�ies the overall change process.

According to Beckhard and Harris (1977), leaders begin the change process by determining the future state, or the vision, as discussed in Section 5.3. The vision should clearly de�ine the direction for the organization; it is the outcome or the result leadership wants to achieve after the change is completed. Once the vision is de�ined, leaders need to turn their attention to the present state of the organization to determine what aspects of the organization need to change to make the vision a reality. For example, a vision that focuses on expansion into global markets may require strengthening the competency cultural intelligence (the knowledge necessary to interact effectively across cultural situations) throughout the organization's middle management ranks. Finally, and this is where the majority of the change effort is required, leaders must manage the transition from the current state to the future state. The transition state is characterized as the period of time it takes for the organization to successfully make the change. For transformational change, success may take a minimum of 3 to 5 years.

How does a leader "lead" the change process? Kurt Lewin (1958) provided the essential three-step framework that many have discussed and enhanced (e.g., Burke, 2008; Schein, 1987) or expanded (Kotter, 1996). We will review �irst Lewin's seminal framework and then Kotter's eight-step model for leading change efforts in organizations.

Lewin on Leading the Change Process Kurt Lewin proposed that change involves unfreezing the organization (helping employees to let go of the past), moving or changing the organization (helping employees to learn new ways of thinking and acting), and refreezing the organization after the change (reinforcing the new ways of thinking and acting).

Unfreezing involves creating the motivation and readiness for change. Change usually involves the need to alter, radically change, or at least unlearn or let go of currently held perspectives, attitudes, values, or behaviors, so employees must feel a sense of disequilibrium or pain to prompt the change. One way of helping

Figure 5.2: Basic model of change management

The change process can be simpli�ied into three steps.

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1.Create a sense of urgency. Leaders need to be sure that as many people as possible within the organization recognize the need for the change. 2.Build a guiding team. Out of the sense of urgency, leaders need to create respected and credible teams to guide the change initiative.

to unfreeze the organization is for leaders to create a sense of urgency, a "do or die" feeling about the need for the change. Employees must believe the organization may not be able to survive without undergoing the proposed change. At the same time, it will be important for leaders to share a compelling vision to help pull the entire organization to the desired future state.

Changing is similar to Beckhard and Harris's (1977) transition state and involves making the changes necessary to achieve the vision. During this phase, leaders help employees to see and learn the new perspectives, attitudes, values, and behaviors that are important to achieving the vision. Leaders do this by acting as role models, demonstrating the new expectations, and in particular by demonstrating more charismatic and transformational leadership behaviors, inspiring action by appealing to employees' emotions and values. During this phase, leaders may also see employees in various stages of reacting to the "loss" of what was, stages best articulated by Kübler-Ross (1969) as shock and denial, anger, bargaining, depression, and acceptance.

Refreezing requires reinforcing how the organization will operate in a way consistent with the vision by altering the processes or systems to help sustain the new perspectives or attitudes. For example, the organization can be restructured to ensure a desired enhanced focus on customers. The performance management system can be modi�ied to emphasize evaluating and appraising leaders on a new set of competencies, such as cultural intelligence. The management incentive plan can be changed to tie a greater percentage of an individual's bonus to the ability to work effectively in a new team- and matrix-based organization.

Leaders, therefore, have to be sure they can motivate their employees to change, help them to change, and then sustain the changes in their attitudes and behaviors. This, of course, requires many of the competencies discussed in earlier chapters, including the cognitive ability to deal with complex change and the emotional intelligence to be sensitive to how others feel as they undergo change. Leaders also need to have resilience to deal with obstacles that they might face, including resistance to the change, and the ability to deal with ambiguity as they take their organizations on long-term journeys to new ways of operating and delivering results. Leaders will need the savvy to identify and reward those who are meeting the new expectations, using a variety of methods such as merit increases, bonuses, and promotions to high-level, critical roles. They also need the courage to remove those who are not in support of the change, particularly the most senior leaders who refuse to get on board and whose actions are widely visible to all and potentially quite detrimental to the success of the change.

Kotter on Leading the Change Process John Kotter's eight-stage model (Kotter, 1978, 1996, 2008; Kotter & Cohen, 2002; Kotter & Whitehead, 2010) can be divided into three phases (see Figure 5.3). We now discuss each phase and the stages it includes.

Figure 5.3: Adaptation of Kotter's eight-stage process

Kotter's eight-stage model can be divided into three phases, which parallel Lewin's unfreezing, changing, and refreezing stages.

Source: Adapted from Kotter, 1978, 1996, 2008; Kotter & Cohen, 2002; Kotter & Whitehead, 2010

The �irst phase involves creating a climate for change. The leader's main goal is to make the organization aware of the need for change and prepare the organization to act. This phase is similar to Lewin's unfreezing stage and includes the �irst three stages of Kotter's change process model:

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3.Develop a vision and strategy. Leaders need to provide a clear target or vision for the organization's future and to ensure there are clear strategies that show employees how the vision will be achieved.

4.Communicate the change vision. Leaders need to overcommunicate, using a variety of media, to ensure employees understand the vision, to gain greater commitment to the vision, and to overcome any signs of resistance.

5.Empower broad-based action. Leaders need to remove barriers to implementing the change. Barriers might include formal structures that get in the way of acting, a lack of skills to take needed action, unsupportive managers, and misaligned information systems.

6.Create short-term wins. Leaders need to generate wins to be sure the vision and strategies are on track and to make any necessary modi�ications, to further prove the viability of the change effort, and to create momentum for behaving in new ways.

7.Don't let up. Given the connectedness of various systems and processes across the organization, leaders need to continue to engage their employees in the change and to sustain and broaden the change effort as appropriate throughout the organization.

8.Make the change stick. Leaders need to ensure the change is sustained in the organization, that it becomes a part of the organization's fabric. This is accomplished by making the necessary widespread changes in the organization's structure, systems, processes, and, most of all, norms and values. This will guide how people act and ultimately embed the change in the culture.

Once the climate for change is established, leaders begin the next phase, engaging and enabling the whole organization to make the change. This phase is similar to Lewin's changing stage. The leader's main goals in this phase are to ensure all employees understand the vision and direction for the change, feel enabled and empowered to act in new ways consistent with the vision, and see early signs of success for their efforts. Leaders engage the entire organization in stages 4, 5, and 6:

Kotter's last two stages are focused on implementing and sustaining change. Change often fails because people grow tired, give up, continue to resist the change effort, or get distracted with new problems and challenges. Leaders need to �irmly anchor the change in the culture as the new way of doing things. Stages 7 and 8 are as follows:

Table 5.3 offers key questions leaders can ask themselves as they proceed through each stage of the change. Leaders will need to take the necessary action where they can't answer a question with a resounding yes.

Table 5.3: Key leading change questions

Major phase Stage Key questions

Create a climate for change. 1. Create a sense of urgency. Do we have a burning platform? Can we explain the critical reasons for the change? Are we shaking up the status quo?

2. Build a guiding team. Have we selected a "leading" team? Are the team members committed, focused, and accountable? Do the members work well together?

3. Develop a vision and strategy.

Can we convey a clear picture of the organization after the change? Is the vision inspiring and achievable? Do we have clear strategies for achieving the vision?

Engage and enable the whole organization.

4. Communicate the change vision.

Can we communicate the vision in a concise, heartfelt, and candid way? Are we using a variety of media? Is our communication two-way? Are we addressing concerns? Is our behavior consistent with our message?

5. Empower broadbased action.

Have we identi�ied and aligned efforts? Have we provided bold goals? Have we removed barriers to success? Have we provided the support systems and training necessary? Are we recognizing and rewarding behavior in support of the change?

6. Create short-term wins. Have we created and communicated short-term wins? Are we rewarding those who make short-term wins possible?

Implement and sustain change. 7. Don't let up. Are we maintaining the sense of urgency? Are we persistent in assessing and monitoring our progress and our goals? Are we improving our processes by eliminating unnecessary work and interdependencies? Are we rewarding and promoting supporters of the change?

8. Make the change stick. Are we creating new operating norms and practices to support the vision and strategies? Are we continuing to recognize, reward, and promote those who adopt these norms and practices?

Addressing Resistance to Change

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Measuring change requires a commitment to seeing long-term plans through.

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As should be evident from the discussion of Lewin's and Kotter's models, leaders typically encounter various forms of resistance to the change throughout the change process. Dealing with resistance is the main focus of both Lewin's �irst phase of change, unfreezing, and Kotter's �irst stage, create a sense of urgency. Based on Burke (2008) and others, resistance can appear in different forms:

A low tolerance for change, or blind resistance. The leader's role is to reassure employees and allow time to pass. A desire not to lose something of value, or political resistance. This is not necessarily resistance to the change itself; the leader's role is to make clear to employees what they receive in return for making the change. A belief that the change does not make sense for the organization, or ideological resistance. This revolves around having honest differences; leaders will need to persuade employees using data and facts. Experiencing a lack of choice, or control resistance. This involves employees reacting to the imposition of change; leaders need to seek input from and engage employees in the change. A misunderstanding of the change and its implications, or uninformed resistance. The leader's role is to educate employees about the change and to communicate more regularly and effectively.

Finally, there are certain "do's and don'ts" for leaders dealing with resistance and promoting change. Use these checklists to be sure your behavior effectively drives change versus creating dissatisfaction and discontent with the change.

As a leader faced with resistance to change, do

Listen to what your employees have to say. Dialogue �irst, problem solve second, persuade last. Connect the vision to the interests of your employees. Reward and recognize early adopters of the change. Provide hands-on experience for employees to be engaged in the change. Honor the past. Don't be too critical of how things were; focus more on the more appropriate vision for the future.

As a leader faced with resistance to change, don't

Discount the feelings employees may express about the nature of the change or their own dif�iculty in trying to make the change. Try to force the change on employees with logic and data. Continue to change your focus and priorities once the change is launched. Ask others to make any changes without �irst asking yourself to make those changes. Ask for the "new" behaviors and efforts but still focus on measuring the "old" ways of doing things.

Measuring the Gap in Change Leadership

When you are leading change, measures for its effectiveness have to take a longer-term focus. The purpose of measuring change is not to achieve short-term results and then alter company direction again because the initial change was not followed through on. This is a common occurrence, but it is not an effective approach.

Kotter's steps can be used to evaluate the progress of a change effort, asking whether leadership was effective at each step and if all steps were addressed. The best measure is one based on Kotter's eighth step—making the change stick. Why? Because this step suggests that the change won't last if the new ways of operating and behaving and the systems and processes to support those new ways are not embedded in the culture. Of course, some might argue that change is successful if the company achieved some stated �inancial targets. While achieving results is important, results can be achieved—to some extent—even if the change is not successfully completed.

Leadership in Review

Re�lect on your learning by answering the following questions:

1. What are the different types of organization change? 2. What are the three steps to change as identi�ied by Kurt Lewin? 3. What are the eight steps to John Kotter's approach to leading change?

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Changing the culture in an organization requires strategy and an awareness of the existing culture.

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5.5 Changing the Culture in an Organization

Leaders are likely to invest in strategic planning to develop an organization's mission, vision, strategy, and goals. However, they often pay less attention to the organization's culture, when it is having the right culture that enables success consistent with an organization's strategic plan. If the culture does not support employee engagement, innovation, ethical behavior, and feedback for performance and development, the need for culture change becomes apparent over time, even if the strategic plan is sound and valid. In this section, we address the process of culture change and ways to create and assess a culture that supports organization success. Of course, leaders have a clear role when it comes to changing and building organization culture. Much to the surprise of many managers and leaders however, culture change cannot be mandated; culture change must be modeled. Among other things, culture change requires leaders to ensure that their fundamental beliefs are appropriate, that their values and behavior are consistent with those beliefs, and that the right processes (or cultural artifacts) are in place to drive and sustain the desired culture. For example, if organization leaders want to create a culture of engagement, they must truly believe in employee engagement, discuss its importance in a deeply heartfelt way, and then take action to put the right processes in place to develop an engaged workforce. As Schein (1992, 2010) noted in his comprehensive look at culture, if leaders are unaware of their true, fundamental beliefs and assumptions, it is likely that their behavior will be inconsistent with what they say is important. In other words, there will be a clash between their espoused theories and their theories-in-use (see Chapter 3). In these cases, even if leaders put cultural artifacts in place, such as incentives for innovation or for encouraging feedback, the processes will fail owing to lack of true support.

Approaches to Culture Change

Just as there is an organization change process, there is also a culture change process. As Kotter (1996) outlined in his eight-stage organization change process, changes to culture and behavior come at the end of an organization change process, as part of the eighth step: Make the change stick. (If needed, review Kotter's model in Section 5.4.) For culture change to be successful, the new behaviors, systems, processes, and so on must be embedded in the culture. In order to effectively embed or anchor the new ways in the culture, Kotter suggested the following:

Demonstrate and help people to see that the new behaviors, processes, etc. work better than the old. Communicate the importance of the new practices and support them. Identify and remove those who truly stand in the way and are preventing or stalling the change in culture. Change the appraisal, reward, recognition, and promotion processes to support the new culture.

Cameron and Quinn (2006) and Cummings and Worley (2009) recommended a more step-bystep process for culture change. Table 5.4 presents a summary of their culture change steps.

Table 5.4: Processes for culture change

Cameron and Quinn (2006) Cummings and Worley (2009)

1. Reach consensus on the current culture. 2. Reach consensus on the desired culture. 3. Determine impact of change. 4. Identify illustrative stories. 5. Develop a strategic action plan. 6. Develop an implementation plan.

1. Formulate a clear vision, mission, strategy, and values set. 2. Demonstrate executive-level support for and model commitment to

the culture. 3. Alter organization structure, processes, and systems to support

change. 4. Select and hire those who �it, and remove those who do not �it the

culture. 5. Increase awareness of potential ethical and legal issues.

The two approaches have much in common and bear some similarity to Kotter's recommendations. Here is a brief summary and integration of the recommendations of Kotter, Cameron and Quinn, and Cummings and Worley:

Recognize that leadership plays an important role. As we noted earlier in this section, leaders have a clear role when it comes to culture change. Leadership must be engaged in the change and own the change from the very beginning, deciding on what to change and what not to change. Cameron and Quinn suggested that it is important for the senior-most organization leaders to agree to the desired culture; Cummings and Worley suggested that those in senior leadership positions are responsible for both developing the vision of the change and demonstrating their commitment by managing the change from the top of the organization and then modeling and communicating the change through their own actions and behaviors. Understand the impact of the change. Cameron and Quinn recommended carefully determining what needs to change and what needs to remain the same. For example, leaders would consider whether employees need to be more customer focused or perhaps more focused on innovation. Cummings and Worley emphasized ensuring that necessary alterations are made to current processes and systems to support the new culture. Point to visible signs of change. Again, leadership must demonstrate its commitment to the change, which also includes taking visible action such as changing out senior leaders. Cameron and Quinn suggested identifying stories about employees' efforts with customers and leaders, and managers' efforts in their organizations that clearly illustrate the new behaviors; Cummings and Worley said that the replacements for those who stand in the way of the change should be visibly touted. Be intentional when taking action. A change and an implementation plan for the change must be developed and communicated to help employees engage in the process. Cameron and Quinn highlighted the need to focus on a few key priorities. They also recommended ensuring that steps for implementing that action plan are identi�ied and in place—this becomes a change management plan. Cummings and Worley pointed out that leaders need to be sensitive when changing values. New values might set certain expectations, and there will likely be a cost if those promised expectations are not met.

Next, we look at how leaders can build cultures that emphasize engagement, innovation, ethics, and a feedback focus, all of which are important to organization success in the global marketplace.

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Creating a Culture of Employee Engagement

Research has shown that employee engagement leads to higher levels of productivity and �inancial success for organizations (Storey et al., 2009; Gibbons, 2006). We have discussed engaging employees in earlier chapters, but what exactly is employee engagement? It has been de�ined and measured in many ways; however, a reasonably fair de�inition by Storey et al. is that employee engagement is "a set of positive attitudes and behaviors enabling high job performance of a kind that is in tune with the organization's mission" (2009, p. 302). Mone and London (2010) offered the following research-based de�inition of employee engagement: "when employees are involved, committed, passionate, and empowered and demonstrate those feelings in the workplace" (p. xvi).

As Mone and London (2010) reported, a valid measure of employee engagement can serve as the basis for measuring engagement. In their study, statistical analysis was applied to a highly reliable set of questions from an employee opinion survey to identify the drivers of engagement. The actions (drivers) identi�ied in their study are, in fact, similar to those reported by others (Macey & Schneider, 2008; Gibbons, 2006). According to Mone and London, managers and leaders can take the following actions to build and create a culture of engagement:

Build a foundation of trust and empowerment, promoting effective employee–manager relations. Ensure employees have challenging and meaningful work and clarify its value and importance to the organization. Regularly communicate with employees to help ensure their work is aligned with corporate objectives, helping to make their efforts meaningful and valuable, while encouraging innovation and creativity. Establish clear performance goals for employees that are challenging and aligned with overall workgroup and organization goals. Foster team-level learning and development in support of group-level engagement and performance. Establish clear development goals for employees and help them to understand career growth opportunities available to them. Provide ongoing coaching and feedback to employees to ensure performance and development are on track. Recognize employees for their achievements and successes. Conduct fair and effective performance appraisal discussions and write effective appraisals. Monitor the overall climate and efforts of individuals and teams, ensuring engagement does not lead to burnout.

Note that many of these actions contain the components of performance management discussed in Chapter 3. In fact, when performance management is done well, it serves to build engaged employees (Mone & London, 2010). Use Assessment 5.1 to measure your own engagement—or to build a survey to measure employee engagement at your own organization.

Creating a Culture of Support for Innovation

Innovation is more important than ever given the changing global business environment. Recall from Section 5.1 that focusing on innovation and adaptation is one of the three main components of �lexible leadership (Yukl & Lepsinger, 2004). Innovation is also critical for organizations hoping to succeed with a blue ocean strategy (Kim & Mauborgne, 2005). Our discussion here will largely draw on our research and consulting efforts with one major corporation over several years. However, recommendations for measures and actions can be generalized for use in a wide variety of organizations.

The Fortune 500 technology company we worked with needed to understand whether its culture supported its new strategy, which was to create products and services organically rather than through acquisitions. In short, its strategy was to be more innovative. To determine whether the company's culture was supporting its strategy, we had to devise a measure for innovation. After consulting with the organization's technology leaders and experts and reviewing a wide variety of literature (e.g., Chopra, 1999; Christensen, 1997; Kelley, 2001; Hulsheger, Anderson, & Salgado, 2009; Corporate Strategy Board, 1997, 2002), we

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Managers and leaders should create an environment that promotes innovation and recognizes creativity. How would you go about doing this?

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identi�ied more than 60 possible items that could be used to measure innovation. These items were used in an employee opinion survey along with another series of items to help determine what drives a culture of innovation. When the survey results were compiled (based on a response rate of 71%, with more than 3,000 respondents), statistical analysis was used to create a valid measure of 18 statements, using a 5-point Likert scale ranging from strongly disagree to strongly agree (see Assessment 5.2).

Overall, it would seem important for managers and leaders to not only encourage their employees to be innovative but also support innovation efforts through setting goals for innovation, providing feedback about innovation efforts, and providing rewards and recognition for innovation. Managers and leaders must also take action on the innovative ideas, helping to move them forward in the organization. Being innovative involves risk—risk of failure if the innovation does not succeed. Managers and leaders must be sure that they embrace all efforts for innovation, even those that eventually do not succeed.

Speci�ically, our research demonstrated that there are three primary drivers serving to encourage employees to put forth their innovative ideas:

Employees need to enjoy being creative in their work. Being creative and having supportive job conditions make working on innovation a more positive experience. Employees need to have jobs that are structured to allow innovation in their work. Even employees who are more creative than others will be negatively affected if they don't have the time and resources to focus on innovation. Employees need to believe being innovative is an important part of their jobs. This is demonstrated by managers and leaders when being innovative leads to better performance evaluations and opens up more career and promotional opportunities for their employees.

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Finally, Cameron and Quinn (2006) and Chopra (1999) provided managers and leaders with practices that can be used to build a culture of innovation. Cameron and Quinn identi�ied �ive key practice areas: leading innovation and entrepreneurship, leading the future, leading improvement and change, leading creativity, and leading �lexibility and agility. Chopra offered the following eight rules or practices for engaging hearts and minds to drive innovation:

1. Grow ideas; don't mow them down. 2. Manage the ego agenda; don't let it run the show. 3. Practice the art of "hands-on listening." 4. Uncover their assumptions . . . if you want people to change their course. 5. Expose your ideas to criticism before they are fully grown. 6. Involve people, but keep them off your decision turf. 7. Acknowledge contributions to your thinking. 8. Invite ideas only when you're open to them.

Of course, cultural change requires effective leadership, and for employees to accept and embrace the change, leaders need to demonstrate integrity by changing their own behaviors, demonstrating an ethical stance. We turn next to building ethical cultures in organizations.

Creating a Culture of Support for Ethical Behavior

Begin by taking Assessment 5.3, which is based on the De�ining Issues Test (DIT) (Rest, 1979, 1986).

Principled or ethical leadership was introduced in Chapter 1 as a strategic approach to leadership. We de�ined ethical leadership as leading from a set of core values, including trust, honesty, integrity, and caring. More formally, ethical leadership can be described as "the demonstration of normatively appropriate conduct through personal actions and interpersonal relationships, and the promotion of such conduct to followers through two-way communication, reinforcement, and decision-making" (Brown, Treviño, & Harrison, 2005, p. 120). In other words, ethical leadership involves leading the organization in a responsible way, including setting the tone from the top of the organization by modeling ethical behaviors and decision making. Ethical leadership cascades well throughout an organization (Mayer, Kuenzi, Greenbaum, Bardes, & Salvador, 2009); the effects on employees are very favorable. Direct reports who perceive their leaders as behaving ethically are more likely to

exert extra effort on the job, see their leader as effective, and report problems to them (Brown et al., 2005). show citizenship behaviors such as helping their coworkers and going above and beyond what their job responsibilities entail (Mayer et al., 2009). describe having more say in decisions because they feel a higher level of psychological safety; for example, they feel that their jobs will be safe even if they speak out (Walumbwa & Schaubroeck, 2009).

What drives ethical behavior? Ethical behavior largely depends on one's cognitive moral development, or the extent to which one can reason ethically. In a study of leaders, Jennifer Jordan and her colleagues (Jordan, Brown, Treviño, & Finkelstein, 2011) found that those who are more advanced in their ethical reasoning stand out from their peers as ethical role models and have a strong in�luence on creating a culture of ethics in their organizations. Kohlberg's (1969, 1981) cognitive moral development theory divides ethical reasoning capability into three broad stages:

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Think of experiences you've had where you've witnessed or drawn upon preconventional, conventional, or postconventional ethical reasoning. Which have you used most often?

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1. Preconventional ethical reasoning. This is the least sophisticated. Reasoning is egocentric, and those who reason at this stage view morality as a set of rules that are imposed on them by outside authorities. Decisions are based on self-interest, either to seek rewards or to avoid punishment. In organizations, leaders and employees who are preconventional reasoners feel that policies and guidelines don't necessarily apply to them, and their decisions will be based on satisfying their own self-interests— what is best for them.

2. Conventional ethical reasoning. At this stage, reasoning can be characterized as upholding the ethical norms of signi�icant others, such as peers, leaders, family members, and the government. Personal satisfaction comes from ful�illing duties and obligations. In organizations, employees and leaders who reason in a conventional way comply with the rules and demonstrate citizenship behaviors; they tend not to challenge the status quo.

3. Postconventional ethical reasoning. This type of ethical reasoning comes from more independent thinkers. Their judgments are based on what they believe is right considering the greater good and universal principles of rights and justice, not what others think or do. In organizations, leaders who are postconventional reasoners will work adaptively, trying to do what is right. Employees who are postconventional reasoners will generally be inclined to take the initiative. For example, an employee will do what is right for the customer, even if there is no prescribed rule for doing so.

What type of moral and ethical thinking can you typically expect to �ind in an organization of substantial size? Some employees and leaders will be and will continue to remain in the preconventional stage. The majority of employees will be operating in the conventional reasoning stage, and a few employees will have progressed and operate in the postconventional stage. Upbringing, cognitive ability, and the culture in which people live and work in�luence the degree to which they advance in cognitive moral reasoning.

Leaders will need to assess the extent to which they consider their organization's culture to be ethical. Leaders should both examine their own feelings about the organization's culture and assess more broadly whether everyone considers their organization's culture as a whole to be ethical. If their assessment yields negative results, leaders may want to change their behavior and discuss with other leaders in the organization how their actions and decisions are affecting the reputation of the organization, their own reputation, and how the people they lead feel about the organization.

They can accomplish this by evaluating management and leadership behavior, organizational support, and colleague behavior.

1. Management and leadership behavior refers to the extent to which managers and leaders both are ethical and observe the compliance standards established for the organization.

2. Organizational support refers to the extent to which the organization has in place policies and practices that enable ethical behavior. 3. Colleague behavior refers to the extent to which the employees in the organization act in an ethical manner.

Use Assessment 5.4 to evaluate an organization's culture. We recommend using the list of statements, grouped into these three areas mentioned, as a comprehensive measure for assessing the overall ethical nature of an organization's culture.

Creating a Culture Focused on Feedback

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Leaders must have the ability to measure the gap between an organization's existing culture and its desired culture.

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Feedback is one of the most signi�icant contributors to the success of any individual, team, or organization—speci�ically, performance and development feedback. Throughout this book, we have described many programs, processes, and procedures that foster learning and development and contribute to creating a feedback-focused culture, which we de�ine as a culture centered on continuous performance improvement.

In a feedback-focused culture, seeking and giving continuous feedback is acceptable and expected, not a once-a-year event connected with a formal performance appraisal. Feedback is meant to be formative rather than evaluative and is targeted to help employees do better each day. Managers and leaders who foster this type of culture in their organizations know how to give constructive feedback. They pay attention to behaviors that employees can change. Also, these managers and leaders know how to be coaches and mentors. They help their employees think about their actions and how others perceive them, as well as alternative ways of acting that may be more effective. These managers and leaders are open to helping employees improve by providing them with resources (e.g., training and special assignments) and the time and opportunities for employees to try these new behaviors in a nonthreatening environment.

The bene�its of employees working in a feedback-focused culture are signi�icant:

Feedback can help to keep employees focused on achieving what is important to the employees' and the organization's success. Positive feedback will help employees know they are appreciated, as well as where they stand—both of which can increase their motivation to do better next time. Employees will be able to monitor and improve their performance as they learn to keep in mind feedback on their performance and the expected standards of excellence. Employees will be better positioned to take control of their own performance. Employees may realize that they can be even more successful than before as they learn about areas and opportunities for improvement. Employees will feel more engaged when they see how they contribute to the department's goals and their efforts are in alignment with larger organizational goals.

Leaders can promote an environment that encourages constructive feedback. Leaders who do this are considered credible: Employees trust them to provide accurate and timely information. These leaders take the time to speak to direct reports about their performance; they do not wait for the annual performance appraisal; they praise positive performance and discuss problems when they occur. Effective feedback-focused leaders provide meaningful, clear feedback about behaviors that are important to performance outcomes and subordinates' career success. When they do give unfavorable feedback, they are careful to avoid blaming subordinates or disparaging their character. Finally, these leaders encourage direct reports to discuss their performance (Steelman, Levy, & Snell, 2004).

As a leader, do you engage in these behaviors to promote constructive feedback? Work on making these behaviors a habit for yourself. Do the leaders with whom you work behave this way? If not, how does this affect the organization? How much better would performance be if leaders fostered an environment of constructive feedback?

Measuring the Gap Between Current and Desired Culture

Today's business environment tends to put stress on the current culture in most organizations. For instance, new technology may reduce personal communication and create the feeling of distance between individuals or departments. More competition or poor economic conditions may make leaders make decisions quickly without consulting others in the organization who are affected by those decisions or may even prompt unethical or even illegal behavior. When examining leadership in an organization, consider the difference between the current culture and the desired culture leadership is trying to create. To measure this gap, �irst of all, examine the extent to which senior leadership followed the steps in the process for leading culture change. Second, use measures like those suggested in the section to assess the evidence of the desired culture. For example, the 10 questions in Assessment 5.1 can be used in an employee opinion survey. The results clarify the effectiveness of the culture change effort, as well as what aspects of engagement still need to be addressed.

Leading change and modeling desired behaviors involves, to some extent, ensuring that the organization is focused on developing and selecting the right leaders—a task that is largely entrusted to the senior leadership of the organization. We address this task in Section 5.6.

Leadership in Review

Re�lect on your learning by answering the following questions:

1. What is organization culture? 2. What are the key steps to leading culture change? 3. What is the bene�it of an engagement culture? 4. What is the bene�it of an innovation culture? 5. What is the bene�it of an ethical culture? 6. What is the bene�it of a feedback-focused culture?

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Succession planning involves identifying lower-level employees who have the potential to take on high- level leadership positions in the future.

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5.6 Succession Planning and Leadership Development

"Having the right people, in the right place, at the right time" has become a human resources truism. However, it is dif�icult to overestimate the signi�icance of ensuring the availability of successors for critical positions and of identifying at the lower levels those who demonstrate potential for assuming higher-level leadership roles in the future. Yet, the process of succession planning in corporations today still leaves room for improvement; a recent survey of more than 1,000 board members showed that more than half of them were dissatis�ied with their company's succession plans (La�ley, 2011).

In general, succession planning and identi�ication processes involve the following:

Assessing the strengths and weaknesses of a candidate based on some criteria Discussing all candidates with the appropriate senior-level group of leaders Determining the potential of the candidate to move forward in the business Identifying development opportunities for each candidate Communicating the outcomes to the candidates

We see the top executive as primarily responsible for ensuring the effectiveness of these processes, including actual hands-on involvement in all discussions of talent capability. Leaders at all levels of the organization need to be attuned to who is ready for advancement so that leadership positions throughout the organization can be �illed when they need to be—when people leave or are promoted. Otherwise, there are likely to be leadership gaps. Of course, the organization can recruit talent from outside, which is also valuable in bringing in fresh ideas. Recruitment planning is another part of succession planning, perhaps even keeping track of talented individuals in other organizations who might be recruited for more responsible positions in your organization in the future.

Identi�ication Process

To launch the process of identifying potential leaders, supervisors for all candidates complete assessments or pro�iles that shed light on each candidate's leadership qualities and characteristics. The assessments, in particular, which are typically completed electronically for candidates for non-senior leadership positions, explore these qualities and characteristics in greater depth and detail. The assessments and pro�iles are then used when supervisors discuss succession planning. Supervisors are expected to lead a succession planning discussion with their direct reports. The outcome of that discussion should be the identi�ication of replacements for these direct reports and a clear understanding of the leadership potential of all those assessed and discussed. Mone, Acritani, and Eisinger (2009) offered strategies for making this process and discussion effective: for example, clearly specifying and de�ining those leadership characteristics that are most critical to identifying future leaders. They also suggested identifying the extent to which those characteristics tend to be stable over time or can be further developed—for example, through coaching or training.

At the most senior level, a very formal assessment is not typically necessary, given the level of experience and accomplishment necessary to achieve these organization levels and the experience of those evaluating them. At Proctor and Gamble (P&G), for example, senior-level executives are informally evaluated against 10 criteria (La�ley, 2011):

Character, values, and integrity Proven track record Ability as a capability and capacity builder Level of energy and endurance Ability as a visionary and strategic leader Ability to be inspiring, courageous, and compassionate Productive relationships with internal and external stakeholders Ability to embrace change and lead transformational change Ability to remain calm, cool, and resilient in the face of con�lict and criticism Ability as an institution builder, to focus on the long-term good of the company

Pro�iles for a prospective leader identify background, key strengths, development needs, and possible successors for the role. For example, see the sample pro�ile of Eleanor Rigby in Figure 5.4. In a large organization, the CEO brings the pro�iles of senior leaders to the company's board of directors, which, by statute, are responsible for ensuring a CEO succession plan is in place. (See Considering the Board of Directors for a closer look at the relationships of executives with a company's board of directors.) They will engage in thorough discussion. At the conclusion of the meeting, the CEO and the board will generally come to agreement about the assessment, development needs, and future of all senior-level candidates. The CEO is then responsible for meeting with each direct report to discuss the outcomes of the process and next steps. The same process is followed in small organizations and is especially important in family-run businesses when the founder is approaching retirement age and hopes to keep the business intact rather than selling it.

Figure 5.4: Sample pro�ile: Eleanor Rigby

Eleanor Rigby's pro�ile contains a photo and a brief synopsis of the executive's background, followed by an overall assessment on a nine-box grid, typically used for these evaluations. In essence, the grid positions each candidate based on the combined assessment of performance and potential criteria, and an overall judgment is made. Candidates placed in the upper right-hand box are seen as having the highest levels of performance and potential to succeed. This candidate, Eleanor Rigby, demonstrates high levels of performance but shows some need to further develop her potential.

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When meeting with the board, the CEO will also generally brief the board on the next level of leadership below the CEO's own direct reports, as well as the level below that. This gives the board a sense of the overall leadership pipeline and insight into the need for possible programmatic action for the development of leaders at the lower levels. The same process can occur at any level of an organization, with the focus on the business unit head or manager of any department. This sets the stage for future leadership throughout the organization.

One factor to keep in mind when identifying the leadership characteristics or criteria for selecting high potentials is the organization's strategy and direction. For example, Fernandez-Araz, Groysberg, and Nohria (2011) stated that if the organization is looking to grow in global markets, then criteria that indicate the candidate's capacity to be �lexible and adaptable in unfamiliar situations should be included. If the goal is to be the industry low-cost leader, then criteria should include being highly disciplined and results oriented.

Considering the Board of Directors

The senior leadership of almost any company—particularly a large, publicly traded company—will likely need to work closely with a board of directors. A board of directors is a group of individuals elected or appointed to oversee the company and its activities and represent the interests of management and shareholders. Board members are usually highly talented and experienced business, government, or academic leaders.

The CEO is the primary interface with the board and is held directly accountable by the board for overall organization results. Other senior leaders will likely interact with board committees—subsets of the board—based on the areas of expertise. For example, a chief human resource of�icer (CHRO) might interact with a "compensation committee," which may provide oversight for succession planning, leadership development, HR compliance, diversity, bene�its, employee engagement, and compensation.

Fundamentally, the relationship between the board and the CEO is about performance management. The chairman of the board, if not the entire board, takes on the role of "supervisor," helping to ensure that the CEO leads the organization to success (Mone, 2009). In light of corporate scandals at Enron and WorldCom near the turn of the century, boards today are keenly focused on corporate governance and are more proactive. They even need to be wary of possible large-scale public scrutiny of their decisions. Hewlett-Packard, for example, has such a board, which has been criticized for its poor handling of CEO succession (Bloomberg Businessweek, 2011).

When it comes to what the CEO can expect of the board, in general, Brountas (2004) suggested that the CEO and the board members should relate to each other as equals. This requires that they trust and respect each other. Collegiality and cooperation are essential to making this an effective relationship. In addition, the CEO can expect board members to

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It is the job of the board of directors to oversee the company's activities and image, and to represent the company's interests.

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Leaders need to take steps to build leadership capacity in their organizations.

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help in creating an environment that allows for productive disagreement; learn about and understand the company, its industry, and its competitors; be actively involved and engaged in all board and committee meetings; assist in preparing the agenda for meetings, to make them as relevant as possible; and provide frank and constructive feedback, as well as encouragement and praise, when required.

What can boards expect of the CEO? Charan (1998) stated that CEOs must help their boards to understand and focus on the issues that are critical to the business. As a result, boards can expect their CEOs to

provide an understanding of corporate strategy and updates on trends in the marketplace that can affect the success of that strategy; provide opportunities to meet with senior management to not only hear from them on speci�ic issues within their functional areas, but also assess and evaluate future talent; and be open and receptive to board member questions and feedback.

CEOs can either use their boards as a resource to help drive corporate success or attempt to minimize the board's involvement in the overall business. The competent CEO will make the former choice.

Leadership Development Practices

Leading organizations, large or small, at any organization level requires developing employees' capability to do better today and be prepared for the future. Leaders need to assess managers' leadership potential and what these managers need to do to prepare for the future. Some leadership positions will be �illed from outside the organization, bringing in fresh ideas and new ways of leading to �it the changing needs of the business. Yet the strength of the organization lies in having experienced individuals who know the organization well and are outstanding performers. Giving these individuals opportunities for advancement will increase their engagement in their work and commitment to the organization and build the leadership capacity the organization needs for the future. Here are some steps we recommend to make this happen:

1. Conduct a future job analysis. Interview top leaders about their view of the industry's and organization's future and what they think this means for dimensions of performance that should be developed and measured. For instance, if the organization is expanding its business internationally, leaders may need to hire people who are more diverse or have global experience. Leaders can then be measured on the extent to which they have broadened the diversity of their units.

2. Determine a strategy for development that �its the organization. There might be multiple strategies. For example, one strategy might be to develop and promote general managers—those who know all departments of the organization well—while another may be to develop leaders within areas of functional expertise, such as for advancement to higher levels of responsibility in the marketing department.

3. Identify new dimensions of performance that are important at different levels of management. These will inform managers that what they are doing today in their current positions may not be what is needed for tomorrow at higher levels of the organization.

4. Rate managers on current performance and potential to advance. The two types of ratings are not necessarily the same. People may be performing well, but this does not necessarily mean they have the competencies needed to lead in a more responsible position, especially if the organization is changing direction and doing things differently. Use the ratings of potential to identify managers with potential for advancement—those who are ready for promotion now and those who need further development before they are promoted. If managers do not have an opportunity in their current jobs to demonstrate their ability to perform on job dimensions required at higher levels, consider the use of assessment centers (described in Chapter 2).

5. Formulate succession plans and review and revise them at least annually. Take action based on those plans.

We also highly recommend establishing a development program for high-potential managers. The following is a list of primary or key initiatives (drawn from such authors as Conger & Benjamin, 1999; Hatch, 2009; and Weir, 2010) that organizations use to help leaders further develop their performance and potential. Some of these were introduced in earlier chapters:

360-degree feedback assessments provide feedback from multiple sources that leaders can then use to further their development. These assessments are especially effective when they are aligned with the business's strategy and incorporate organization-speci�ic leadership criteria. Action learning involves leaders solving real business problems within a group learning experience. Mentoring is a personalized approach to learning, in which leadership candidates develop relationships with and learn from the expertise and experience of leaders who have already demonstrated the "right stuff." Executive coaching involves one-on-one coaching with an external consultant. Executive coaching is valued for its �lexibility to meet the varying needs of executives in a safe and con�idential manner and provides an excellent approach for facilitating personal behavior change. Psychological and cognitive assessments, typically offered by external consultants, can provide a detailed understanding of the personality styles, behaviors, competencies, or intellectual capacity necessary for successful leadership, helping to chart out a development plan for future growth.

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Job assignments and special projects provide a rich learning experience from which an individual's leadership capacity can be further developed and evaluated. Internal leadership development programs teach leaders best practices that work within the organization and within the larger realm of leadership. They can also offer better practical applications and learning transfer to solve the problems at hand. These programs are largely classroom based, of varying length, and about varying topics. External executive education programs are typically targeted to senior- and middle-level leaders and offer an opportunity to interact with peers from around the world and from different industries, as well as potentially world-class faculty. This provides great opportunities for challenging and expanding one's perspectives and beliefs. These programs are also largely classroom based.

The senior leadership of the organization, in concert with the head of human resources, will ultimately have to decide on where to invest their leadership development dollars—which levels of leadership—and which programs best meet their leadership development needs. Leadership development efforts should also account for the more global nature of today's world and business. Any and all development for high potential and senior leaders should be adapted to re�lect the cultures in which those leaders will be asked to lead (Weir, 2010). When leaders ponder these questions, they are taking into consideration one of the three broad areas of leadership focus, human resources, as well as a thorough understanding of the strategic direction of the business.

Measuring the Gap in Succession Planning

The simplest way to measure the gap in succession planning is to determine if there is a viable succession planning process in place and the extent to which there are candidates who are ready or near ready to assume the company's most critical positions, including those at the C-level and below. The greater the number of these candidates per position, the better. Ideally, a minimum of two to three candidates should be identi�ied for each of these positions. If this is the case, the outcome of the succession planning process can be considered successful. Of course, the practical and realistic measure of the process is based on the eventual success of the succession candidates. If they take on more senior roles and successfully perform in them, then the process was clearly effective at identifying and selecting future talent.

When it comes to leadership development, it is best to �ind a systematic approach consistent with the company's overall objectives and goals, with various efforts targeted for different levels of leadership. In addition, each leadership development experience, such as 360-degree feedback or leadership training, can be evaluated based on the extent to which the experiences are viewed as effective by both senior leadership and the participants.

Leadership in Review

Re�lect on your learning by answering the following questions:

1. What does succession planning mean? 2. What are the major approaches to leadership development?

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Leaders today must be prepared to manage people from �ive separate generations.

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5.7 Challenges Facing Leaders of Organizations Today

Leaders are constantly facing new challenges arising from a changing world. Two signi�icant challenges that today's leaders face are leading a multigenerational workforce and leading during times of adversity.

The Challenge of Leading Five Generations

Longer life expectancies—and perhaps �inancial setbacks from the recent downturn—mean that many people will be working well into old age. Managers and leaders must face the possibility that they will need to lead as many as �ive generations, each of which has its own perspective, life stage, preferences, priorities, and, perhaps, prejudices against one another.

Fox (2011) described the �ive generations as follows:

Traditionalists (born 1925–1945) Baby Boomers (born 1946–1964) Generation X (born 1965–1980) Millennials (born 1981–1995) Digital Natives (born after 1995)

Traditionalists (born 1925–1945) remember the sacri�ices they made during the Great Depression and World War II. Their values shaped the culture of many existing organizations—a culture of commitment to work and loyalty to the company in return for job security and excellent bene�its. Traditionalists may feel the need to stay in the workforce longer than they would ordinarily, given the recent economic downturn, and they may feel disrespected by the younger generations who want them out of the way.

Baby Boomers (born 1946–1964) were called the "me" generation. Unlike traditionalists, who may have been more likely to postpone grati�ication, Baby Boomers focused more on self-realization and self-ful�illment and were known for promoting individual rights and equality in the workforce. Like traditionalists, Baby Boomers generally prefer face-to-face meetings or phone calls when it comes to building relationships.

Generation X (born 1965–1980) is characterized by latchkey kids—both of a Gen Xer's parents tended to be in the workforce. Gen Xers learned early in their lives to be self-reliant; they gained transferable skills that positioned them quite well in the face of eventual corporate downsizing. However, Gen Xers may fear that younger generations will be promoted over them as the Baby Boomers �inally retire.

Millennials (born 1981–1995), also known as Generation Y, were raised by so-called "helicopter parents," who are known for being overprotective and excessively interested in their children's education and activities. Millennials were encouraged to be well rounded and rewarded for everything they did—they were considered "all above average," to borrow public radio show host Garrison Keillor's description of the children in the �ictional town Lake Woebegon. They are naturally optimistic, but many are unemployed and late bloomers, discovering that the world is tougher than they thought. Still, many Millennials do not expect to stay with the same company for their entire careers. They are well aware of the golden handshakes and layoffs that their parents suffered, along with unfunded pensions, forced early retirements, and long periods of unemployment in mid and late careers. Millennials recognize that they will probably not retire early. Moreover, they recognize that their career progress is up to them, as is their perception of career progress, and they take responsibility for their own development and career path. They want challenging jobs that allow them to become more competent and competitive in the labor market and provide for the satisfying, well-balanced life that their parents hoped they would achieve—and in some cases, provided for them during their early adulthood.

The clash between generations largely seems to be between Millennials and the older generations. Perhaps this is always the case, with younger and older generations feeling there is a gap in communication and willingness to understand each other's perspectives. Although both Gen Xers and Millennials prefer emails, Millennials de�ine themselves in terms of technology. Millennials strive to integrate their nonwork lives with their work lives, multitasking and giving as much attention to leisure and family as to work. Millennials are not used to following rules unless they are of their own making. They want to control their time and especially how and where they work. Technology enables this �lexibility. However, Gen Xers may believe that Millennials are arrogant and sel�ish and feel entitled without having a strong work ethic. Baby Boomers may believe that Millennials disregard corporate norms and the value of "paying your dues." In contrast, Millennials may believe that Baby Boomers are rigid, tied to corporate rules, and intolerant of differences or change. Gen Xers and Baby Boomers need to recognize that these new forms of work do not mean less engagement or productivity.

Millennials also expect constant feedback and coaching. Gen Xers see this as neediness, and Millennials may believe that Gen X managers are bitter and abrasive and not interested in them. Gen X managers should be trained in how to give constructive feedback, coaching, and mentoring. Although it often seems incumbent on the older generation to change, workers in the younger generation can bene�it from understanding the perspectives of their older coworkers and supervisors. Workshops with opportunities for Millennials and Gen Xers to discuss these differences might help them work together more productively. Millennials who are put in the position of leading older employees would likely be more successful if they recognized that Gen Xers might not have a natural interest in the Millennials' well-being, and they may need to ask Gen X subordinates to give them upward feedback and demonstrate that they are responsive to the Gen Xers by using the feedback.

Digital Natives (born after 1995), also known as Generation Z or the Next Generation, are beginning to enter the workforce. Instead of email, they are more likely to predominantly use instant messaging, Twitter, Facebook, and other apps and social media platforms. They may be especially responsive to other Digital Natives as trends sweep across social media. Digital Natives are likely to have a major advantage over Gen Xers and Baby Boomers and even Millennials in this regard. Digital Natives will be able to use social media more effectively to communicate within the organization and especially to fellow Digital Native customers and others outside the organization. For instance, Digital Natives will be able to formulate marketing strategies and mobile-based technologies that Millennials, accustomed to websites, may not understand or consider.

Although these are broad, sweeping statements, these generational differences have implications for leadership. Understanding the differences and interactions between generations will help the organization hire and develop the employees it needs for today and the future. Indeed, this mutual understanding between generations will help promote harmony in the workplace, with clearer communication and open discussion about what, why, and how decisions are made, especially when these decisions affect the lives of people—for instance, the ease of taking time off for family responsibilities or using technology for meetings (and saving the organization money, by the way) rather than requiring employees to travel frequently. A Baby Boomer leader of a large high-tech company, or the Gen X entrepreneur, needs the Millennial generation when faced with rapidly changing technology and a highly competitive, economically challenging, global world. The Millennials will mature, certainly, but they will do so with a new set of interpersonal skills. The Digital Natives, now entering the workforce, making discoveries, and inventing new uses for emerging technologies, will not only shape the organization of the future but are vital to creating it. The changes ahead are likely to be less in the form of incremental adaptation and more like frame-breaking transformation. Leaders from all generations need to think about what this means for them as they formulate organizational goals and strategies. Leaders who recognize these workforce differences will have an edge over those who do not.

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John Swainson speaks at a conference in 2006. Swainson was charged with restoring customers' con�idence and trust at CA Technologies.

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The BP oil spill is an example of an intractable crisis. Can you think of any other examples?

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The Challenge of Leading in Times of Adversity

What can create the conditions that lead to times of adversity? Consider some of these potential major changes, crises, and leadership challenges:

A major bank is faced with economic dif�iculties and must cut back costs drastically, laying off at least 10% of its employees. A major retailer is purchased by an upstart online retail company that specializes in offering discounts. The long-time head of a major organization has a heart attack and must resign, leaving the organization without a clear successor, and the board of directors brings in someone new from another industry as an interim replacement. A toxic chemical spill in a manufacturing facility severely injures 10 workers, causes the plant to shut down for 3 months, furloughs 252 workers, and causes an environmental furor. Sales revenues decline by 40%. A nonpro�it agency that provides medical assistance to disabled senior citizens is dangerously low in funds and may have to shut its doors. A software company is found to have engaged in fraud (see Case Study: The New CEO's Challenge). A major national retailer suffers a data breach/hacking and the loss of customer personal information, and the company initially chooses not to inform customers of whose identify information was stolen.

These are just a few examples of dilemmas and disasters that can arise in an organization for a variety of reasons. Sometimes the adversity is of the organization's own making. More often, it is a function of nature, the economy, or other factors beyond the organization's control. Gundel (2005) described four different types of crises:

Conventional crises are predictable—for example, the failing of a company's IT system. There are known ways to in�luence them. Unexpected crises are unpredictable ("black swan" events, to borrow the term used by Nassim Taleb [2010]), making them harder to prevent— for example, a forest �ire raging out of control. However, there are still known ways to in�luence them. Intractable crises are predictable, but the ability to in�luence their occurrence or outcome is extremely limited. For example, consider a volcanic eruption (sometimes with forewarning) or a hurricane. Cities can know that these events occur and be prepared but often are not. Fundamental crises are unpredictable and impossible to in�luence; therefore, leaders who face these crises can never truly be prepared or have enough capability or resources to respond. For example, consider a terrorist attack, such as those in Paris in 2015 and in Nice and Istanbul in 2016.

Corporate crises are hardly new, but their continued reoccurrence suggests that crisis leadership remains an important competency for today's leaders (James & Wooten, 2010). As Collins and Hansen (2011) stated in their book Great by Choice, "Instability in the world is chronic, uncertainty is permanent, change is accelerating, disruption is common, and we can neither predict nor govern events" (p. 193). For the remainder of this section, we consider what behaviors and attitudes an effective leader should embody in the face of adversity, in particular, motivating with inspirational leadership, remaining disciplined and vigilant, and having a positive attitude. In Case Study: The New CEO's Challenge, consider the case of how executive fraud occurred and was managed by leaders at Computer Associates (now called CA Technologies).

Case Study: The New CEO's Challenge

In 2004, software company Computer Associates (CA) admitted to $2.2 billion in fraud based on the backdating of hundreds of sales contracts and altering other related documents. In essence, the company had kept its books open at the end of each quarter—maintaining a so-called 35-day month—so it could include revenue from the following quarter to meet revenue goals and thereby sustain its stock price. The CEO, Sanjay Kumar, and other involved senior leaders (including the head of sales, the general counsel, and a senior �inance executive) resigned and, in some cases, were later incarcerated. To try to repair the damage at the company, the CA board of directors looked for someone who knew software and was considered credible, smart, and honest. The board installed John Swainson, who had spent more than 25 years at IBM.

Swainson began personally meeting with customers to repair relationships and rebuild con�idence and trust in CA. According to an article in Fortune (Varchaver, 2006), the company founder, Charles Wang, and then-CEO Kumar had created a "sharp-elbowed, sales-obsessed culture" (para. 13) rather than a service-oriented culture, thereby alienating its customers. CA's infrastructure software was so dif�icult and expensive to remove that many companies did not bother, causing CA's senior management to arrogantly think there was no need for change. When the company acquired new products, leadership simply eliminated most newly acquired staff and rebranded the products under the CA logo without updating or investing in them. As long as money was �lowing in, CA leaders did not see the need to help customers who were dissatis�ied or plagued with obsolete products. Such greed was also apparent when Wang, Kumar, and Artzt,

another cofounder, chose to split a $1.1 billion stock award, even though the �igure exceeded the company's annual pro�its that year ($250 million was later returned in the face of angry and contentious shareholders).

In addition to working with customers, new CEO Swainson changed the company's name to CA Technologies to disassociate the company from the name Computer Associates, but he also realized that CA needed a cultural transformation, which would take 3 to 5 years. As a result, he launched a number of initiatives, including the following:

Creating a new set of core values, with a strong customer focus and backed by senior leadership commitment Instituting mandatory ethics training for all employees Reorganizing the sales organization to provide customers with designated sales representatives

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Making strategic acquisitions with a strong commitment to keep the staff and provide continued product improvement and support Creating an organization hierarchy empowered with decision-making ability Installing a companywide enterprise software management system to improve the transparency and ef�iciency of business operations, particularly in the troubled sales and �inancial areas Hiring trusted senior executives who could help lead the transformation

Along the way, however, Swainson ran into several setbacks. First, the company had to restate a number of earnings as problems from the Kumar regime were unearthed. Second, appointed executives bungled the implementation of a new sales commissions plan, resulting in an unplanned cost of $75 million. Third, there was general resistance to the culture change, as many long-time employees and senior executives were comfortable with the old way of doing things. Fourth, faced with earnings dif�iculties, the company conducted layoffs and cut a number of employee perks, including a one-time elimination of a discretionary 401(k) contribution, while Swainson himself still appeared to be enjoying perks, such as helicopter rides from his home in Connecticut to the company's Long Island headquarters of�ice.

Swainson did steer the company through a stormy 5-year period, doing his best to overcome the problems of the past while meeting the challenges of the future. In 2009, after a number of years of �lat to little growth in earnings, Swainson left CA and was replaced by another former IBM executive, Bill McCracken, who was then CA's board chairman. McCracken was expected to lead the next transformation at CA, moving CA, among other things, into the business of supporting cloud-connected enterprises. Today, CA is a thriving company that has rebuilt its reputation. Although it is still selling business software, CA's ads in media portray this new image to the general public, who may be shareholders or customers of clients.

For more detail on the CA story, read the 2006 Fortune article: http://money.cnn.com/magazines/fortune/fortune_archive/2006/11/27/8394334/index.htm (http://money.cnn.com/magazines/fortune/fortune_archive/2006/11/27/8394334/index.htm) .

Re�lection Questions

Many of the issues in this case were addressed in this chapter, in general, as we discussed the complexity of leading organizations:

The importance of ethical leadership and building a culture of ethics, which Swainson set out to do The need to focus on process ef�iciency and reliability, which Swainson did by implementing an enterprise management software system Being innovative, which Swainson did through making acquisitions, and to do so more in a manner that demonstrates collaborative leadership The importance of succession planning and the role of the CEO and the board in selecting the right CEO for the times Creating the right set of core values and ensuring senior leadership embraces and demonstrates those values in day-to-day actions

1. Are there any other actions you would have recommended to CEO John Swainson to transform CA's culture? 2. How are leaders in the �irm likely to be viewed by employees, shareholders, and other stakeholders? 3. What characteristics do leaders need to rebuild an organization's or department's reputation after a loss of con�idence? Some characteristics may

include being open and honest, being a good listener, and being willing to engage others in making decisions. What else can you think of?

Motivate With Inspirational Leadership Adverse or crisis situations cause members of the organization to face ambiguity, fears about the organization's ability to continue, and doubts and anxiety about the future. Leading organizations through adversity requires a host of talents, including the ability to inspire and give hope to employees, reinstate a feeling of psychological safety, work to recoup losses, and �ind ways to redirect and sustain the organization. Leaders also need a well-reasoned strategic plan, but one that is �lexible and farsighted, and they need to judge when to stick to the plan or alter it (Kotter, 1996; Heifetz, 1994). Employees look to the leader for a strong vision, cues on how to deal with the misfortune and their distress, ways to make sense of the situation and focus on common goals, and encouragement. This requires leaders who have a strong combination of charisma, transformational skills, and a values-based approach. Together, these are elements of inspirational leadership (Wilson & Rice, 2004). Inspirational leaders bring vision, challenge the status quo, and value and appreciate employees' contributions to sustaining the organization.

Collins and Hansen (2011) stated that leaders become attractive and motivate others by a form of ambition. In essence, leaders display an ambition that is focused beyond themselves toward, for example, building a great company or changing the world—a common vision for the future, one that engages the hearts and minds of employees. Within the framework of full range leadership, this behavior can be characterized as idealized in�luence and inspirational motivation. As Wilson and Rice (2004) noted,

When inspirational leadership is practiced effectively, a clan-like culture develops in the organization. The leadership's vision and values are internalized. Followers learn which goals to value and how to achieve these goals by following logical administrative processes. They willingly demonstrate their own capability for leading with inspiration and develop deep and productive relationships with colleagues at all levels. (p. 7)

Remain Disciplined and Vigilant Collins and Hansen's 2011 book Great by Choice is based on a long-term study of companies, most of which were in existence for at least 25 years prior to the 2002 close of their study period. Collins and Hansen stated that leaders need to personally demonstrate and ensure their organizations focus on a triad of core behaviors in extended periods of uncertainty, adversity, and change:

1. Fanatic discipline. Action must be consistent over time with the vision, mission, and goals of the organization. This means setting targets and sticking to them—not underperforming in challenging markets and overperforming when the markets allow for it. Progressive Insurance, for example, consistently targets a combined ratio of 96%—the ratio of losses plus overhead to sales, regardless of environmental factors. This target setting is similar in approach to performance management that starts at the top of the organization and is cascaded through the hierarchy, aligning everyone's efforts toward a common purpose.

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Which of the core behaviors have you utilized in challenging times?

2. Empirical creativity. When the organization is faced with uncertainty, evidence and learning become the focus. Leaders encourage the search for empirical data—from direct observation, practical experimentation, and direct engagement with tangible evidence. One way organizations do this is by taking small steps, steps that are low in risk and distraction to the overall organization. For example, a major retailer opens just one store in a new region and learns what works and what doesn't before opening others, rather than trying to open too many at one time. This is what is characterized as organization learning, and a demonstration of innovativeness. We refer to this approach as shooting bullets before shooting cannonballs.

3. Productive paranoia. Organizations maintain a hypervigilance of the environment, staying attuned to threats and changes, particularly when things are going well. It involves being prepared for the worst possible conditions to happen, by taking action, creating contingency plans, building buffers, and creating large margins of safety. In addition, we recommend building large cash reserves and bounding and managing risk. For example, Southwest Airlines has been known to keep a very conservative balance sheet, which has contributed to its long-term success.

Overall, Collins and Hansen's �indings apply to leadership at all times. The core behaviors of fanatic discipline, empirical creativity, and productive paranoia are not only something to emphasize for success in the more challenging and unstable period of time, but also effective practices for leadership under all market conditions. Would you agree with this statement? Why or why not?

Have a Positive Attitude Appreciative inquiry is the leadership philosophy of searching for the best in people and organizations (Bushe, 1995; Cooperrider, 1995; Cooperrider, Barrett, & Srivastva, 1995). It is recognizing the dynamic, vital quality of an individual or company that needs to be nurtured for continuous growth and development. This is what makes people and organizations effective and constructive, particularly in dif�icult and challenging times. Crises can bring out the worst in people or the best. Appreciative inquiry calls on leaders to look for the best to make the most of an individual's or organization's capacity. In fact, leaders should view crises from a positive perspective, as they help leaders capitalize on the opportunities that arise from adversity and, as a result, overcome signi�icant barriers to success. In this way, leaders help the organization gain a competitive edge, using their own inspirational approach as a model that becomes part of the organization's can-do culture.

To engage in appreciative inquiry, leaders need to discover the positive qualities that can be the heart of positive change. For example, leaders can realize the importance of clear communication, involving others in making decisions that affect them or avoiding any appearance of unethical activity. Once positive qualities are identi�ied, leaders can create a clear, results-oriented vision for the individual's or organization's full potential and higher purpose ("What the world is calling us to become"). Instead of �ighting the crisis or continuously solving problems, appreciative inquiry envisions the possibilities that emerge from the crisis. At the risk of oversimplifying, in the words of the Johnny Mercer song, the point is, "You've got to accentuate the positive / Eliminate the negative" (Mercer, 1944; words by John Mercer, music by Harold Arlen, © 1944 Harwin Music Co.).

This might seem like Pollyannaism, but a positive attitude and perspective can make a difference. People who have a positive perspective improve their performance. They are more productive, creative, and engaged (Anchor, 2012). Leaders who cultivate a positive mindset in themselves and the people who work with them perform better in the face of challenges.

We close this section by offering Weiss's eight laws for crisis leadership (2002, p. 28), laws that you should by now have come to know and appreciate as important to leadership in general. Observe how they sum up what we have discussed so far about leading in times of adversity:

1. Maintain absolute integrity 2. Know your stuff 3. Declare your expectations 4. Show uncommon commitment 5. Expect positive results 6. Take care of your people 7. Put duty before self 8. Get out in front—lead by pulling, not pushing

Leadership for the Future: The Leadership Practices Model

More than ever before, organizations—perhaps more importantly, the leadership in organizations—face unprecedented times: uncertain economic outlooks, global competition, geopolitical events, and other forms of adversity. In this �inal section, our goal is to provide some closing thoughts by presenting a simple yet compelling model to consider. Although the other leadership models in this text should inform your approach to leadership, we see this as a practical model that pulls together many of the key aspects of leadership we have been discussing.

The leadership practices model has roots in both transformational and transactional leadership. It was introduced by Kouzes and Posner (1987; see also Kouzes & Posner, 2016). They suggested �ive speci�ic practices for effective leadership, each with two behavioral commitments:

1. Modeling the way. Leaders commit to setting examples of the behavior they expect of others. In other words, you should "walk the talk" and "practice what you preach," demonstrating the behaviors you expect from others. Modeling the way also refers to being clear about principles that guide your behavior and decisions and recognizing and respecting others' values.

2. Inspiring a shared vision. Leaders commit to envisioning the future and enlisting others. This is about describing your dreams of what could be and expressing con�idence that they can come true. You also need to know others' dreams and, together, create a shared vision to which you all commit.

3. Challenging the process. Leaders commit to searching for opportunities and experimenting and taking risks. You should accept challenges, be open to learning, and try new things. Recognize and create innovative ideas for transforming the status quo.

4. Enabling others to act. Leaders commit to fostering collaboration and strengthening others. This is about promoting cooperation, providing resources for learning, and helping others do a good job.

5. Encouraging the heart. Leaders commit to recognizing individual contributions and strengthening others. You should celebrate others' values and accomplishments and appreciate their commitment and dedication, especially when they go above and beyond expectations. Encourage a team identity, and provide guidance when the going gets tough.

One �inal piece of advice: Consider watching the following short Harvard Business School video titled The Biggest Mistake a Leader Can Make, which features leadership experts discussing behaviors that leaders should avoid. Think about how their advice relates to everything you have learned so far: http://www.youtube.com/watch?v=iiorMUkqqDY&feature=related (http://www.youtube.com/watch?v=iiorMUkqqDY&feature=related) .

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Leadership in Review

Re�lect on your learning by answering the following questions:

1. What are the challenges of the different generations in the workplace today? 2. How do you de�ine inspirational leadership? 3. What are four types of crises? 4. What are the �ive leadership practices recommended by Kouzes and Posner?

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Summary and Resources

Chapter Summary

This chapter examined the challenges of leading organizations, whether departments, business units, or complex organizations. Leaders need to �ine-tune their skills as they balance a host of concerns—including the three dimensions of ef�iciency and process reliability, innovation and adaptation, and human resources and human relations—to meet challenges for today and the future. Today's leaders need to recognize the multiple roles they need to play, determine and guide the culture they want to foster, and envision and prepare for the future. From a strategic perspective, collaborative leadership calls for working across organization boundaries, while adaptive leadership involves learning how to address con�licts in the followers' values or mitigate the gap between the values they hold and the reality they face.

For the role of leading organizations, four leadership competencies were discussed. We described how to lead the overall strategic planning process that results in providing organization purpose and direction. We detailed how to lead organization change, including Kurt Lewin and John Kotter's more recent eight-step approach. One of the hardest things to change in organizations is culture, and in terms of building and changing cultures, the importance of and how to build cultures that embody engagement, innovation, ethics, and a feedback focus was stressed. Senior leadership's role in succession planning and leadership development was also highlighted.

Of course, leaders are always facing new challenges, and two in particular were reviewed: leading a multigenerational workforce and leading in times of crisis and adversity. Finally, we offered key practices to follow to help ensure your future success as you consider your overall leadership style.

As you think about your future and the future of leadership, consider watching the introduction to IBM's forum on the future of leadership: http://www.ibm.com/ibm100/us/en/forum/ (http://www.ibm.com/ibm100/us/en/forum/) . After watching the introduction, consider selecting one or more additional videos on the list to hear more from these thought leaders and think about how the world has changed since the forum took place.

Leadership Exercise

Instructions: In this �inal exercise, you will create the elements of a plan for your own leadership development, considering what you know about yourself, one- to-one leadership, team leadership, and leading organizations.

First, identify a leader you want to study, perhaps someone you can emulate or someone who represents what you do not want to be. Search for published information about this person and determine the major characteristics that contributed to the person's successes or failures. Use concepts discussed throughout this book to assess the individual's self-leadership, one-to-one relationships in the organization, team leadership, and organization leadership. What did you learn from your analysis?

Next, answer the following about yourself:

1. What is your road map for being an effective, balanced, and ethical leader? That is, what actions will you take to apply the principles in this book? 2. In what ways are you or can you balance your leadership style—balancing creating a vision with recognizing and incorporating followers' vested

interests, balancing taking control with empowering followers, and balancing your bias for action with time for re�lection and �inding ways to improve? 3. How can you be a �lexible, collaborative leader for one-to-one leadership, team leadership, and organization leadership? 4. What are your leadership strengths and weaknesses, what leadership skills do you want to develop, and what actions are you going to take to develop

those skills?

Web Resources

See this Harvard Business Review article on traits of innovative leaders: https://hbr.org/2014/12/research-10-traits-of-innovative-leaders (https://hbr.org/2014/12/research-10-traits-of-innovative-leaders) Forbes provides a good overview of strategic leadership (http://www.forbes.com/2010/10/27/three-strengths-strategy-leadership-managing- ccl.html (http://www.forbes.com/2010/10/27/three-strengths-strategy-leadership-managing-ccl.html) ) and tips for collaborative leadership(http://www.forbes.com/sites/carolkinseygoman/2014/02/13/8-tips-for-collaborative-leadership/#5dd5372c4526 (http://www.forbes.com/sites/carolkinseygoman/2014/02/13/8-tips-for-collaborative-leadership/#5dd5372c4526) ) Acumen is a global learning community for social change makers. The organization offers a course on adaptive leadership as well as other leadership skills courses: http://plusacumen.org/courses/adaptive-leadership/ (http://plusacumen.org/courses/adaptive-leadership/) For a more detailed description of change leaders, see Harvard professor and in�luential leadership scholar Rosabeth Moss Kanter's TED Talk about making a difference in the world and success factors that are the keys to positive change, including lining up partnerships, managing the miserable middles of change, and sharing success with others: https://www.youtube.com/watch?v=owU5aTNPJbs&spfreload=5 (https://www.youtube.com/watch?v=owU5aTNPJbs&spfreload=5) For more details about how to conduct succession planning, see the tool kit offered by Canada's HR Council: http://hrcouncil.ca/hr-toolkit/planning- succession.cfm (http://hrcouncil.ca/hr-toolkit/planning-succession.cfm) The Wall Street Journal offers tips for managing different generations ( http://guides.wsj.com/management/managing-your-people/how-to- manage-different-generations/ (http://guides.wsj.com/management/managing-your-people/how-to-manage-different-generations/) ) and lessons for leading in a crisis (http://guides.wsj.com/management/developing-a-leadership-style/how-to-lead-in-a-crisis/ (http://guides.wsj.com/management/developing-a-leadership-style/how-to-lead-in-a-crisis/) )

Key Terms to Remember

Click on each key term to see the de�inition.

adaptive leadership (http://content.thuzelearning.com/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London

An approach that engages and empowers followers to own and solve problems collectively, as a community, to tackle problems that are hard to de�ine and have no clear, available solutions.

appreciative inquiry (http://content.thuzelearning.com/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London

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The leadership philosophy of searching for the best in people and organizations.

blue ocean strategy (http://content.thuzelearning.com/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London

In which companies focus on untapped market space (uncharted waters) where they can create demand and opportunity for pro�itable growth.

collaborative leadership (http://content.thuzelearning.com/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London

An approach that emphasizes using leadership skills across functional and organizational boundaries.

core values (http://content.thuzelearning.com/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London

The deeply held beliefs that characterize and de�ine the behaviors necessary to ensure organization success.

cultural intelligence (http://content.thuzelearning.com/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London

The knowledge necessary to interact effectively across cultural situations.

employee engagement (http://content.thuzelearning.com/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London

When employees are considered involved, committed, passionate, and empowered and demonstrate those feelings in the workplace.

inspirational leadership (http://content.thuzelearning.com/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London

An approach that involves engaging employees in the mission of the organization by communicating vision, challenging the status quo, and appreciating employees' contributions to sustaining the organization.

mission (http://content.thuzelearning.com/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London

The fundamental purpose of the organization—what the organization does to accomplish its vision.

planned change (http://content.thuzelearning.com/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London

A deliberate, proactive, conscious decision to change.

refreezing (http://content.thuzelearning.com/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London

Reinforcing the new ways of thinking and acting after an organization change.

succession planning (http://content.thuzelearning.com/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London

Identifying people who are ready now for promotion or who have the potential to advance in the organization after a period of development.

transactional change (http://content.thuzelearning.com/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London

Change that focuses on modifying existing characteristics in an organization.

transformational change (http://content.thuzelearning.com/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London

A radical change in the organization's mission, vision, strategy, culture, or leadership.

unfreezing (http://content.thuzelearning.com/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London

Helping employees to let go of the past in the face of change.

unplanned change (http://content.thuzelearning.com/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London

An organization's response to unanticipated external events.

vision (http://content.thuzelearning.com/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London.2728.16.1/sections/cover/books/London

What the organization wants to create or be at some time in the future.

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An approach that engages and empowers followers to own and solve problems collectively, as a community, to tackle problems that are hard to define and have no clear available solutions

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