What is the way to lead?

Jul 19

Dealing with power in organizations

What has been the way to lead?

It was in the 1850s that the hierarchical organizational structure was created for American companies. At the time, during the industrial era, old businesses expanded, and new businesses were created. The business culture relied heavily on production efficiency and was in its essence transactional between businesses and employees. As an employee, a full day of work meant payment, and with it meant maintaining a standard of living or a family. So, because companies were hiring people in large quantities, the need for an organizational structure arose and therefore came the hierarchy structure we all know.

The difference with today is that the culture around business has changed, and as businesses grew so did competitors and now professionals have endless options to choose where to invest their careers into. So, what makes a company different from the rest? What are the aspects that emerging professionals value? And, should the organization’s structure represent the new way to lead? As is known, the traditional hierarchical structure uses its tiers to translate leadership as power. Whoever is recognized as a leader usually gets to manage a team, assign roles, direct tasks and make final decisions, meanwhile the team is expected to follow directions, prove themselves and remain motivated. The method is effective when the mission of the company is production and revenue and most effective when their workforce aligns with this mission.

Nowadays, the demand of emerging professionals for companies to have a people based culture and mission has made cultural change an essence to adapt and to keep moving forward. Perhaps reconsidering the meaning of leadership in the context of power could start the basis for finding the specific actions needed to reach the new and most effective way to lead.

Does power corrupt?

It was in the first week of my Leadership class that we asked ourselves this question. After going through the full coursework I can see how this question relates to many aspects about running a business. Starting with defining power, Dr. Elliot Kruse describes the different ways someone obtains power in a way that is not always earned but rather contextual. Power can come from wealth, physical strength, ideas, numbers, state action and social norms (Kruse & EGADE Business School, n.d.). Most of these only attribute power at the time a person owns them. For example, wealthy people can be very powerful but when wealth is taken out of the equation most if not all of their power goes with it. The same happens with social norms, as a society we are constantly evolving and changing our way of thinking, something that was accepted years ago may not be accepted today and that affects the power anyone might have due to their social status. So if power by wealth, physical strength, numbers, state action and social norms are contextual and dependent on each other is that power really considered equivalent to leadership? In the business field, this question is usually formulated as is being recognized as a manager and being a leader the same?

In the reading “What Leaders Really Do” the author identifies that leaders will strive to set a direction towards a vision, align employees with it through effective communication, and motivate and inspire others to do the work (Kotter, 2001). This relates to obtaining power through ideas. An idealistic powerful figure will focus on knowledge and very often that knowledge leads to a vision and eventually a mission. One could say power through ideas is the closest one to real leadership. Comparing leaders to management, the latter will focus on planning and budgeting for a set of tasks, organizing and staffing the team of employees appropriate for these tasks, problem solving and potentially micromanaging results.

Frequently, companies will face the challenge of adaptive change, which occurs when behaviors in the organization are obstructing the path to achieve goals. Adaptive change could be, when the company’s reputation is threatened and demand for its products plummets, or when the culture within the organization is based on politics creating an inefficient environment, or when the culture around the industry evolves. When facing this challenge, leaders will have a higher chance at collective adaptive change, than managers. However, it is possible to wear both hats, as management is still an essential role that ensures productivity and keeps organizations moving forward.

So, in the spirit of looking for the most effective way to lead today, how can managers become leaders and succeed at adaptive change? The most common practices a leader does to achieve critical behavioral changes according to “The Work of Leadership” by Ronald A. Heifetz and Donald L. Laurie are “getting in the balcony” (looking at the big picture), identifying the adaptive challenge, regulating distress, maintaining disciplined attention (regaining focus), giving the work back to employees by letting them take the initiative to define and solve problems, and lastly, protecting the voices of leadership from below (Heifetz & Laurie, 1997). Working at an organization that follows these practices is today’s generations’ dream, but considering that this article was written in 1997 and others have been written since then about this topic too, what makes it so difficult for managers to become leaders?

The following are some examples of how positions of power have been used admirably by following leadership best practices (ChatGPT, personal communication, June 28th, 2023).

Indra Nooyi, the former CEO of PepsiCo from 2006-2018, emphasized the importance of looking at the big picture and considering long-term sustainability in the company’s decision making. She tackled adaptive challenges such as a shift in consumer preference towards healthier options and managed distress by promoting a culture of innovation and continuous learning.
Angela Merkel, the former chancellor of Germany, although a different kind of power than that of Nooyi, Merkel is recognized for identifying adaptive challenges, like the country’s energy transition and climate change, her ability for regulating distress during critical situations, like the Eurozone crisis of 2009 and refugee crisis of 2015, and has also been praised for encouraging dialogue and inclusivity in decision-making.

The next examples identify powerful figures that used their positions of power in a corrupt manner by focusing on self-serving gains (ChatGPT, personal communication, June 28th, 2023).

Travis Kalanick, CEO of Uber, has been known to foster a problematic organization environment by showing aggressive behavior, lack of accountability and a disregard for ethical considerations. While Kalanick’s goal was to grow the company fast, he focused the effort on the HR department hiring employees at a large scale without considering the culture that was developing from it (Bondreau, 2017). Overall, his time as CEO has been seen as divisive and unencouraging for employees to take initiatives and find solutions.
Jim Balsillie, former Co-CEO of Blackberry. His failure to adapt to the changing market and technological landscape, as we know, led the company to significantly decline in the smartphone market. His leadership style was also considered overly confrontational and combative which created tensions within the company, his lack of collaboration and disregard for differing perspectives obstructed effective communication and decision-making within the company.

Going back to the question, does power corrupt? Both cases of good and bad figures of power prove that it depends on the person and the ideals she/he follows. Owning power is a dangerous privilege that comes with great responsibility. Figures of power should be careful with not letting it veil over the noble missions of the company or creating shared value by being aware of the impact of their actions. Wealth and admiration are often the ultimate goals that people are willing to be corrupted for, like was the case of the CEO’s for Uber and Blackberry, but in this digital era word gets out faster than ever and such behaviors are severely condemned.

Allowing power to corrupt might be the difference from someone that stops at manager instead of becoming a leader. The more I study cases about good leaders I find that there is a common denominator that keeps them from becoming corrupt, and that is genuinely believing in the organization’s mission, and at the core of adaptive change is persuading others to align to this new mission. A challenge that leaders and managers face frequently in their careers.

Is it possible to persuade people without manipulating them?

When tackling adaptive change, leaders don’t hold on to power as their way to persuade others but instead share the power to encourage others to align with the mission and participate in the way that they can find their own connection with it. Still, persuasion is an art of its own. Some are naturally born with it and others learn along the way. By mastering persuasion it is completely possible to move organizations without manipulation. The key involves a set of people skills and genuine good intentions.

The article “Harnessing the Science of Persuasion” by Robert C. Cialdini proposes unique approaches to persuasion that are based on the targeted group or individual and the context in which the conversation would take place (Cialdini, 2001). These approaches are;

Liking: “If you want to influence people, make friends”
Reciprocity: Gift giving is one of the most common practices of this principle but other sophisticated approaches involve a genuine first-mover advantage on any manager who is looking to foster positive attitudes and productive personal relationships in the office.
Social Proof: Effective persuasion when it comes from respected peers.
Consistency: Aligning with clear commitments by encouraging employees to communicate them publicly.
Authority: Not assuming your expertise is self-evident but exposing it instead. People defer to experts.
Scarcity: Opportunities are seen to be more valuable as they become less available.

The challenge of persuasion is the everyday work routine for powerful figures. One would think that after you have obtained power you are done needing to persuade, but the two are positively related. Which is why people in powerful positions without leadership skills or persuasion skills resort to manipulation, which directly contributes to a person becoming corrupt through their power. An example is Robert Maxwell, a media tycoon and the founder of the Mirror Group of Newspapers (ChatGPT, personal communication, June 28th, 2023). His leadership approach was based on manipulation, deception, and a lack of ethical behaviors. Instead of inspiring and persuading others through genuine leadership and CLTs (charismatic leadership tactics), he relied on fear and manipulation to maintain control and further his own interests. This led to permanently damage the trust of stakeholders and had severe consequences for the organization.

On the other hand, leaders in powerful positions that follow the approaches to persuasion and practice CLTs will find the task of persuading much lighter and perhaps eventually requiring less effort as their leadership becomes trusted and respected. Steve Jobs, as a leader that reached that level of trust and respect, always had grand ways of presenting new ideas, however persuading people to be interested and onboard was not really the challenging part (ChatGPT, personal communication, June 28th, 2023). Jobs’ success in persuasion was built in consistency, authority and scarcity all used at the same time. He would promise the consumers a new innovative product that would save them time and space with a high standard level of quality and delivered on his commitment every time. To his employees he would show authority by showcasing and building off of his previous successes to present the next product he wanted to persuade them to work on. Lastly, working on a Steve Jobs idea was considered a scarcity that many strived for the opportunity to do so.

Regardless of his position as CEO and the power that gave him, Jobs would always sell his ideas to his employees and would go through the effort of persuading them to align to his vision. Whereas other CEO’s would perhaps point a finger in the direction the organization should move towards and expect everyone to follow. By Jobs handing over the power to the employees across levels to decide for themselves on the interest for his ideas and create a vision of their own about how they could be a part of it, he was able to create a culture of high innovation, motivation and loyalty. Which leads me to consider if sharing power might actually multiply efficiency, job satisfaction and meaningfulness. Something that today’s generations prioritize. It might seem that in a hierarchy structure this could be challenging, but perhaps hierarchies are not as rigid as they seem.

Should power be shared?

Due to the impending need for a change, demanded by emerging professionals (Gen Z’s and millennials), in the traditional ways businesses are built, new organizational structures are arising, holacracy being among the strongest ones suggesting self-management as an organizational structure. Sharing power as a leader is like lending a hand to others to climb the ladder. By doing so, employees across levels are able to expand their potential and create opportunities for themselves to bring meaning to their daily work. In organizational concepts like holacracy, the main goal is to bring people together to work under a strong organizational mission that is believed by everyone who works there and makes their job the place they choose to invest their careers on and contribute to that mission.

Like Barry Schwartz says in his “The way we think about work is broken” TED Talk, generations today want job satisfaction more than the monetary glory of a successful career (TED, 2015). Millennials are desperate to find meaning in their day to day jobs, with an urge to make a positive impact in the world, and Gen Z’s are bringing on the full force to move beyond existing structures looking to resolve social issues. It all comes down to finding meaning in the work we do by creating value with it for others, being free to work in many roles, not just one job description, and to leaders designing in favor of human nature.

In a way, today’s generations are looking for a workplace democracy, an organizational culture built on the principles of being mission driven, sharing power, encouraging voices from all levels and autonomy to design each one’s roles within projects (Kruse & EGADE Business School, n.d.). The structures that come closest to this idea are holacracy and self-organization, both fairly new and based on a strong belief that organizations should share power; however, they are not free of considerable limitations. As they differ significantly from the traditional structures (hierarchical, functional, division, and matrix) it’s not surprising that they have a big learning curve that requires time, patience and infrastructure to support its adoption while the business continues running. This limitation alone has been enough to lose the interest of many executives running companies, however the advantages of both structures demonstrate a proposed solution to the evolution of business culture and leadership.

In the article “First let’s fire the managers” the author studies an example of a company that uses holacracy successfully, Morning Star (Hamel, 2011). In this company’s case, sharing power has elevated the potential of a 400 employee firm to achieve revenues of a large company scale. Morning Star used holacracy as its organizational structure and was able to implement it efficiently after handing out severance packages to those that were not comfortable with the change. Its methods were seen as extreme and the company caused noise in the media which is how it became a popular case study for the business field. Its success proved that organizational structure changes are possible and that one with such freedom and flexibility has the potential to significantly increase stamina, efficiency, loyalty, and innovation.

In the way this company uses holacracy, everyone is trained to be a leader. Every employee uses public commitments to negotiate and persuade others on ideas and participation in projects and their roles are not meant to be categorized as less or more powerful but equally important to the sake of each project.

Project teams work as a structure of their own in which taking initiative and proposing new ideas is highly encouraged and protecting leadership voices across levels is embedded within the culture, as a result, employees at Morning Star have a deep care and loyalty for the company. Sharing the power has made them consider the company as their own, not just the place they work at.

Fortunately, holacracy’s principles can be adapted to hierarchical structured companies as well without the need to completely adopt it and equally create positive results. For example, Google promotes self management when choosing a role to work on in a project (Schwantes, 2020). Although Google is a company with a hierarchical structure, its organizational culture is heavily grounded on its mission to make information universally accessible and useful. Which is why adopting this principle of autonomy in role picking made sense as it allows employees to make their own decisions based on shared information, consequently enhancing their leadership development, connection to the mission, meaningfulness in their careers, and accomplishment. Another company that has been discussed to have similar values as holacracy is Apple. As a company completely driven by the vision of changing the world with innovative, high quality, and beautifully designed tech products, they highly encourage employees to use a percentage of their work time to invent something creative (Podolny & Hansen, 2020). Although those inventions might not be real company projects, Apple prioritizes the employees’ freedom to create and get inspired to propose new ideas for the company resulting in them feeling energized, inspired and loyal to the vision.

Cases like these provide good examples of how the organizations’ structures can be flexible and adaptable and that sharing the power to lead, innovate, and to choose elevates the quality of work for employees allowing them to discover meaningfulness and develop their leadership skills. At the same time, it reduces the presence of politics that make the path to success confusing and prone to resorting to manipulation, and other corrupt behaviors. As a result of job satisfaction the company’s culture naturally knits together, creating a collaborative environment based on success in accomplishments rather than power, which is then reflected in higher efficiency, and productivity.

What is the way to lead now?

If there is one specific action to take as either a leader of a startup company or an existing one, or even as an employee yet to be recognized as a leader, let it be to prioritize leadership development and merge the company’s mission with it. As we learned, emerging generations are finding that expertise in technical skills is not enough to achieve a meaningful impact in the world but instead are looking for the space to have freedom to choose and support to explore and learn leadership skills so that they are able to connect their work to created shared value, advocate for a mission, and collaborate and lend a hand out to others.

Other important actions to take on today’s demand for change in the way we lead are;

Educate and train the workforce on the difference between a manager and a leader and how it is possible to be both
Leave room for employees to step outside of their job description to find creativity, inspiration, learn new skills or get involved in new initiatives
Check in on the company’s culture status by having team meetings that focus on “how we work” aside from the typical “working on”
Consider the company’s workforce as volunteers that are there because they believe in the mission and want to create shared value
Keep a clearly defined set of rules about self-management accessible to everyone in the organization and establish public commitments to secure that empowering efforts are genuine and supported by the company
Analyze and make necessary changes to the current organizational structure of the company to provide a positive sense of power allowing for healthy competition based on accomplishments and skills acquired rather than control, exclusivity, or personal gain

Following these steps and recognizing the particular challenges of your organization will provide a robust base to develop the exact formula needed for your company to welcome emerging professionals and contribute to the evolution of the way businesses lead and the culture that comes with it.

References

Antonakis, J., Fenley, M., & Liechti, S. (2012). Learning Charisma. Harvard Business Review, 127–130.
Bernstein, E., Bunch, J., Canner, N., & Lee, M. (2016). Beyond the Holacracy Hype. Harvard Business Review, 38–49.
Bernstein, E., Canner, N., & Dobbs, C. (2016). How Self-Managed Companies Help People Learn on the Job. Harvard Business Review Digital Articles, 2–5.
Bondreau, J. (2017). Uber Is Finally Realizing HR Isn’t Just for Recruiting. Harvard Business Review Digital Articles, 2-4
Cialdini, R. B. (2001). Harnessing the Science of Persuasion. Harvard Business Review, 72–79.
Hamel, G. (2011). First, let’s fire all the managers. Harvard Business Review, 49–60.
Heifetz, R. A., & Laurie, D. L. (1997). The Work of Leadership. Harvard Business Review, 124–134.
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Kotter, J. P. (2001). What Leaders Really Do. Harvard Business Review, 85–97.
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Schwantes, M. (2020, February 6). Google’s Insane Approach to Management Could Transform Your Company. Inc.com. https://www.inc.com/marcel-schwantes/googles-insane-approach-to-management-could-transform-your-company.html
Schwartz, B. (n.d.). The way we think about work is broken [Video]. TED Talks. https://www.ted.com/talks/barry_schwartz_the_way_we_think_about_work_is_broken?language=zh
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Zides, M. (2022, May 16). The Difference Between Gen-Z and Everyone Else [Video]. TED Talks. https://www.ted.com/talks/mark_zides_the_difference_between_gen_z_and_everyone_else

Images

Freepik. http://www.freepik.com

Alexandra García