Who can answer this post for me? MGMT313 "Leading Change in Uncertain Times"

Leaders do not need to know all the answers. They do need to ask the right questions.

The Work of Leadership

by Ronald A. Heifetz and Donald L. Laurie

To stay alive, Jaek Pritehard had to change his life. Triple bypass surgery and medication could help, the heart surgeon told him, but no tt^chnical fix could release Pritehard from his own respon- sibility for changing the habits of a lifetime. He had to stop smoking, improve his diet, get some exercise, and take time to relax, remembering to breathe more deeply each day. Pritchard's doctor could provide sustaining technical expertise and take supportive action, but orily^Pritchard could ^3apt bis ingrained habits to improve his]ong-term health. The doctor faceci the leadership task of mo- bilizing j h e patient to make critical behavjoral changes; Jack Pritehard faced the adaptive workjsL figuring out which spccihc changes to make and how to inciMpiir;itL' tlicm into his daily life

Companies today face challenges similar to the ones confronting Pritehard and his doctor. Th.ey face adaptive challenges. Changes in societies, markets, customers, competition, and technology around the globe are forcing organizations to clar- ify their values, develop new strategies, and learn new ways of operating. Often the toughest task for leaders in effecting change is mobilizing people throughout the organization to do adaptive work.

Adaptive work is required when our deeply held beliefs are challenged, when the values that made us successful become less relevant, and when legit- imate yet competing perspectives emerge. We see adaptive challenges every day at every level of the workplace-when companies restructure or reengi- neer, develop or implement strategy, or merge busi- nesses. We see adaptive challenges when marketing has difficulty working with operations, when cross- functional teams don't work well, or when senior executives complain, "We don't seem to be able to execute effectively." Adaptive problems are often systemic problems with no ready answers.

Mobilizing an organization to adapt its behaviors in order to thrive in new business environments is critical. Without such change, any company today would falter. Indeed, getting people to do adaptive work is the mark of leadership in a competitive world. Yet for most senior executives, providing leadership and not just authoritative expertise is extremely difficult. Why- We see two reasons. First, in order to make change happen, executives have to break a long-standing behavior pattern of their own: providing leadership in the form of solu- tions. This tendency is quite natural because many executives reach their positions of authority by virtue of their competence in taking responsibility and solving problems. But the locus of responsibili- ty for problem solving when a company faces an adaptive challenge must shift to its people. Solu- tions to adaptive challenges reside not in tbe execu- tive suite but in the collective intelligence of em- ployees at all levels, who need to use one another as resources, often across boundaries, and learn tbeir way to those solutions.

Second, adaptive change is distressing for the people going through it. They need to take on new roles, new relationships, new values, new behav- iors, and new approaches to work. Many employees are ambivalent about the efforts and sacrifices re- quired of them. They often look to the senior exec- utive to take problems off their shoulders. But

Ronald A. Heifetz is the director of the Leadership Edu- cation Project at Harvard University's John F. Kennedy School of Government in Cambridge, Massachusetts. Donald L. Laurie is managing director of Laurie Inter- national Limited, a management consulting firm in Boston, Massachusetts, that focuses on leadership and strategic change. This article is based in part on Heifetz's Leadership Without Easy Answers (Belknap Press of Har- vard University Press, 1994).

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those expectations have to be unlearned. Rather than fulfilling the expectation that they will pro- vide answers, leaders have to ask tough questions. Rather than protecting people from outside threats, leaders should allow them to feel the pinch of real- ity in order to stimulate them to adapt. Instead of orienting people to their current roles, leaders must disorient them so that new relationships can de- velop. Instead of quelling eonfliet, leaders have to draw the issues out. Instead of maintaining norms, leaders have to challenge "the way we do business" and help others distinguish immutable values from historical practices that must go.

Drawing on our experience with managers from around the world, we offer six principles for leading adaptive work; "getting on the balcony," identify- ing the adaptive challenge, regulating distress, maintaining disciplined attention, giving the work back to people, and protecting voices of leadership from below. We illustrate those prineiples with an example of adaptive change at KPMG Netherlands, a professional-services firm.

Get on the Balcony Earvin "Magie" Johnson's greatness in leading

his hasketball team came in part from his ability to play hard while keeping the whole game situation

in mind, as if he stood in a press box or on a balcony above the field of play. Bobby Orr played hockey in the same way. Other players might fail to reeognize the larger patterns of play that performers like Johnson and Orr quickly understand, beeause they are so engaged in the game that they get carried away by it. Their attention is captured by the rapid motion, the physical contact, the roar of the erowd, and the pressure to exeeute. In sports, most players simply may not see who is open for a pass, who is missing a block, or how the offense and defense work together. Players like Johnson and Orr watch these things and allow their observations to guide their aetions.

Business leaders have to be able to view patterns as if they were on a balcony. It does them no good to be swept up in the field of action. Leaders have to see a context for ehange or ereate one. Tbey should give employees a strong sense of the history of the enterprise and what's good about its past, as well as an idea of the market forces at work today and the responsibility people must take in shaping the fu- ture. Leaders must be able to identify struggles over values and power, recognize patterns of work avoid- ance, and watch for the many other functional and dysfunctional reactions to change.

Without the capacity to move back and forth be- tween the field of action and the balcony, to reflect

Business leaders need to get on the balcony if they want to see all the patterns.

DRAWINGS BY MICHAEL KLEIN 125

THE WORK OF LEADERSHIP

day to day, moment to moment, on the many ways in which an organization's habits can sabotage adaptive work, a leader easily and unwittingly be- comes a prisoner of the system. The dynamics of adaptive change are far too complex to keep track of, let alone influence, if leaders stay only on the field of play.

We have encountered several leaders, some of whom we discuss in this article, who manage to spend mueh of their precious time on the baleony as they guide their organizations through change. Without that perspective, they probably would have been unable to mobilize people to do adaptive work. Getting on the balcony is thus a prerequisite for following the next five principles.

Identify the Adaptive Challenge when a leopard threatens a band of chimpanzees,

the leopard rarely succeeds in picking off a stray. Chimps know how to respond to this kind of threat. But when a man with an automatic rifle eomes near, the routine responses fail. Chimps risk ex- tinction in a world of poachers unless they figure out how to disarm the new threat. Similarly, when businesses cannot learn quickly to adapt to new challenges, they are likely to face their own form of extinction.

Consider the well-known case of British Air- ways. Having observed the revolutionary changes in the airline industry during the 1980s, then chief executive Colin Marshall clearly recognized the need to transform an airline nicknamed Bloody Awful by its own passengers into an exemplar of

to adaptive challenges reside not in the executive suite but in the collective intelligence of employees at all levels.

customer service. He also understood that this ambition would require more than anything else changes in values, practices, and relationships throughout the eompany. An organization whose people clung to funetional silos and valued pleasing their bosses more than pleasing customers eould not beeome The World's Favourite Airline. Mar- shall needed an organization dedicated to serving people, acting on trust, respecting the individual, and making teamwork happen across boundaries.

Values had to change throughout British Airways. People had to learn to collaborate and to develop a collective sense of responsibility for the direction and performanee of the airline. Marshall identified the essential adaptive challenge: creating trust throughout the organization. He is one of the first executives we have known to make "creating trust" apriority.

To lead British Airways, Marshall had to get his executive team to understand the nature of the threat created by dissatisfied customers: Did it rep- resent a technical challenge or an adaptive chal- lenge? Would expert adviee and technical adjust- ments within basic routines suffice, or would people throughout the company have to learn new ways of doing business, develop new competeneies, and begin to work collectively?

Marshall and his team set out to diagnose in more detail the organization's challenges. They looked in three places. First, they listened to the ideas and concerns of people inside and outside the organization - meeting with crews on flights, showing up in the 350-person reservation center in New York, wandering around the baggage-handling area in Tokyo, or visiting the passenger lounge in whatever airport they happened to be in. Their pri- mary questions were. Whose values, beliefs, atti- tudes, or behaviors would have to change in order for progress to take place? What shifts in priorities, resources, and power were neeessary? What sacri- fiees would have to he made and by whom?

Seeond, Marshall and his team saw conflicts as clues-symptoms of adaptive challenges. The way conflicts across functions were being expressed

were mere surface phenomena: the underlying confliets had to be diag- nosed. Disputes over seemingly technical issues such as procedures, schedules, and lines of authority were in faet proxies for underlying eonflicts about values and norms.

Third, Marshall and his team held a mirror up to themselves, reeogniz- ing that they emhodied the adaptive challenges facing the organization.

Early in the transformation of British Airways, competing values and norms were played out on the exeeutive team in dysfunctional ways that im- paired the capacity of the rest of the company to eollaborate across functions and units and make the necessary trade-offs. No executive ean hide from the fact that his or her team refleets the best and the worst of the company's values and norms, and therefore provides a ease in point for insight into the nature of the adaptive work ahead.

126 HARVARD BUSINESS REVIEW January-February 1997

with a highly fragmented organization, defining new measures of performance and compensation, and developing sophistieated information systems. During that time, employees at all levels learned to identify what and how they needed to change.

Thus a leader must sequence and pace the work. Too often, senior managers convey that everything is important. They start new initiatives without stopping other activities or they start too many ini- tiatives at the same time. They overwhelm and dis- orient the very people who need to take responsibil- ity for the work.

Second, a leader is responsihle for direction, pro- tection, orientation, managing conflict, and shap- ing norms. (See tbe table "Adaptive Work Calls for Leadership.") Fulfilling these responsibilities is also important for a manager in technical or routine situations. But a leader engaged in adaptive work uses his authority to fulfill them differently. A leader provides direction by identifying the organi- zation's adaptive challenge and framing the key questions and issues. A leader protects people by managing the rate of change. A leader orients peo- ple to new roles and responsibilities by elarifying business realities and key values. A leader helps ex- pose conflict, viewing it as the engine of creativity

Thus, identifying its adaptive challenge was cru- cial in British Airways' bid to become The World's Favourite Airline. For the strategy to succeed, the company's leaders needed to understand them- selves, their people, and the potential sources of conflict. Marshall recognized that strategy develop- ment itself requires adaptive work.

Regulate Distress

Adaptive work generates distress. Before putting people to work on challenges for which there are no ready solutions, a leader must realize that people can learn only so much so fast. At the same time, they must feel the need to change as reality brings new challenges. They cannot learn new ways when they are overwhelmed, but eliminating stress alto- gether removes the impetus for doing adaptive work. Because a leader must strike a delicate bal- ance between having people feel the need to change and having them feel overwhelmed by change, lead- ership is a razor's edge.

A leader must attend to three fundamental tasks in order to help maintain a productive level of ten- sion. Adhering to these tasks will allow him or her to motivate people without disabling them.

First, a leader must create what can be called a holding environ- ment. To use the analogy of a pressure cooker, a leader needs to regulate the pressure by turn- ing up the heat while also allow- ing some steam to escape. If the pressure exceeds the cooker's ca- pacity, the cooker can blow up. However, nothing cooks without some heat.

In the early stages of corporate change, the holding environment can be a temporary "place" in which a leader creates the condi- tions for diverse groups to talk to one another about the challenges facing them, to frame and debate issues, and to clarify the assump- tions behind competing perspec- tives and values. Over time, more issues can he phased in as they be- come ripe. At British Airways, for example, the shift from an inter- nal focus to a customer focus took place over four or five years

' and dealt with important issues in succession: building a credible executive team, communicating Leaders must turn up the heat while also allowing some steam to escape.

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Adaptive Work Calls for Leadership Responsibilities Situation

Direction

Protection

Orientation

Managing Conflict

Shoping Norms

Terlinical o[ Routine

Define problems and provide solutions

Shield tfie organization from external threats

Clarify roles and responsibilities

Restore order

Maintain norms

Adaofive

Identify the adaptive challenge and frame key questions and issues

Let the organization feel external pressures within a range it can stand

Challenge current roles and resist pressure to define new roles quickly

Expose conflict or let it emerge

Challenge unproductive norms

and learning. Finally, a leader helps the organiza- tion maintain those norms that must endure and challenge those that need to ehange.

Third, a leader must have presence and poise; regulating distress is perhaps a leader's most diffi- cult job. The pressures to restore equilibrium are enormous. Just as molecules bang hard against the walls of a pressure eooker, people bang up against leaders who are trying to sustain the pressures of tough, conflict-filled work. Although leadership de- mands a deep understanding of the pain of ehange- the fears and sacrifices associated with major re- adjustment - it also requires the ability to hold steady and maintain the tension. Otherwise, the pressure escapes and the stimulus for learning and change is lost.

A leader has to have the emotional capacity to tolerate uncertainty, frustration, and pain. He has to be able to raise tough questions without getting too anxious himself. Employees as well as col- leagues and eustomers will carefully observe verbal and nonverbal eues to a leader's ability to hold steady. He needs to eommunicate confidence that he and they ean tackle the tasks ahead.

Maintain Disciplined Attentian Different people within the same organization

bring different experiences, assumptions, values, beliefs, and habits to their work. This diversity is valuable beeause innovation and learning are the products of differences. No one learns anything without being open to contrasting points of view.

Yet managers at all levels are often unwilling-or unable-to ad- dress their competing perspee- tives coUeetively. They frequent- ly avoid paying attention to issues that disturb them. They restore equilibrium quiekly, often with work avoidance maneuvers. A leader must get employees to confront tough trade-offs in val- ues, procedures, operating styles, and power.

That is as true at the top of the organization as it is in the mid- dle or on the front line. Indeed, if the executive team eannot model adaptive work, the organization will languish. If senior managers can't draw out and deal with divi- sive issues, how will people else- where in the organization change their behaviors and rework tbeir

relationships? As Jan Carlzon, the legendary CEO of Scandinavian Airlines System (SAS), told us, "One of the most interesting missions of leadership is getting people on the exeeutive team to listen to and learn from one another. Held in debate, people can learn their way to collective solutions when they understand one another's assumptions. The work of the leader is to get eonfliet out into the open and use it as a souree of creativity."

Beeause work avoidance is rampant in organiza- tions, a leader has to eounteraet distractions that prevent people from dealing with adaptive issues. Scapegoating, denial, foeusing only on today's tech- nical issues, or attacking individuals rather than the perspeetives they represent - all forms of work avoidance-are to be expected when an organization undertakes adaptive work. Distraetions bave to be identified when they occur so that people will re- gain foeus.

When sterile conflict takes the place of dialogue, a leader has to step in and put the team to work on reframing the issues. She has to deepen the debate with questions, unbundling the issues into their parts rather than letting eonfliet remain polarized and superfieial. When people preoeeupy them- selves with blaming external forces, higher man- agement, or a heavy workload, a leader has to sharp- en the team's sense of responsibility for carving out the time to press forward. When tbe team frag- ments and individuals resort to protecting their own turf, leaders have to demonstrate the need for collaboration. People have to discover the value of consulting with one another and using one another

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as resources in the problem-solving process. For example, one CEO we know uses executive meet- ings, even those that focus on operational and teeh- nical issues, as opportunities to teach the team how to work collectively on adaptive problems.

Of course, only the rare manager intends to avoid adaptive work. In general, people feel ambivalent about it. Although they want to make progress on hard problems or live up to their renewed and clari- fied values, people also want to avoid the associated distress. Just as millions of U.S. citizens want to re- duce the federal budget deficit, but not by giving up their tax dollars or benefits or jobs, so, too, man- agers may consider adaptive work a priority but have diffieulty sacrifieing their familiar ways of do- ing business.

People need leadership to help them maintain their foeus on the tough questions. Diseiplined at- tention is the currency of leadership.

Give the Work Back to People

Everyone in the organization has special access to information that comes from bis or her particu- lar vantage point. Everyone may see different needs and opportunities. People who sense early changes in the marketplace are often at the periphery, but the organization will thrive if it can bring that in- formation to bear on tactical and strategic deci- sions. When people do not aet on their special knowledge, businesses fail to adapt.

All too often, people look up the chain of com- mand, expecting senior management to meet mar- ket challenges for which they themselves are re- sponsible. Indeed, the greater and more persistent distresses that accompany adaptive work make sueh dependence worse. People tend to become pas- sive, and senior managers who pride themselves on being problem solvers take decisive action. That behavior restores equilibrium in the short term but ultimately leads to eomplaceney and habits of work avoidance that shield people from responsibility, pain, and the need to ehange.

Getting people to assume greater responsibility is not easy. Not only are many lower-level employees eomfortable being told what to do, hut many man- agers are aeeustomed to treating subordinates like maehinery requiring control. Letting people take the initiative in defining and solving problems means that management needs to learn to support rather than eontrol. Workers, for their part, need to learn to take responsibility.

fan Carlzon encouraged responsibility taking at SAS by trusting others and decentralizing author- ity. A leader has to let people bear the weight of

HARVARD BUSINESS REVIEW )anuary-February 1997

responsibility. "The key is to let them diseover the problem," he said. "You won't be successful if peo- ple aren't carrying the recognition of the problem and the solution within themselves." To that end, Carlzon sought widespread engagement.

For example, in bis first two years at SAS, Carl- zon spent up to 50% of his time eommunieating directly in large meetings and indireetly in a host of innovative ways: through workshops, brain- storming sessions, learning exercises, newsletters, broehures, and exposure in the publie media. He demonstrated through a variety of symbolic a c t s - for example, by eliminating the pretentious execu- tive dining room and burning thousands of pages of manuals and handbooks-the extent to whieh rules had come to dominate the company. He made him- self a pervasive presence, meeting with and listen- ing to people both inside and outside the organiza- tion. He even wrote a book. Moments of Truth (Ballinger, 1987), to explain his values, philosophy, and strategy. As Carlzon noted, "If no one else read it, at least my people would."

A leader also must develop collective self-confi- denee. Again, Carlzon said it well: "People aren't born with self-confidence. Even the most self-con- fident people ean be broken. Self-confidenee eomes from sueeess, experience, and the organization's en- vironment. The leader's most important role is to instill confidence in people. They must dare to take risks and responsibility. You must back them up if they make mistakes."

Protect Voices of Leadership from Below |

Giving a voice to all people is the foundation of an organization that is willing to experiment and learn. But, in fact, whistle-blowers, creative de- viants, and other such original voices routinely get smashed and silenced in organizational life. They generate disequilibrium, and the easiest way for an organization to restore equilibrium is to neutralize those voices, sometimes in the name of teamwork and "alignment."

The voices from below are usually not as articu- late as one would wish. People speaking beyond their authority usually feel self-conscious and sometimes have to generate "too much" passion to get themselves geared up for speaking out. Of course, that often makes it harder for them to com- municate effectively. They pick the wrong time and place, and often bypass proper channels of com- munication and lines of authority. But buried in- side a poorly packaged interjection may lie an im- portant intuition that needs to be teased out and

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considered. To toss it out for its bad timing, lack of clarity, or seeming unreasonableness is to lose potentially valuable infor- mation and discourage a poten- tial leader in the organization.

That is wbat bappened to David, a manager in a large manu- facturing company. He had lis- tened when his superiors encour- aged people to look for problems, speak openly, and take responsi- bility. So he raised an issue about one of the CEO's pet projects-an issue that was "too bot to han- dle" and had been swept under the carpet for years. Everyone un- derstood that it was not open to discussion, but David knew that proceeding with the project could damage or derail key elements of the company's overall strategy. He raised the issue directly in a meeting with his boss and the CEO. He provided a clear descrip- tion of the problem, a rundown of competing perspectives, and a summary of the consequences of continuing to pursue the project.

The CEO angrily squelched the discussion and reinforced the positive aspects of his pet project. When David and his boss left the room, his boss exploded: "Who do you think you are, with your holier-than-thou attitude?" He insinuated that David had never liked the CEO's pet project be- cause David hadn't come up with the idea himself. The subject was closed.

David had greater expertise in the area of the project than either his boss or the CEO. But his two superiors showed no curiosity, no effort to investi- gate David's reasoning, no awareness that he was behaving responsibly with the interests of the com- pany at heart. It rapidly became clear to David that it was more important to understand what mat- tered to the boss than to focus on real issues. The CEO and David's boss together squashed the view- point of a leader from below and thereby killed his potential for leadership in the organization. He would either leave the company or never go against the grain again.

Leaders must rely on others within the business to raise questions that may indicate an impending adaptive challenge. They have to provide cover to people who point to the internal contradictions of the enterprise. Those individuals often have the

Managers need to support rather than control, letting othel:s solve problems.

perspective to provoke rethinking that people in authority do not. Thus, as a rule of thumh, when authority figures feel the reflexive urge to glare at or otherwise silence someone, they should resist. The urge to restore social equilibrium is quite powerful, and it comes on fast. One bas to get accustomed to getting on the balcony, delaying the impulse, and asking. What really is this guy talking ahout? Is there something we're missing?

Doing Adaptive Work at KPMG Netherlands

The highly successful KPMG Netherlands pro- vides a good example of how a company can en- gage in adaptive work. In 1994, Ruud Koedijk, the firm's chairman, recognized a strategic challenge. Although the auditing, consulting, and tax-prepa- ration partnership was the industry leader in the Netherlands and was highly profitable, growth op- portunities in the segments it served were limited. Margins in the auditing business were being squeezed as the market became more saturated, and competition in the consulting business was in- creasing as well. Koedijk knew that the firm needed to move into more profitable growth areas, but be

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didn't know what they were or how KPMG might identify them.

Koedijk and his board were confident that they had the tools to do the analytical strategy work: analyze trends and discontinuities, understand core competencies, assess their competitive position, and map potential opportunities. They were con- siderably less eertain that they eould eommit to im- plementing the strategy that would emerge from their work. Historically, the partnership had resist- ed attempts to ehange, basieally because the part- ners were content with the way things were. They had been successful for a long time, so they saw no reason to learn new ways of doing business, either from their fellow partners or from anyone lower down in the organization. Overturning the part- ners' attitude and its deep impact on the organiza- tion's culture posed an enormous adaptive chal- lenge for KPMG.

Koedijk could see from the baleony that the very structure of KPMG inhibited change. In truth, KPMG was less a partnership than a eoUection of small fiefdoms in whieh eaeh partner was a lord. The firm's sueeess was the cumulative accomplish- ment of eaeh of the individual partners, not the uni- fied result of 300 colleagues pulling together to- ward a shared ambition. Suecess was measured solely in terms of the profitability of individual units. As one partner described it, "If the bottom line was correct, you were a 'good fellow.'" As a re- sult, one partner would not trespass on another's turf, and learning from others was a rare event. Be- eause independence was so highly valued, eon- frontations were rare and conflict was eamouflaged. If partners wanted to resist firmwide change, they did not kill the issue di- rectly. "Say yes, do no" was the oper- ative phrase.

Koedijk also knew that this sense of autonomy got in the way of devel- oping new talent at KPMG. Direc- tors rewarded their subordinates for two things: not making mistakes and delivering a high number of billable hours per week. The emphasis was not on creativity or irmovation. Partners were look- ing for errors when they reviewed their subordi- nates' work, not for new understanding or fresh insight. Although Koedijk could see the broad outlines of the adaptive ehallenges facing his orga- nization, he knew that he could not mandate be- havioral change. What he could do was create the conditions for people to discover for themselves how they needed to change. He set a process in mo- tion to make that happen.

HARVARD BUSINESS REVIEW lanuary-February 1997

To Start, Koedijk held a meeting of all 300 part- ners and focused their attention on the history of KPMG, the eurrent business reality, and the busi- ness issues they could expeet to face. He then raised the question of how they would go about changing as a firm and asked for their perspeetives on the is- sues. By launching the strategic initiative through dialogue rather than edict, he built trust within the partner ranks. Based on this emerging trust and his own credibility, Koedijk persuaded the partners to release 100 partners and nonpartners from their day-to-day responsibilities to work on the strategic challenges. They would devote 60% of their time for nearly four months to that work.

Koedijk and his colleagues established a strategic integration team of 12 senior partners to work with the 100 professionals (ealled "the 100") from differ- ent levels and disciplines. Engaging people below the rank of partner in a major strategic initiative was unheard of and signaled a new approach from the start: many of these people's opinions had never before been valued or sought by authority figures in the firm. Divided into 14 task forces, the 100 were to work in three areas: gauging future trends and discontinuities, defining core competencies, and grappling with the adaptive challenges facing the organization. They were housed on a separate floor with their own support staff, and they were unfet- tered by traditional rules and regulations. Hennie Both, KPMG's director of marketing and communi- cations, signed on as project manager.

As the strategy work got under way, the task forces had to confront the existing KPMG culture. Why? Because they literally eould not do their new

Leaders have to provide cover to employees who point to the internal contradictions

of the enterprise. work within the old rules. They could not work when strong respect for the individual eame at the expense of effeetive teamwork, when deeply held individual beliefs got in the way of genuine discus- sion, and when unit loyalties formed a barrier to cross-functional problem solving. Worst of all, task force members found themselves avoiding conflict and unable to discuss those problems. A number of the task forces became dysfunctional and unable to do their strategy work.

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To focus their attention on what needed to change. Both helped the task forces map the culture they desired against the current culture. They dis- covered very little overlap. The top descriptors of the current culture were: develop opposing views, demand perfeetion, and avoid conflict. The top characteristics of the desired culture were: create

The task forces compared the old KPMG to a sluggish hippo and the new one to a dolphin- playful and eager to learn.

the opportunity for self-fulfillment, develop a ear- ing environment, and maintain trusting relations with colleagues. Articulating this gap made tan- gible for the group the adaptive challenge that Koedijk saw facing KPMG. In other words, the peo- ple who needed to do the changing had finally framed the adaptive challenge for themselves: How could KPMC succeed at a competenee-based strategy that depended on eooperation across mul- tiple units and layers if its people couldn't succeed in these task forces* Armed with that understand- ing, the task foree members eould beeome emis- saries to the rest of the firm.

On a more personal level, each memher was asked to identify his or her individual adaptive challenge. What attitudes, behaviors, or habits did eaeh one need to change, and what speeific actions would he or she take? Who else needed to be in- volved for individual change to take root? Acting as coaches and eonsultants, the task force members gave one another supportive feedbaek and sugges- tions. They had learned to confide, to listen, and to advise with genuine care.

Progress on these issues raised the level of trust dramatieally, and task foree members began to un- derstand what adapting their behavior meant in everyday terms. They understood how to identify an adaptive issue and developed a language with whieh to discuss what they needed to do to improve their eoUective ability to solve problems. They talked about dialogue, work avoidanee, and using the colleetive intelligenee of the group. They knew how to "call" one another on dysfunetional behav- ior. They had begun to develop the culture required to implement the new husiness strategy.

Despite the critical breakthroughs toward devel- oping a collective understanding of the adaptive

challenge, regulating the level of distress was a con- stant preoccupation for Koedijk, the board, and Both. The nature of the work was distressing. Strat- egy work means broad assignments with limited instruetions; at KPMG, people were accustomed to highly struetured assignments. Strategy work also means being ereative. At one breakfast meeting, a

board member stood on a table to ehallenge the group to be more cre- ative and toss aside old rules. This radical and unexpected hehavior fur- ther raised the distress level: no one had ever seen a partner behave this way before. People realized that their work experience had prepared them only for performing routine tasks with people "like them" from their own units.

Tbe process allowed for conflict and focused peo- ple's attention on the hot issues in order to help them learn how to work with conflict in a eonstruc- tive manner. But the heat was kept within a tolera- ble range in some of the following ways: • On one occasion when tensions were unusually high, the 100 were brought together to voice their concerns to the board in an Oprah Winfrey-style meeting. The board sat in the center of an auditori- um and took pointed questions from the surround- ing group. a The group devised sanetions to discourage un- wanted behavior. In the soccer-crazy Netherlands, all participants in the proeess were issued the yel- low cards that soccer referees use to indicate "foul" to offending players. They used the cards to stop the action when someone started arguing his or her point without listening to or understanding the as- sumptions and eompeting perspectives of other participants. n The group created symbols. They compared the old KPMG to a hippopotamus that was large and cumbersome, liked to sleep a lot, and became ag- gressive when its normal habits were disturbed. They aspired to be dolphins, which they character- ized as playful, eager to learn, and happily willing to go the extra mile for the team. They even paid attention to the statement that clothes make: it surprised some clients to see managers wandering through the KPMG offices that summer in Ber- muda shorts and T-shirts. D The group made a deliberate point of having fun. "Playtime" could mean long bicycle rides or laser- gun games at a local amusement center. In one spontaneous moment at the KPMG offices, a dis- eussion of the power of people mohilized toward a common goal led the group to go outside and use

132 HARVARD BUSINESS REVIEW January-February 1997

tbeir colleetive leverage to move a seemingly im- movable concrete block. n The group attended frequent two- and three-day off-site meetings to help bring closure to parts of the work.

These actions, taken as a whole, changed atti- tudes and behaviors. Curiosity became more valued than obedience to rules. People no longer deferred to the senior authority figure in the room; genuine dialogue neutralized hierarchical power in the bat- tle over ideas. The tendency for each individual to promote his or her pet solution gave way to under- standing other perspectives. A confidence in the ability of people in different units to work together and work things out emerged. The people with the most curious minds and interesting questions soon became the most respected.

As a result of confronting strategic and adaptive challenges, KPMG as a whole will move from au- diting to assurance, from operations consulting to shaping corporate vision, from business-process reengineering to developing organizational capabil- ities, and from teaching traditional skills to its own clients to creating learning organizations. The task forces identified $50 million to $60 million worth of new business opportunities.

Many senior partners who had believed that a firm dominated by the auditing mentality could not contain creative people were surprised when the process unlocked creativity, passion, imagina- tion, and a willingness to take risks. Two stories il-

Many managers treat adap challenges as if they were technical problems.

lustrate the fundamental changes that took place in the firm's mind-set.

We saw one middle manager develop the confi- dence to create a new business. He spotted the op- portunity to provide KPMG services to virtual orga- nizations and strategic alliances. He traveled the world, visiting the leaders of 65 virtual organiza- tions. The results of his innovative research served as a resource to KPMG in entering this growing market. Moreover, he represented the new KPMG by giving a keynote address discussing his findings at a world forum. We also saw a 28-year-old female auditor skillfully guide a group of older, male senior partners through a complex day of looking at oppor- tunities associated with implementing the firm's

new strategies. That eould not have occurred the year before. The senior partners never would have listened to such a voice from below.

Leadership as Learning

Many efforts to transform organizations through mergers and acquisitions, restructuring, reengi- neering, and strategy work falter because managers fail to grasp the requirements of adaptive work. They make the classic error of treating adaptive challenges like technical problems that can be solved by tough-minded senior executives.

Tbe implications of that error go to the heart of the work of leaders in organizations today. Leaders crafting strategy have access to the technical exper- tise and the tools they need to calculate the benefits of a merger or restructuring, understand future trends and discontinuities, identify opportunities, map existing competencies, and identify the steer- ing mechanisms to support their strategic direc- tion. These tools and techniques are readily avail- able both within organizations and from a variety of consulting firms, and they are very useful. In many cases, however, seemingly good strategies fail to be implemented. And often the failure is misdiag- nosed; "We had a good strategy, but we couldn't execute it effectively."

In fact, the strategy itself is often deficient be- cause too many perspectives were ignored during its formulation. The failure to do the necessary

adaptive work during the strategy development process is a symptom of senior managers' technical orien- tation. Managers frequently derive "their" solution to a problem and then try to "sell" it to some col- leagues and bypass or sandbag others in the commitment-building pro- cess. Too often, leaders, their team,

and consultants fail to identify and tackle the adap- tive dimensions of the challenge and to ask them- selves. Who needs to learn what to develop, under- stand, commit to, and implement the strategy?

The same technical orientation entraps restruc- turing and business-process-reengineering initia- tives, in which consultants and managers have the know-how to do the technical work of framing the objectives, designing a new work flow, document- ing and communicating results, and identifying the activities to be performed by people in the organiza- tion. In many instances, reengineering falls short of the mark because it treats process redesign as a technical problem: managers neglect to identify the adaptive work and involve the people who have to

HARVARD BUSINESS REVIEW January-February 1997 133

THE WORK OF LEADERSHIP

do the changing. Senior executives fail to invest their time and their soul in understanding these issues and guiding people through the transition. In- deed, engineering is itself the wrong metaphor.

In short, the prevailing notion that leadership consists of having a vision and aligning people with that vision is bankrupt because it eontinues to treat adaptive situations as if they were technical: the authority figure is supposed to divine where the eompany is going, and people are supposed to follow. Leadership is reduced to a combination of grand knowing and salesmanship. Such a perspec- tive reveals a basic misconception about the way businesses succeed in addressing adaptive chal- lenges. Adaptive situations are hard to define and resolve precisely beeause they demand the work and responsibility of managers and people through- out the organization. They are not amenable to solutions provided hy leaders; adaptive solutions require members of the organization to take re- sponsibility for the problematic situations that faee them.

Leadership has to take place every day. It eannot be the responsibility of the few, a rare event, or a once-in-a-lifetime opportunity. In our world, in our businesses, we face adaptive ehallenges all the time. When an executive is asked to square con-

flicting aspirations, he and his people faee an adap- tive challenge. When a manager sees a solution to a problem-technical in many respeets except that it requires a ehange in the attitudes and habits of sub- ordinates - she faces an adaptive challenge. When an employee close to the front line sees a gap be- tween the organization's purpose and the objectives he is asked to achieve, he faces both an adaptive challenge and the risks and opportunity of leading from below.

Leadership, as seen in this light, requires a learn- ing strategy. A leader, from above or below, with or without authority, has to engage people in con- fronting the challenge, adjusting their values, ehanging perspeetives, and learning new habits. To an authoritative person who prides himself on his ability to tackle hard problems, this shift may come as a rude awakening. But it also should ease the bur- den of having to know all the answers and bear ail the load. To the person who waits to receive either the coach's call or "the vision" to lead, this change may also seem a mixture of good news and bad news. The adaptive demands of our time require leaders who take responsibility without waiting for revelation or request. One can lead with no more than a question in hand. ^ Reprint 97106 To order reprints, see the last page of this issue.

YOU'RE COSTIMC? A LOT Of

134 CARTOON BY JACK ZIEGLER

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