Leadership and The Culture of Simulation (5)

What are legitimate measures of leadership?

Leadership and Structural Alignment

The reality is that most businesses are broken. They are out of alignment. This is not a new topic for me. I have been talking and writing about this for over twenty years. This essay extends what I wrote before.*

Leadership culture is a chief reason for this brokenness. By this, I mean that modern leadership cultures of business, politics, sports, and entertainment are seduced by the Culture of Simulation. They define leadership as something other than how one performs in their role.

I have found throughout my consulting career that whoever is this “leader” will be strong in one of the four functions. The selection of that person to fill the role of the leader will be based on the perception that the governance board has about the needs of the organization. The organization will then focus on the function that “the leader” is most proficient in. In large organizations over the past century, that person has primarily been a strong financial leader.

David Leonhardt’s article on David Gelles's book on former General Electric CEO Jack Welch describes this development. 

“For decades after World War II, big American companies bent over backward to distribute their profits widely. In General Electric’s 1953 annual report, the company proudly talked about how much it was paying its workers, how its suppliers were benefiting and even how much it paid the government in taxes.

That changed with the ascendance of men like Jack Welch, who took over as chief executive of G.E. in 1981 and ran the company for the next two decades. Under Welch, G.E. unleashed a wave of mass layoffs and factory closures that other companies followed. The trend helped destabilize the American middle class. Profits began flowing not back to workers in the form of higher wages, but to big investors in the form of stock buybacks. And G.E. began doing everything it could to pay as little in taxes as possible. …

Welch transformed G.E. from an industrial company with a loyal employee base into a corporation that made much of its money from its finance division and had a much more transactional relationship with its workers. That served him well during his run as C.E.O., and G.E. did become the most valuable company in the world for a time.

But in the long run, that approach doomed G.E. to failure. The company underinvested in research and development, got hooked on buying other companies to fuel its growth, and its finance division was badly exposed when the financial crisis hit. Things began to unravel almost as soon as Welch retired, and G.E. announced last year it would break itself up.”

The impact of these trends was a fragmenting of the structures of organizations. This diagram shows the transition from a unified structure where the social and organizational structures operated in tandem. Then, possibly fifty to sixty years ago, things began to change. As the executive, managerial, and worker levels became increasingly segregated and isolated from one another. The social structure of “the persistent, residual culture of values” defined the different segments, not the whole company.

With one client of mine, the social culture defined the company, even though the executive leadership followed Welch’s finance orientation. Another client suffered the diminishment of the company’s morale as their executives were also principally focused on the financial state of the company. In many communities, small businesses have been driven out of business because of the predatory character of much larger businesses. The problem is not the financial function itself. It is the over-valuing of finance. Or as Bill George, the former C.E.O. of Medtronic remarked about the impact of Jack Welch,

“A lot of G.E. leaders were thought to be business geniuses, but they were just cost cutters. And you can’t cost cut your way to prosperity.”

When product development, customer service, and governance take a back seat to finance, you have a similar misalignment as with structure is emphasized over values and purpose creation and the fostering of an environment for relationships of respect, trust, and mutual accountability.  

What is Leadership?

It is not my purpose to sound like some old curmudgeon complaining about the world of leadership. I’m not a complainer. I am only speaking about what I see. What I see is a lot of people who know how to run their organizations, not know how to lead them. This is why it is important to talk about what constitutes legitimate and illegitimate measures of leadership?

We need to begin with an understanding of what leadership is and what it isn’t. The conventional thought throughout my almost 70 years of life is that leaders occupy a role and a title within an organizational structure. In this sense, the only measure of leadership is the internal efficiency of the organization. Is the Profit/Loss report a legitimate measure of leadership. Or, is it, as I believe it is, a measure of managerial ability.

Mohamed Al Zarooni writes.

“Manager and leader are two completely different roles, although we often use the terms interchangeably. Managers are facilitators of their team members’ success. They ensure that their people have everything they need to be productive and successful; that they’re well trained, happy and have minimal roadblocks in their path; that they’re being groomed for the next level; that they are recognized for great performance and coached through their challenges.

Conversely, a leader can be anyone on the team who has a particular talent, who is creatively thinking out of the box and has a great idea, who has experience in a certain aspect of the business or project that can prove useful to the manager and the team. A leader leads based on strengths, not titles.”

He points to a Daniel Goleman’s HBR study of middle-managers in 2000 that identified the following types of leaders.

1.       The pacesetting leader 

2.       The authoritative leader 

3.       The affiliative leader

4.       The coaching leader 

5.       The coercive leader 

6.       The democratic leader

The problem here is that this is not a holistic understanding of leadership.

Two questions.

How do we measure each as a function of organizational leadership?

What is missing?

Look again at the diagram above. The transaction version treats leadership as a role within the structure. It is a limited role. Are there only six types of leaders? This is the wrong way to see leadership.

In the transformational scheme, the organization is a whole entity. It isn’t fragmented into these parts. How often have you had conversations about the silos at work? This is because leadership has been designed to serve the structure of the organization. And it serves best those who benefit the most. I believe there is another way.

Leadership as a Function of Human Performance

I see that “all leadership begins with personal initiative to create impact that makes a difference that matters.” This means that everyone in an organization from the CEO all the way down to the maintenance staff can function in a leadership capacity. If everyone can have a leadership impact, then everyone can be measured for their leadership.

As much as I want to celebrate Mohamed Al Zarooni and Daniel Goleman’s perspectives, it does not really change anything. It doesn’t provide a ground for a legitimate measure of leadership.

Let’s do a little exercise. Ask these questions about the place where you work.

What has changed over the past two years? How are we in transition?

What is the impact that we are having? What is the difference that matters that we create every day?

Who are we impacting? Who is missing from this list?

What opportunities for impact do we have right?

What problems have we created? What obstacles do we face?

These are the Five Questions that Everyone Must Ask. If you and your team we to answer them on a weekly schedule, you will find that your orientation to impact grows. And more importantly, you will know what to do and what you can stop doing.

Impact and The Culture of Simulation

From my observations, most of the measures that we use to define leadership are not the ends of leadership, but rather the means to it. Those means should lead to some change that makes a difference that matters.

What then should be the impact of every worker and who should their leadership be impact.

What is the qualitative difference?

What should be the impact of every middle manager? Who should they be impacting?

What should be the impact of executive in the C-suite? Who should they be impacting?

An organization’s definition of impact reveals the company’s values and purpose. To be absolutely clear, each person in a company should be able to state not only what the values are, but what the impact of those values are to be. This is how a persistent, residual culture of values ultimately defines the impact of the company.

The Culture of Simulation is insidious. What is the impact of the simulation? The means to that impact is seduction into a belief system that fosters, not the freedom of the individual to take personal initiative to create impact, but rather to submit to the controlling interests of those in power.

Through the Culture of Simulation, every CEO, every National President or Prime Minister, every Governor of a State, and every Mayor of a major city is telling us without wanting to that they are responsible for the way the world is.

The impact that you experience in your work and life is the product of their leadership. If you believe that leadership is a role and a title in an organizational structure, then you must believe that the top leaders of every global institution are responsible for the crises that afflict us.

When they do not accept responsibility, when they point their finger toward someone else or some group and blame them for the problems that we face, they are telling us that they have failed as leaders.

As a leader in authority and with responsibility, casting blame on someone else demonstrates is weakness. It erodes the ground for leadership that unifies society to address its crises. The reason the Culture of Simulation exists is to hide the real impact of their leadership which is their greed and lust for power and wealth.

This distinguishes between the people who only know how to run their business and and not lead their business.

To lead is to elevate the capacity of everyone to be a person of impact.

To lead is to accept responsibility.

To lead is act to resolve the problems that we face.

Impact – The Only Legitimate Measure of Leadership

Impact is change. It is a change that makes a difference that matters. You can only know what matters by being clear about your values and purpose for impact.

What is your company’s purpose for impact? What do you want to change?  

The crises that we face on a global scale are not accidents but is the impact of the leaders of the Culture of Simulation.

So, what should you do?

First, embrace reality by asking what is the impact that we are experiencing.

Second, embrace your people, and your network of relationships.

Respect and Trust them.

Train them to be impact leaders.

Equip them to solve problems, communicate better, and innovate how they do their work.

Support and celebrate their personal initiatives.

Create a way to be mutually accountable by being clear about our shared values for impact.

Third, do not dream for a better world instead create impact in the areas that are within your reach right now.

What then is a legitimate measure of leadership? Impact.

It is a change that makes a difference that matters.

Every other measure is just preparation or delay for creating impact.  

Note:

*  The idea of the brokenness of modern organizations I first developed in my book, Circle of Impact: Taking Personal Initiative To Ignite Change. See Chapter 6 Organizations in Transition.

Almost three years later, I returned to the question of organizational brokenness after a conversation with leaders about government corruption.

My thoughts are captured in two short books, Seeing Below The Surface of Things: The Brokenness of the Modern Organization and Where Did Trust Go? Restoring Authority and Accountability in Organizations.