What Leaders Really Do

1. What Leaders Really Do

2. Leadership and Management • Leadership • Not mystical and mysterious • Not charisma or personality traits • Not province of chosen few • Not better than management or replacement • Leadership and Management • Distinctive and complementary systems of action • Own function and characteristic activities • Necessary for success in volatile complex environment

3. Leadership and Management • Most cos. Over managed and under led • Need to develop capacity to exercise leadership-identifying and grooming potential leaders • Strong leadership with weak management • The real challenge: combine strong leadership with strong management • Strong cos. Develop leader- managers

4. Diff :Leadership & Management • Management: coping with complexity • Practices and procedures • Without good magmt. - cos. go chaotic • Good magmt.- degree of order • Leadership: coping with change • Reason for importance • More competitive and volatile business • Many factors contributed to this shift • Net result? • More change: More Leadership

5. Diff :Leadership & Management • Two different functions shape characteristic activities • Each system of action involves • Deciding what needs to be done • Creating networks for accomplishment • Ensure that people actually do the job • But each accomplishes these tasks differently

6. Management and Leadership • Planning & Budgeting • Setting targets • Establishing detailed steps • Allocating resources • Setting a direction • Developing a vision • Developing strategies

7. Management and Leadership • Organizing and staffing • Creating organizational structure/set of jobs • Staffing jobs • Communicating the plan • Delegating responsibility • Devising monitor systems • Aligning people • Communicating new direction

8. Management and Leadership • Controlling and problem solving • Monitoring results vs. plans • Identifying deviations • Planning and organizing • Motivating and inspiring • Keep people moving in right direction despite obstacles • By appealing to basic human needs, values and emotions

9. Setting Direction vs. Planning and Budgeting • Fundamental to leadership • Inductive • Not plans but vision and strategies • Visions and strategies: need not brilliantly innovative e.g. SAS CEO Joe Carlzon • Crucial about vision: not originality but serving its constituencies and translating into strategy • Bad visions

10. Setting Direction • Not the same as planning • Jan Carlzon. Fmr CEO Scandinavian Airlines • Wanted to make the airline accommodating for the frequent business traveler

11. Setting Direction vs. Planning and Budgeting Planning and Budgeting • Management process • Deductive • Designed for orderly results and not change

12. Setting Direction: Case Study Lou Gerstner at American Express • President of TRS-arm of AE in 1979 • Challenges a) Credit cards by many banks b) Lot of financial cos. in travelers cheques business • Crafted a vision and saw potential to become a dynamic and potential firm • Focused on global marketplace, affluent customer of AE, served with top products

13. Gerstner Method/Vision: • Questioned business principles & mental models • Instituted entrepreneurial culture • Results: • New markets, products and services • Card and travel services combined for corporate clients • Am Ex 5th largest direct mail merchant in US • Other unique products and services • TRS net income: rise by 500%- ’78-’87; a compounded annual rate of growth of 18% • Outperformed many high tech/growth cos. • 1988’s ROE of 28% outperformed most low growth but high profit business

14. Aligning People vs. organizing and staffing • Alignment –different from organizing and staffing: more of a communication challenge than a design problem • Involves talking to lot of people • Credibility-getting people to believe the message while delivering it • Leads to empowerment better than organizing • Helps to overcome the problem of people feeling powerless

15. Lower levels initiate action without feeling vulnerable when direction is there • Stalling probability less since ’target’ is there • Managers “organize” to create human systems that can implement plans efficiently and precisely • Talking to less people

16. Aligning People • Getting everyone in the company to work together toward a common goal • Fedex CEO Fred Smith took the company to the next level • And won the Baldrige Award

17. Aligning People: Case Study Chuck Trowbridge and Bob Crandall at Eastman Kodak • Situation • Entry of Kodak Eastman in copy business in early 1970’s concentrating on technically sophisticated machines costing $60000 • This business grew approx. $1 billion in revenues in 10 years • But costs high, low profits and problems • Kodak had to write off $40 million in inventory • People agreed on probs. But not how to solve them

18. Changes • Chuck Trowbridge, GM met everyone imp. to business-crucial area of engg.& manfg. head Bob • Vision: to become a world class manfg. Operation & to create a less bureaucratic and more decentralized organization • Bob set up no. of vehicles to empower vision and to align to it-weekly, monthly, quarterly meetings • Trowbridge and Bob did written communication “Copy Products Journal,” “Dialog Letters,” “Charts”

19. Results • Appeared within 6 months, more after a year • Successes: message more credible: more people on board • Quality of one main product line up by 100 fold: 1984-1988 • Defects per unit: down from 30 to .3 • Costs on another product line down nearly 24% in three years • Deliveries on schedule increased 82% in 1985 and 95% in 1987 • Inventory levels dropped over 50% • Productivity more than doubled:1985- 1988

20. Motivating People vs. Controlling and Problem Solving • Change function of leadership-energized behavior-coping with barriers to change • Leadership is different. Grand visions: burst of energy. Motivation and inspiration energize people • Good leaders motivate people in: • Articulate organization vision by stressing values of audience addressed • Support employee efforts by coaching, feedback and role modeling • -Recognize and reward success

21. Motivating People vs. Controlling and Problem Solving • More ‘change’ in business envi. :more leaders must motivate people to provide leadership: Multiple Leadership Roles (MLR) thru out hierarchy –Highly valuable • For MLRs to converge not conflict- different mechanisms than the traditional Mangmt. Roles reqd. • Strong network of informal relationships • Multitude of commun. Channels &trust allows accommodation and adaptation • Strong networks across groups necessary. If not exist, function of leadership

22. Motivating People vs. Controlling and Problem Solving • Control mechanisms: Compare system behavior with plan and act if deviation • Control is central to Management: Highly motivated or inspired behavior irrelevant • Purpose of systems and structures: help normal people to complete routine jobs successfully day after day: Not exciting or glamorous • Management processes: fail- safe and risk-free

23. Motivating People • “Generating highly energized behavior while coping with the inevitable barriers to change.” • Wal-Mart constantly motivates its employees

24. Motivating People: Case Study Richard Nicolosi at Proctor & Gamble • Situation • No competition for Paper prods. Division for 20yrs • New market thrusts hurt P&G badly • Richard, AGM in 1984 finds bureaucratic and centralized organization • Focus • Aug.: i. Stresses the need for market driven & creative instead of low cost producer ii. New direction: Team work & Mul. L’ship Roles iii. Strategy: Groups to manage - Oct.: Team designated ‘ Paper division Board’ - Nov.: i. Established “ Category Teams.” “Shun incremental. Go for leap” ii. Involves himself more in certain activities iii. “Meet” of everyone. Vision: “Each of us is a leader” described by ‘Board’, video graphed and sent to all to see

25. Motivating People: Case Study • Results • Creation of entrepreneurial envi. Where large no. of people motivated to realize vision • Most innovations from people dealing with new products • Ultra Pampers pushes Pampers market share to 58% from 40% & profitability from break-even to +ve • Luvs Deluxe market share up by 15% within few months of its intro. • Other employee initiatives • - End 1988, revenues(40%) and profits(68%) up despite tougher competition

26. Creating a Culture of Leadership • Ability of some cos. To develop people into outstanding leader managers • Recruiting people with leadership potential • Managing their career patterns • Successful individuals in leadership roles share • Face significant challenge early in career • Broadening happens later: lateral career moves, promotions, special task force assignments or a General Management Course : breadth of knowledge and network of relationships • Cos. that do ‘better than average’ job of developing leaders emphasize creating challenging job opportunities for young employees

27. Creating a Culture of Leadership • Decentralization is the key: pushing responsibility lower in organization creates more challenging jobs • Johnson and Johnson, 3M, HP, GE, etc used this approach quite successfully • Addl. Challenging assignments thru new products and services e.g. 3m • Such practices prepare small and medium sized leadership roles -More work by Senior executives –long time for preparing people for important leadership positions

28. Creating a Culture of Leadership • Methods • Young employees visible to Sr. management • Judging of potential and development needs • Discuss tentative conclusions for more accurate judgments • Spend time planning their development • For encouragement of managers: recognize and reward people who successfully develop leaders

29. Creating a Culture of Leadership “Such strategies create a corporate culture where people value strong leadership and strive to create it. Just as we need more people to provide leadership in the complex organizations that dominate our world today, we also need more people to develop the cultures that will create that leadership. Institutionalizing a leadership centered- culture is the ultimate act of leadership.”

30. MANAGE FROM THE LEFT…...LEAD FROM THE RIGHT • Management: • Planning and Budgeting • Organizing and Staffing • Controlling and Problem-Solving • Producing Predictability and Order • Leadership: • Establishing Direction • Aligning People • Motivating and Inspiring • Producing Change

31. MANAGE FROM THE LEFT…...LEAD FROM THE RIGHT MANAGE FROM THE LEFT…...LEAD FROM THE RIGHT • Management: • is about copying and maintaining the status quo • is about efficiency • is about how • is about controls, procedures, policies • is about hierarchy • is mechanistic • Leadership: • is about innovating, initiating and creating • is about effectiveness • is about what and why • is about trust • is about teams, collaboration • is holistic

32. Kotter’s Approach • Set directions • Align constituencies • Motivate and inspire

33. Setting Directions • The “vision thing”

35. Setting Directions • The “vision thing” • Is not planning • Attuned to environment & its direction • Broad view • Involves choosing • Involves changing the status quo • Visions are pictures in the mind

36. Aligning Constituencies • Communicates the vision & strategy • Keeps message simple • Repeats the message --- a lot • Allows challenges and questions • Recognizes/acknowledges the size of the task

37. Motivating & Inspiring • Appeals to the values of the group • Provides autonomy needed to do the job • Encouraging and cheerleading • Recognizing and rewarding

38. Kotter Has Identified Some Differences Between Management and Leadership Management Planning and Budgeting — Setting targets and goals; establishing detailed steps and timetables for achieving results Organizing and Staffing — Establishing structure for accomplishing plan requirements; staffing and identifying responsibility and authority for carrying out the plan; providing policies and procedures to help guide people; and creating methods or systems to monitor implementation Controlling and Problem Solving — Monitoring results vs. plan in some detail; identifying deviations; and planning and organizing to solve problems Produces a degree of predictability and order, and has the potential of consistently producing key results expected by various stakeholders (e.g., for customers, always being on time; for stockholders, being on budget) Leadership Establishing Direction — Developing a vision and strategies for accomplishing the vision Aligning People — Communicating the direction by words and deeds to all those whose cooperation may be needed so as to influence the creation of teams and coalitions that understand the vision and strategies, and accept their validity Motivating and Inspiring — Energizing people to overcome major obsticles by tapping often unfulfilled, human needs, values and emotions Produces change, often to a dramatic degree, and has the potential of producing extremely useful change (e.g., new products, systems or processes) Source: Kotter, What Leaders Really Do

39. Leadership vs. Management • Management: Coping with Complexity • Brings Degree of Order and Consistency • Leadership: Coping with Change • Can’t manage people into battle • Must LEAD into battle

40. Leadership vs. Management • Leadership Sets the Direction • Vision of the Future • Strategies to Achieve the Vision • Management Develops Capacity to Achieve the Vision • Organizing • Staffing • Controlling and Problem Solving

41. Set the Direction Align People Motivate Plan and Budget Organize and Staff Control and Solve Problems Leadership / Management