Next Generational Leadership
There is a difference between knowing how to run a business and how to lead a business. Ultimately, it centers on understanding why impact is the measure of any action or strategy.
Tumblin’ Tumbleweeds
There are two general perspectives on history. One is that history progresses forward in a linear process of development. The other view is that history is cyclical. George Santayana famously remarked that “those who do not learn from history are doomed to repeat it.”
Tumbleweed
2009 Bronze
Artist - Bale Creek Allen (b.1958)
Whitney Western Art Museum
Buffalo Bill Center of the West, Cody Wyoming
I take a third view. I call it the Tumbleweed view of history. Tumbleweeds are blown across desert landscapes by the invisible forces of the wind. As they tumble over and over their path is random and chaotic. We should think of their direction as a mixture of cycles, over and over again, and a relatively consistent direction. Tumbleweeds as they blow across the terrain pile up against obstacles like fences, houses, and other objects.
History from this perspective takes on a much more chaotic presentation while at the same time demonstrating that there is a movement forward through time. An example of this perspective is the sports team that everyone expects to win the championship, yet by mid-season they have lost as many games as they have won. The linear progression to the championship has been disrupted by injuries to key players, and the remarkable performance of another team’s rookie star who has led their team, though being a year or two away from contending for the championship, to an undefeated season so far. While many believe that time is linear, life is more like the tumbleweed where adaptation and adjustment are skills constantly tested.
The Nature of Transition
If we apply the tumbleweed metaphor to businesses, we’ll see that they are always in transition. Add to this perspective the cycle of time, then we can see that every business, organization, and society will at some time experience decline.
All businesses, at some point, go through a transition toward irrelevance and extinction. Many business leaders saw this coming fifty years ago. The result was a shift from the innovation of new products to the financialization of the business. In effect, every business becomes a bank. And leadership becomes left to numbers people and bean counters.
As an organizational and leadership consultant who did not come to this work out of a business or corporate background, but from a leadership one. I realized that I was witnessing the diminution of organizational leadership to a weakened form of management. I described this change as “people knowing how to run a business, but not lead a business.”
One of the products of this decline was a growing gap between the generations serving in organizations. Every privately owned business has a generational leadership problem. The generational gap between Boomers, GenX, Millennials, and GenZers is significant and is treated as a given. Why? Because organizational leaders over time believe they know their business better than anyone else.
Recently, while serving in Wyoming, I had conversations with people across the generations. One woman, a Generation Xer, closed her restaurant of thirty years, because she could not get both qualified and willing staff. She complained about the GenZers she employed not having the work ethic that was needed.
At another business, I talked with Millennial and GenZ workers about this situation. It was clear that the generation gap meant that there was no common ground for understanding why the gap existed. Some of the GenZers felt that they were being scapegoated as they realized that their teachers and parents were GenXers and Baby Boomers.
The missing element was an understanding of what leadership is. If you only run your business, you look for reasons external why the organization is not performing well. If you have a leadership impact mindset, then as the senior leader, you realize that your responsibility is to facilitate the development of leadership across the company.
Ultimately, we need to see that the nature and operation of businesses are in transition. The old factory mindset no longer serves in a complex, technological environment.
A Transition That Didn’t Work
Two decades ago, a friend who was a data specialist invited me to join a team working at a manufacturing company making men’s socks. The company was founded in 1940, and the founder still came to work every day. His son was the president. His son-in-law was the marketing and sales director. And his nephew was the production head.
For some time, the company had been losing money. Our team was brought in to address the production process. It had not changed since the company’s founding. There was no cross-training. Every worker had a slot in the 17 steps of the process. They came to work every day and did the job of their specific step in the process.
When we began, it took six weeks from the beginning of the process for a pair of socks to leave the plant. By the time we were through it took six days.
The nephew had forced the family to address the production process. But that was not the only problem. If you are familiar with Eliyahu Goldratt’s Theory of Constraints, continuous improvement means that you address the highest leveraged constraint, resolve it, and then move to the next one. We were not tasked to address the sales side of the business. But it was in as bad a condition as the production process. As a result, within 18 months of completing our project, the company shut down and closed.
This is what happens when you believe that time stands still and the way we have always done it is fine for how we will always do it.
A Transition That Did Work
Leadership transitions are challenging moments. I participated in one after the new CEO had arrived. I was hired to draft a new values statement for the company. The former leadership operated from top-down centralized command of all the decisions that affected the company. A number of the top executives and several board members had been let go because of an ethical violation.
When I arrived to begin my project, the new CEO had been in place for four months. He had spent those months establishing rapport with the employees. A team of executives and union representatives was assigned to the project. I asked them, “How far back in time do we have to go to when this was a happy company.” The union president immediately said, “Twenty years.” I responded, “What was it like then?” He said, “We were a family. We did things together. We knew each other and our families.”
The company was in its second major transition in twenty years. The goal set by the board was to improve the valuation of the company so that either they grow by acquisition or by being acquired. The new CEO knew that a culture change needed to take place.
As the project came to a close, the team came up with five values statements. After a vote, one of the statements garnered a significant number of votes. We invited the CEO to come join us. Without knowing the statement the team had selected, we asked him his choice. He chose the same as they did. A visceral feeling of unity swept through the room as the team realized that the company was going to be okay.
A leadership development program based on the values statement was implemented, focused on equipping middle management to develop leadership in the people who work for them. The program was a success as the company was purchased by an industry-leading corporation, and Forbes magazine recognized the company as one of the 100 most trustworthy companies in the nation.
Generational Transitions
A dozen years ago, I spent a year brainstorming with a friend who worked for a regional financial services company, how they could broaden their services to their customer. Many of their clients were families with privately held businesses. The company worked with the family offices of these families.
One of the challenges/opportunities is the transition from one generation of the family transferring leadership to a younger generation. In my interactions with the consultants who served these families, I saw the complexity of generational leadership transition in the context of generational family dynamics.
Ultimately, the senior leadership of the financial services firm decided not to move forward with our project. But the issue of generational leadership transition remains a live one for me.
Impact as the Focal Point of Transitions
When I use the term, “know how to run a business but not lead at business”, it is based on an observation that I have had throughout my career. It is that the demands of a business create a focus on the internal dynamics of the business to the exclusion of the external. The principal external contexts are customers and the socio-economic society that exists.
I wrote about this in my essay, Impact - The Measure of Leadership. There I wrote,
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. The result is an assumption that 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?
What, then, does leadership mean, and how should we measure it, develop it, and deploy it?
I see that all leadership begins with personal initiative to create impact that makes a difference that matters.
The old model of leadership as a structural component of the mechanism of a business never really worked. The kind of leadership that I describe above would emerge out of necessity. Too often it was dependent on the designated being motivated to lead. This meant that leadership impact was at odds with the structure of the business. This was the problem with the knitting mill described above.
I see impact as a change that makes a difference that matters.
To understand impact from this perspective, we need to be clear about our values, our purpose, and how those ideas factor into the relationships in our business, and what the actual mission of the business is.
This diagram captures this relationship.
The linear application of this model begins with being clear about our values. Those values help us to define our purpose. Our values also help us to define who we want on our team.
Those relationships need to be grounded in respect, which provides the basis for trust, mutual accountability, and support. When this happens, we discover a social environment described as …
a persistent residual culture of values that persists because it resides in the relationships of the people.
Your people are the leaders of the company. They are the ones who need to be equipped to “take personal initiative to create impact that makes a difference that matters.”
From a relationship culture like this, a vision for impact emerges that becomes the shared mission of the company. It is at this point we have the perspective that we need to critically understand how the current organizational structure serves our purpose for impact.
Structure is not an obstacle to leadership. Though it can inhibit the freedom to envision how we can be a company of impact. The old ways of seeing leadership and structure are a crutch for resistance to change. When we say, “We’ve never done it that way.”, we are really saying, “Leave me alone to run the business.“ It is an excuse for not changing. This mindset is not hidden but evident to everyone who comes into contact with a business.
Ultimately, the focal point of leadership is impact. Impact is a change that makes a difference that matters. Impact has an internal focus and an external one. The external takes on a higher priority because it defines what the internal impact needs to be.
The Immediate Leadership Need
While I see the need to elevate our understanding that leadership is a function of how we each individually live, I do not see this as the critical need.
Rather, I see the divisions in society having a more detrimental effect. While politics takes center stage in our awareness of these divisions, they are also not my prime concern. They are distractions that I describe as The Spectacle of the Real.
Instead, my greater concern is the divisions between the generations. When I was young, people spoke of a generation gap. Today, that gap has grown wider.
Two years ago, I had a Zoom call with a group of Swiss university students. They emphasize three things.
They are disappointed with the way the world is.
They have fear about the future.
They want to understand what it means to have purpose.
I believe we can all identify with their perspective.
What needs to be said is that they didn’t create this world. This is the world that The Greatest Generation, the Baby Boomers, and GenXers have created. We are responsible for the problems that we have allowed to develop. Our complaints about the young generation fall hollow and self-serving.
The solution is to begin by having small conversations. This is the premise and purpose of The Eddy Network Podcast. Last year, I interviewed a couple of GenZers. I have just interviewed another who will appear soon. Beginning in February, I will host an open conversation for paid subscribers of my Substack. By open, I mean no agenda. We’ll talk about what emerges in our introductions to one another.
The Future is in our hands now. We need to stop running our world and start leading it.
I like the Tumbleweed theory— that reminds me of Adrian Bejan’s Constructal Law. I think your maxim of “everything is in transition” connects to the concept of Panarchy- https://adamkaraoguz.substack.com/p/panarchy-in-the-us
It doesn't help that we are used to conflating "leadership" with occupying a place at the top of a hierarchy, when really that is just a certain level of management. We talk about senior leaders when they are really senior managers. If leadership is about individual impactful action, then it can be done by anyone at any level in a way that is appropriate for their context. Of course people with more positional power should have more responsibility to use it impactfully.