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Browning

Leading

Leading
Strategic leadership has never been more important than it is
today—and never more difficult. The job of a leader is to infuse an
organization’s work with meaning that creates Purpose—and then
to make the few critical choices necessary to achieve that Purpose.
This job is simple to articulate but enormously challenging to do. I
recommend Leading at the Strategic Level to any leader trying to
step up to this challenge today. Dr. Jim Browning of the National
Defense University Eisenhower School—one of the great leadership

Strategic Level
institutions in the world—has captured the insights of scholars and

at the
the lessons of practitioners who, together, have reflected on what is
required for truly strategic leadership in a VUCA world.

—Bob McDonald, Chairman, President and CEO of Procter & Gamble


in an Uncertain World

at the
Dr. Browning skillfully mixes leadership theory with many clarifying
insights and examples from practitioners who actually performed
where the rubber meets the road. What makes this so valuable
is that his analysis focuses upon a broad spectrum of leadership
By James W. Browning

Strategic Level
situations—business, the military, education, politics and nonprofit
organizations. This is a leadership manual that will immediately
make current strategic leaders more productive and provide those
who aspire to become strategic leaders with a road map to success.

—Dr. James Koch, Board of Visitors Professor of Economics and


President Emeritus at Old Dominion University, and co-author of
Presidential Leadership with Jim Fisher

Dwight D. Eisenhower School for National Security and Resource Strategy


National Defense University
LEADING
STRATEGIC LEVEL
at the
in an Uncertain World
LEADING
STRATEGIC LEVEL
at the
in an Uncertain World

By James W. Browning

Dwight D. Eisenhower School for National Security and


Resource Strategy
National Defense University
Washington, D.C.
2013
Opinions, conclusions, and recommendations expressed or implied within are solely those of the con-
tributors and do not necessarily represent the views of the Defense Department or any other agency of
the Federal Government. Cleared for public release; distribution unlimited.

Photo credits: Front cover (from left), President Barack Obama calls a Member of Congress about health
care reform from Oval Office, March 19, 2010 (The White House, Pete Souza); on October 6, 2011,
approximately 10,000 people joined march for Occupy Portland in Portland, Oregon (iStock); traders
work on floor of New York Stock Exchange, August 10, 2007 (Mario Tama/iStock). Back cover (from
left), vessels combat fire after explosion of Deepwater Horizon mobile drilling rig in Gulf of Mexico,
April 20, 2010, while U.S. Coast Guardsmen search for and rescue survivors (DHS/USCG); Soldiers hit
the ground running in opening salvo of Operation Patriot Strike in Ubaydi, Iraq, December 29, 2007
(Ben Brody); children beg for food in refugee camp where thousands of Somalis wait for humanitarian
help, August 15, 2011, in Dadaab, Somalia (iStock).
CONTENTS

Acknowledgments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix

Section I: Defining Strategic Leadership


Chapter 1: What Is Strategic Leadership?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chapter 2: A Strategic Leadership Model. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Section II: The Strategic Leader—Key Interface between the


Organization’s External and Internal Environments
Chapter 3a: Strategic Leader Readiness—Personal Dimensions, Part I. . . . . . . . . . . 61
Chapter 3b: Strategic Leader Readiness—Personal Dimensions, Part II . . . . . . . . . 101
Chapter 4: Environmental Dynamics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Chapter 5: A Strategic Leader Competency—Leveraging Power and Politics. . . . . 193

Section III: Strategy to Action—Strategic Leader Work


Chapter 6: Building and Leading a Strategic Leadership Team. . . . . . . . . . . . . . . . . 221
Chapter 7: Decisionmaking at the Strategic Level. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247
Chapter 8: Strategic Negotiations—A Strategic Leader
Decisionmaking Competency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283
Chapter 9: Strategic Communication—A Strategy Execution Imperative. . . . . . . . 309

Section IV: Preparing the Organization for Success


Chapter 10a: Organizational Climate and Culture:
Strategic Determiners, Part I—Shaping Organizational
Climate and Culture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331
Chapter 10b: Organizational Climate and Culture:
Strategic Determiners, Part II—Building Ethical and
Innovation Climates and Cultures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367
Chapter 11: Leading and Managing Transformational Change. . . . . . . . . . . . . . . . . 399
Chapter 12: Leading Strategically in a Crisis Situation . . . . . . . . . . . . . . . . . . . . . . . . 439

 v
Chapter 13: Management Requirements of a Strategic Leader. . . . . . . . . . . . . . . . . . 479
Chapter 14: Four Key Reasons Why Strategic Leaders Fail. . . . . . . . . . . . . . . . . . . . . 503

Appendix A: Overview of the Dwight D. Eisenhower School


for National Security and Resource Strategy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 531
Appendix B: Senior Leaders Interviewed in 2010–2012. . . . . . . . . . . . . . . . . . . . . . . . 535
Appendix C: Executive Assessment at NDU. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 539

About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545

v i 
Acknowledgments

To write and publish a book of this magnitude involved phenomenal support from a
number of people. I am very thankful to Dr. John Yaeger, Vice President of Academic
Affairs (Provost) at the National Defense University (NDU), for his enthusiastic and
unwavering support of this project. I am also grateful for the support of former Dean
of Faculty Dr. Alan Whittaker, former Commandant Rear Admiral Garry Hall, Com-
mandant Major General Joseph D. Brown, USAF, and Dean of Faculty Harry Dorsey,
each of the Dwight D. Eisenhower School for National Security and Resource Strategy
(formerly the Industrial College of the Armed Forces), a college under the umbrella
of NDU. I am especially thankful to Frank Hoffman, director of NDU Press, for his
personal and masterful shepherding of the manuscript through the editing and pub-
lishing process, as well as to Captain Tracy Connors, USNR (Ret.), owner and publisher
of Belleaire Press, whose editing skills helped immeasurably to transform my draft
manuscript into a readable and coherent book. His guiding hand and patience was an
enormous help in finalizing the manuscript.
I am indebted to my many friends and colleagues who shared their insights, expe-
riences, and particular expertise in leading and managing at the strategic level. I am
particularly grateful to four scholars and leadership experts—Dr. Gary Yukl, Dr. Owen
Jacobs, Dr. Steve Zaccaro, and Mr. Dan Cohen—for sharing with me their insights,
research, and practical experiences. Of special note was my learning and growth by
the mentoring, lively discussions, and debates with my faculty colleagues, as well as
discussions and perspectives gleaned through many discussions with annual classes
of 300-plus students—all proven leaders in their own right.
I wish to express my sincere appreciation to the 46 senior leaders who provided
their views and wisdom gained from their experience leading at the strategic level,
and especially the 44 senior leaders who participated in the survey, structured inter-
views, followup discussions and correspondence.
Very special thanks are offered to those who made significant contributions to
my thoughts and materials used in the book, including John Matheny of the Office
of the Secretary of Defense; Ambassador Bob Loftis of the Department of State; and
Renee Cullinan, Meredith Mohr, and Julie Walker of Atalanta Partners (recognized
experts in senior-level teams), for their collaboration, insights, reviews of portions of
the manuscript, and for developing tailored cases studies in their area of expertise.

A c k n ow l e d g m e nt s   v i i
Likewise, I extend special thanks to Nicki Dover, an outstanding case developer and
writer who drafted a number of the case studies used throughout the book.
Invaluable contributions were provided by interns Brad Davidson, whose out-
standing analysis of the interviewed leaders’ transcripts improved the book; Zac
Knitter, whose skilled editing and expertise with computer programs enabled my
conceptualization of various models to be translated into usable graphics; and Niki
Byrne, whose superb organizational skills were immensely helpful.
I want to thank the many colleagues who reviewed the draft manuscript and
offered wonderful insights and suggested enhancements—Dr. Jay Avella, Dr. Bob
Martin, Dr. Dan Riley, Dr. Ken Alford—as well as Eisenhower School faculty col-
leagues Dr. Mark Vaitkus, Dr. Bill Knowlton, Dr. Sylvia Babus, and Ms. Janie Benton.
Special thanks to colleague Dr. Mark McGuire for his coauthoring the section on
“cognitive capacity.”
Finally, and most importantly, I wish to thank my wife, Mara, for her ongoing
encouragement despite the long hours and more than 2 ½ years fully engaged in
conceiving, drafting, editing, and publishing the book. Her love and support were
essential to the success of this project.
A caveat: I have made a concerted effort to capture and express accurately the
views of those I interviewed and with whom I had many lengthy discussions, as well
as those authors who enlightened me through their research, books, and articles. If
I was successful in that endeavor, the concepts and insights are theirs. Any potential
errors, misinterpretations, or text considered unclear are the fault of the author and
no other party.

James W. Browning, Ph.D.


Washington, D.C.
February 2013

v i i i   L e a d in g a t t h e S t r a te g i c L eve l
INTRODUCTION | The Challenge of
Strategic Leadership

On August 18, 1976, U.S. Army Captain Arthur G. Bonifas and his deputy, First Lieu-
tenant Mark T. Barrett, led a 10-man security force (carrying no weapons other than
their sidearms) and five Korean Service Corps into the demilitarized zone (DMZ)
between North and South Korea.1 Their purpose was to trim a tree next to the “Bridge
of No Return” that was obscuring the view of an American outpost. A group of North
Korean soldiers attacked and beat to death both Bonifas and Barrett with the blunt
end of their axes after they repeatedly ignored the North Koreans’ demands to stop.
After initial discussions between the United States and South Korea, a DEFCON
3 (Defense Condition 3) military alert was announced.2 Secretary of State Henry Kiss-
inger convinced President Gerald Ford that strong action was necessary in response
to the North Korean attack.3 Kissinger suggested that the North Koreans would
remember the American B-52 bombers and the destruction they caused during the
Vietnam War (North Koreans manned North Vietnam surface-to-air missile sites at
key locations). This led him to suggest to Ford that they send a fleet of B-52s over the
DMZ. The action would serve as a “shot across their bow.”
On the morning of August 21, 1976, 3 days after the initial provocation, a joint
force (consisting of fighters, helicopters, and armed soldiers) and supported by the
United Nations carried out Operation Paul Bunyan, removing the tree and replacing it
with a small monument honoring the two murdered officers. The joint force completed
the operation in less than an hour with no reaction by the North Koreans. Through
this strategic display of American force, the United States symbolically fulfilled the
mission and memorialized the fallen troops while avoiding the resumption of war
with North Korea.4
Navigating the complex and volatile international landscape, Kissinger deftly
utilized American military strength to maintain the status quo. While this example
from 1976 was certainly a complex international issue filled with uncertainty and
ambiguity, it was a singular, isolated incident. Three decades later Kissinger acknowl-
edged that the world had fundamentally changed. International issues and incidents
were no longer isolated. Strategic leaders now faced a multitude of strategic issues
almost simultaneously in an international global environment that was rife with
complexity, uncertainty, and ambiguity. In an interview with journalist Charlie Rose
in 2007, Kissinger argued, “We’re at a moment when the international system is in a

I nt ro d u c t i o n   i x
period of change like we haven’t seen for several hundred years . . . [and] American
foreign policy has to deal with all of these aspects simultaneously.” He emphasized
that the high volatility and uncertainty inherent in the strategic environment now
rendered obsolete the old mental paradigm that “problems . . . have a solution and can
be solved in a finite period.” Today’s strategic environment is complex, multidimen-
sional, and interrelated. Kissinger stressed that with today’s extraordinary turbulent
environment, there is no clear-cut terminal point to the international problems faced
by today’s leaders; the days of one issue, one region, one country, and one problem
set are over.
The world continues to experience drastic changes that typically create remark-
ably complex challenges for strategic leaders. Kissinger’s assessment of today’s world
order reflects the impact of the globalized, interdependent, and frequently unstable
world—an environment filled with volatility, uncertainty, complexity, and ambiguity
(VUCA). Changes in a small corner of the globe can quickly spread with worldwide
consequences. The “right thing to do” often no longer exists. As Kissinger posited,
“Each success only buys an admission ticket to a more difficult problem.”5

Wicked Problems
At no other time in history has the world faced such a multitude of problems that are
so complex. Often referred to as “wicked problems,” these problems plague the modern
strategic environment for both government and nongovernment leaders. As Professor
Richard Beinecke stated in The Innovation Journal:
We are in a century of complexity, with unprecedented interconnectivity, scale,
novelty, unforeseen new structures with unexpected new properties, and radi-
cal innovation and transformation. These problems and issues are “wicked.”
There is no definite formulation of the problem. Each problem is essentially
unique, often has not been faced before, and is entwined with other problems.
The search for solutions never stops. Solutions are not good or bad or limited,
but are judgment calls and are often difficult to measure.6
A clear definition of the term “wicked problems” remains elusive, leaving scholars
and practitioners to describe the term’s characteristics. For example, Professor John
Camillus, in his Harvard Business Review article “Strategy as a Wicked Problem,”
explained: “A wicked problem has innumerable causes, is tough to describe, and
doesn’t have a right answer. . . . Not only do conventional processes fail to tackle
wicked problems, but they may exacerbate situations by generating undesirable
consequences.”7 These problems can emerge in many different situations, especially
when organizations face constant change or unprecedented challenges.8 It is up to
the strategic leader to identify these challenges, seek out opportunity, and formulate
strategy to tackle, or at least manage, the emerged wicked problems.

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A number of descriptors help strategic leaders judge whether a problem is wicked.
For example, Camillus suggested there are five characteristics of a wicked problem:
• Th
 e problem involves many stakeholders with different values and priorities.
• Th
 e issue’s roots are complex and tangled.
• The problem is difficult to come to grips with and changes with every attempt to
address it.
• Th
 e challenge has no precedent.
• Th
 ere is nothing to indicate the right answer to the problem.9
Similarly, Professor Nancy Roberts described wicked problems as problems with
the following four characteristics:
• There is no agreement about “the problem.” In fact, the formulation of the problem
is the problem.
• There is no agreement on a solution. In actuality, stakeholders put forward many
competing “solutions,” none of which has stopping rules to determine when the
problem is solved.
• The problem-solving process is complex because constraints, such as resources and
political ramifications, are constantly changing.
• Generated changes occur because numerous interested parties come and go, change
their minds, fail to communicate, or otherwise change the rules by which they solve
the problem.10
The expression “permanent white water,” coined by organizational change theo-
rist Peter Vaill in 1996, illustrates the tumultuous nature of the VUCA environment
facing modern strategic leaders. In 2010, Vaill further emphasized this description as
a metaphor illustrating the challenges facing current and future leaders. He outlined
the following five defining characteristics of permanent white water:
First, they arrive as surprises. Second, they frequently have novel components
and character. Third, they do not fit neatly into any capability the organization
already possesses. Fourth, although they are frequently so weird and bizarre
as to be amusing, they cannot be brushed aside but must be dealt with. And
fifth, while conceivably any one of these events can be anticipated, what can-
not be planned for is the continual occurrence of further surprising, novel,
ill-structured, and obtrusive events. This fifth characteristic makes permanent
white water a descriptor of the overall system over which a managerial leader
is in charge or facilitates.11
The national security environment, for example, faces a unique set of modern
challenges, including the rise of nonstate actors, the spread of terrorism, and an
increase in failing states. The rise of economic and political power in other nations

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such as China, India, and Brazil also significantly affects the United States—the world
is returning to a multipolar global hierarchy for the first time since before World War
II. Concurrent with these turbulent national security challenges are the continuing
efforts to combat and minimize international crime, with drug and human trafficking
becoming an industry in its own right. Other examples of wicked problems include
climate change; environmental sustainability; changing demographics; and increases
in natural and man-made crises and disasters. In addition, there are more frequent
economic, financial, and social upheavals and discontinuities; ideological and religious
schisms; impending scarcity of resources; continuing influences of disruptive tech-
nologies; and pandemics. Hyper-competition and volatility of international markets,
coupled with global financial and economic instability, create significant uncertainty
and risk for both government and nongovernment organizations. Wicked problems
were the exception during the times of the “Korean tree incident,” but now they are
the rule.
Effective strategic leaders utilize a combination of “mixed intuition with analyti-
cal reasoning” to develop sound strategy, especially when they are placed in uncer-
tain and unprecedented situations. Strategic leaders often find themselves forced to
develop strategy in “uncertain situations . . . when facts and time [are] limited, when
relevant variables [are] less predictable, and when several plausible possibilities [can]
be entertained.”12
Professor Mark Foulon, Economics Professor and former Acting Under Secretary
of Commerce for Industry and Security, however, offers a note of caution. He sug-
gests some strategic leaders will default difficult problems to being wicked problems.
Doing so may become the excuse for not analyzing and addressing the problems.13
Consequently, strategic leaders need a conceptual framework that will enable them
to differentiate difficult problems that are solvable from those that are truly wicked.
The strategic leader’s ability to utilize his or her informed intuition directly correlates
to their ultimate level of success in this effort.

Factors Influencing the VUCA Environment


Changing Rule Sets
Regardless of profession or type of organization, many popular writers argue that
the rule sets governing individuals’ and organizations’ actions, decisionmaking, and
behaviors are now fundamentally transformed.14 Analogous to playing American
football and suddenly switching the game to European football (soccer), rugby, or
to a new environment such as water polo or synchronized swimming, the strategic
leader must be ready to adapt his or her strategy to the game at hand. With the ever-
evolving VUCA environment facing strategic leaders today, the challenge is as much
figuring out which game they are playing as it is figuring out the rules, the referees,
and the endgame.

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Exploding Technology
Technology is changing daily. As soon as a strategic leader believes he or she has the
latest and greatest gadget, something new appears and makes the technology obsolete.
Strategic leaders throughout the business/industry world share this challenge. They are
constantly looking for ways to stay ahead of the power curve by locating and transmit-
ting as much information as possible. Vice Admiral Conrad Lautenbacher, USN (Ret.),
Vice President for Science at Computer Sciences Corporation and former Deputy Chief
of Naval Operations in charge of Navy programs and budget, noted: “The swift nature
of technology poses a serious challenge to strategic leaders in businesses who are try-
ing to maintain profitability and stay ahead of the curve.”15 This created a world where
technology is a double-edged sword. While technology allowed businesses to grow at
an unprecedented rate during past two decades, Gordon Smith, former executive at
American Express, explained that “the speed of change in technology exacerbates the
difficulty in forecasting and accelerates the pace of business.”16

Magnitude of Information
Organizing and interpreting mountains of information is a persistent challenge for
strategic leaders and their strategic leadership teams. For example, Ambassador Bob
Loftis, Acting Coordinator for Reconstruction and Stabilization for the U.S. Depart-
ment of State, posited: “The biggest challenge to strategic leaders is their ability to
overcome the flood of information that is continually drowning everyone. Too much
information can easily lead to paralysis.”17 Rapid information flow can often reveal
many alternatives with multiple conflicting accounts. This constant bombardment
of information makes it difficult to keep everyone on the same page with the same
information, and increases the complexity of the strategic leader’s internal environ-
ment. Paradoxically, a strategic leader can have both information overload and lim-
ited information when attempting to solve the same issue. Just because leaders have
a massive amount of information does not mean that they have information that is
both accurate and relevant. Data does not necessarily evolve into useful information,
nor does useful information evolve into actionable knowledge.

Limited Resources
“A major challenge for strategic leaders is to be able to handle situations in which
resources are severely limited.”18 Frequently, strategic leaders must make decisions
and implement strategy based on incomplete information and limited resources. This
requires the leader to prioritize goals, identify and evaluate tradeoffs, allocate available
resources effectively, and identify future challenges as well as possible second- and
third-order consequences.

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The New Media
The immediacy of the Internet’s worldwide online access to such information as indi-
vidual videos captured by cell phones and the sharing of such information by social
media, including blogs and “tweets,” are challenging strategic leaders around the world
on a daily basis. These “reporters” can record what they see and within minutes trans-
mit the images in real time by the Internet and other technologies.19 While it is true
that strategic leaders can, in theory, use the same media to spread their own message,
it is the unsolicited—and often irrelevant—information from even the most remote
places in the world that poses new risks for organizational leaders.

Strategic Leadership: Fundamentally Different from Operational


or Tactical Leadership
When comparing strategic and operational leadership, all senior leaders interviewed
for this book emphasized that there is a fundamental difference between leading at
the strategic level and leading at the operational or tactical levels. For example, John
Langford, President and Chief Executive Officer (CEO) of Aurora Flight Sciences
Corporation, argues that “the work of a strategic leader is a chess game. You are play-
ing a multi-dimensional match and you must be able to see multiple moves ahead
against several different opponents. The strategic leader is the one looking at all of the
boards—the whole boards—and determining where to move.”20
Kevin Cox, Executive Vice President at American Express, offered: “The job of a
strategic leader is about synthesizing a fair amount of seemingly disparate information
and creating a direction from all of that.”21 Creating this direction, or vision, is solely
the responsibility of the strategic leader (supported by his or her strategic leadership
team, also referred to in this book as “top management team” and “executive team”).
It is imperative that the leader scans the external environment, identifies risks and
opportunities, and aligns a vision with the purpose and values of the organization in
order to ensure organizational viability. As Jeremy Kaplan, business consultant and
former Director of Technical Integration Services at the Defense Information Systems
Agency (DISA), emphasized, “The most important things that a strategic leader does
are to figure out what the organization ‘should’ be doing and what it must accomplish,
and then to figure out what he or she needs to do for the organization to achieve those
goals. This is absolutely fundamental.”22
A major problem during transitions for many leaders is the understandable urge
to fall back on familiar leadership approaches that worked in the past, rather than take
the time and expend the mental energy and learning necessary to grasp the situations
currently confronting them. Even if the problems are similar to what was experienced
in the past, approaches that were successful in the past may not work in the new situa-
tion. For example, the Xerox Board of Directors selected Ken Thoman, Lou Gerstner’s
“right-hand-man” in the transformation of IBM, to be the CEO of Xerox. Unfortu-

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nately, Thoman failed in his effort to turn around Xerox using what worked for IBM.
The Xerox Board fired Thoman within 2 years of his selection.
The ever-increasing complexity and uncertainty of the strategic environment leave
many organizations wondering whether they are equipped to tackle the challenges—
whether they possess the necessary skills and capabilities to succeed. Although there
is a “call for better, different, more agile leadership, many top executives arrive in their
high-impact roles without being fully prepared to meet contemporary challenges.”23
Organizations touted for their leadership, for example, Bear Stearns, Lehman Brothers,
Saturn, Enron, or Arthur Anderson, can disappear almost over night. Both govern-
ment and nongovernment reputations (and professional futures) of leaders and their
institutions can be damaged, as we have seen with British Petroleum, Toyota, Federal
Emergency Management Agency, U.S. Secret Service, and U.S. General Services
Administration. This inability to perform at the strategic level is illustrated by the
failure (and at times the demise) of organizations, as well as the significant turnover
of senior-level leaders in both government and nongovernment organizations.
While the senior leaders interviewed for this book recognized that organizational
scale is larger at the strategic level than it is at the operational level, they argued that
scale was a vastly less pressing issue than shifting skill sets and mental models. For
example, Dave Zuercher, Executive Vice President, International and Insurance Ser-
vices, Wells Fargo, provided the following analogy that discusses this misconception:
I initially thought the difference could be explained by just a matter of scale.
I imagined that the bar would just keep getting higher and higher. However,
I soon realized that is not the case. The bar does not just keep getting higher
and higher, it keeps moving to different parts of the field. It is your job as the
strategic leader to figure out where the bar is going. You end up spending most
of your time looking around the field attempting to identify where the bar is. It
is rarely right in front of you at the strategic level.24
This level of ambiguity presents a different set of challenges to strategic leadership—
challenges that are not faced at the operational level.
It is crucial that strategic leaders recognize that successfully dealing with the com-
plex and difficult challenges encountered at the strategic level requires new skills, new
mental models, new frames of reference, and new leadership approaches, compared
to leading at the operational or tactical levels.

Leading at the Strategic Level: About This Book


The fundamental nature of a leader’s work changes at the strategic level. Leaders cur-
rently working as strategic leaders or those aspiring to become strategic leaders must
gain a fine appreciation for the effort and skills required at the strategic level. More-
over, they need to develop and hone their personal dimensions (including conceptual,

I nt ro d u c t i o n   x v
social, and behavioral capacities; individual traits, attitudes and characteristics; and
technical skills and business acumen), and acquire the new knowledge essential for
success at the strategic level.

Purpose of Leading at the Strategic Level


The design and focus of this book is to help develop strategic leaders. Intended
participants include those who:
• aspire to be strategic leaders
• c urrently assist or soon will assist strategic leaders
• serve in executive or senior-level positions (government, military, business/industry,
or nonprofit)
• serve as mentors, human resource professionals, or executive coaches providing
counseling to current and future strategic leaders.
The objective is to stimulate both thinking and reflection that will lead to the
development of one’s own learning plan. A personal learning plan—when comprehen-
sive, deployed, and adapted where appropriate—will enhance one’s personal leadership
capacity, personal and organizational performance, and ultimate success.

A Book for Already Successful Leaders


Let’s “tell it like it is,” as the saying goes. As a current leader, you are busy. Finding the
time to read and reflect on ideas presented in this book may be difficult. Why should
you consider changing your approach or behavior? After all, you are successful or
you wouldn’t be in your current position of responsibility. However, as Leading at the
Strategic Level explains, you must be willing to step out of your comfort zone and risk
being temporarily less competent if you are to make a successful transition and achieve
the personal transformation essential for ultimate success as an agile strategic leader.
As you go through the various sections of this book, keep an open mind and reflect
on your own insights, as well as the examples provided. As you progress to the upper
levels of strategic leadership, your development and learning rest ever more directly
on you. For this book to be valuable, you must think about how the gained insights
and ideas are relevant to you and to your organization—and how to apply and adapt
them. So, take the time to read and reflect on the book’s contents and translate your
reflections to your own organization. If you do, the time invested will prove to be a
successful personal strategy.

Research for This Book


The research25 for Leading at the Strategic Level includes discussions and personal experi-
ences and insights of 46 senior-level government and military officials, business/industry
chief executive officers and vice presidents, and presidents of nonprofit corporations (see

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appendix B).26 Of these, 44 participated in specific interviews and completed a short
survey. A framework of 14 questions guided the discourse and provided opportunities
for the interviewees to reflect on their experiences and lessons learned.27 In some cases,
the author chose senior leaders because they had executive or senior leadership experi-
ence in more than one sector—for example, military and business.

Using This Book


While it may be tempting to read certain sections out of order, you will find that read-
ing chapters 1 and 2 will provide a reference guide and sense of direction regarding
the rationale for succeeding chapters. Keep in mind that while the interviewees rep-
resent one or two specific sectors, the lessons—and perspectives they provide—serve
a broader purpose and perspective.
Throughout the book, there are small sections noted as “pauses” as well as “mini
case studies” to assist reflection and understanding. Pause to reflect on how the reading
applies or does not apply to you or your organization. Do you agree or disagree with the
concepts discussed? Why or why not? These notes will be most valuable to you when
you review the text for those key points of interest to you and your circumstances. Do
not wait until you finish the book to reflect or make notes—it is the immediate reflec-
tions that will offer you the greatest opportunity to gain insights. With that in mind,
you may wish to make notes in the margins, especially as analogies, insights, issues,
or ideas for future use come to mind.
As you read the book and desire additional insights or perspectives to improve
your ability to perform as a strategic leader, the articles and books cited in the notes
at the end of each chapter will prove valuable as supplemental reading.

Content Overview
Section I: Defining Strategic Leadership
Chapters 1 and 2 provide the foundations and framework through which to examine
strategic leadership, the key personal dimensions the strategic leader brings to the
position, and the various key components of the work required of strategic leaders.
Chapter 1 provides an overview of strategic leadership and relevant definitions and
an examination of key factors influencing strategic leadership. Chapter 2 introduces
a strategic leadership model supported by two related strategic-leadership frame-
works. These frameworks include: Personal Dimensions (e.g., Cognitive, Social, and
Behavioral Capacity; Personal Traits, Values, and Preferences; and Business Acumen
and Technical Skills); and Personal Growth Stages. Also presented is Stratified Sys-
tems Theory (SST)—a theory important to strategic leadership. For discussion and
examination of additional theories relevant to strategic leadership, see www.brownin-
gleadershipmodel.org/SampleTheories.html. For a sampling of other major leadership
models, see www.browningleadershipmodel.org/SampleModels.html.

I nt ro d u c t i o n   x v i i
Section II: The Strategic Leader—Key Interface between the
Organization’s External and Internal Environments
Beginning with chapter 3, section II provides a more in-depth examination of the Per-
sonal Dimensions framework presented in chapter 2, as well as discussing the critical
requirements for a strategic leader to have a strong sense of self and a commitment
to continuous learning. Chapter 4 examines the work the strategic leader performs
at the interface between the organization’s external and internal environments, for
example, “Scan, Make Sense of the External Environment, and Formulate Organi-
zational Vision and Strategy.” The strategic leader must continuously scan, interpret,
and exercise sense-making and foresight to ascertain what is going on in the external
environment, assessing risks, and evaluating opportunities. Based on the leader’s stra-
tegic lens, he or she determines a construed reality. Using this new reality, the strategic
leader produces and evaluates a number of strategies, generates big ideas, and begins to
formulate proactive and adaptive choices. Through this process, the strategic leader is
envisioning an inspiring organizational vision of the future and the need for address-
ing organizational change, as well as formulating strategies to get there. This section
concludes with an examination of a strategic leadership competency—“Leveraging
Power and Politics Strategically and Constructively,” chapter 5.

Section III: Strategy to Action—Strategic Leader Work


In section III, the focus shifts to the organizational work of the strategic leader. For
example, using the Strategic Leadership Model (figure 2-1), the first of the seven pie-
shaped sectors is highlighted and explained in chapter 6, “Building and Leading a
Strategic Leadership Team.” Most of the interviewed senior leaders acknowledged
that in today’s turbulent VUCA environment, the job is too big for a strategic leader to
accomplish alone. This chapter examines how a strategic leader determines if there is a
need for a strategic leadership team (SLT), and if so, the approaches needed to build and
use a SLT. Chapter 7, “Decisionmaking at the Strategic Level,” follows. Also included
in this section is the important strategic leader competency examined in chapter 8,
“Strategic Negotiations—A Strategic Leader Decisionmaking Competency”; and the
essential requirement for the strategic leader to be adept at strategic communication—
examined in chapter 9, “Strategic Communication—A Strategy Execution Imperative.”

Section IV: Preparing the Organization for Success


The strategic leader must be conscious of the impact of the organization’s climate and
culture in either enhancing or restricting the behavioral changes needed to move the
organization toward fulfilling its vision and achieving its strategic objectives. Chapter
10, “Organizational Climate and Culture: Strategic Determiners,” is examined in two
parts. The third sector noted in figure 2-1 focuses on shaping organizational climate in

x v i i i  L e a d i n g a t t h e S t r a te g i c L eve l
culture, which is examined in the first part of this chapter. The second part of chapter
10 focuses on the how the strategic leader can build ethical, innovative climates and
cultures.
The fourth sector from the Strategic Leadership Model represents the ongoing
requirement to lead and manage organizational change. In preceding chapters, the
strategic leader (and the SLT) evaluated the ability of the organization to achieve the
desired endstate. This examination includes the determination of the amount of orga-
nizational change that must take place to achieve the vision, mission, and strategic
objectives—from minor organizational adjustments to major transformational change.
The most difficult is transformational change. Chapter 11, “Leading and Managing
Transformational Change,” examines how strategic leaders can approach and execute
transformational change.
A key strategic leadership responsibility identified by the interviewed senior lead-
ers is the handling of an organizational crisis. As no organization returns to “normal”
following a crisis, chapter 12, “Leading Strategically in a Crisis Situation,” examines
this key strategic leader challenge.
Beginning with the “leading organizational change” and continuing through the
remaining sectors, figure 2-1 depicts the need by the strategic leader to practice stra-
tegic leadership, as well as strategic management. It is in this area of the model where
the strategic leader leads and manages actions through indirect leadership—where
the leader delegates much of the work to subordinate leaders and managers. This is
not to imply that the strategic leader maintains a “hands-off” approach; rather, he or
she ensures the translation of the agreed-upon strategic direction and strategies into
concrete and effective actions. The strategic leader must pay attention to the orga-
nization’s ability to execute, but should not micromanage the process. Chapter 13,
“Management Requirements of a Strategic Leader,” examines what it takes to drive a
culture of execution.
Concluding section IV is chapter 14, “Four Key Reasons Why Strategic Leaders
Fail.” Section IV focuses on preparing the organization for success; however, it is pru-
dent for the strategic leader to have a fine appreciation regarding what contributes to
leader and organization failure. This final chapter examines some of the causes behind
failed leaders and organizations.

A Final Note
While the chapters are presented as a logical flow of strategic leader actions, the
structure and layout for Leading at the Strategic Level are not meant to imply that the
work of strategic leaders is linear—quite the contrary. Clearly, work at the strategic
level is iterative, often nonsequential, with many elements occurring simultaneously—
depending on the specific task and its context and situation.

I nt ro d u c t i o n   x i x
Future Strategic Leadership Research, Theories, and Practices
I welcome feedback regarding the contents of this book as well as the additional materi-
als located at www.browningleadershipmodel.org. Of particular interest would be per-
sonal experiences and insights, case studies, or refinements to the strategic leadership
model or the Personal Dimensions Framework. In addition, I would be grateful for any
submissions of new findings, concepts, and their leadership implications derived from
the growing contributions from neuroscience research and NeuroLeadership work-
shops and annual summits. I can be reached at info@browningleadershipmodel.org.

Notes
John Singlaub and Malcolm Macconnell, Hazardous Duty (New York: Summit Books, 1992), at
1

<www.jedburghgroup.com/Oldsite/singlaub/about.htm> (accessed September 13, 2011).


2
“The Axe Murder Incident,” Welcome to DMZ (International Cultural Service Club), at <www.
tourdmz.com/english/main.php> (accessed September 13, 2011).
Richard Head and Frisco Short, Crisis Resolution: Presidential Decision Making in the Mayaguez and
3

Korean Confrontations (Boulder, CO: Westview Press, 1978), 190.


4
Office of Secretary of Defense-Policy (OSD-P), former OSD-P Chair for ICAF; military assistant to
VP Mondale and VP George H.W. Bush; and former Director of Operations and Equipment Standards
for the United States Golf Association.
Charlie Rose, “Charlie Rose Interviews Zbigniew Brzezinski, Henry Kissinger, Brent Scowcroft,”
5

Transcript of the Charlie Rose Show of June 15, 2007, The New York Times, June 18, 2007.
6
Richard Beinecke, “Introduction: Leadership for Wicked Problems,” The Innovation Journal: The
Public Sector Innovation Journal 14, no. 1 (2009), 1, at <www.innovation.cc/scholarly-style/beinecke1.
pdf> (accessed October 20, 2011).
7
John Camillus, “Strategy as a Wicked Problem,” Harvard Business Review, May 2008, 100.
8
Ibid.
9
Ibid., 100–101.
Nancy Roberts, “Introduction” to course syllabus, DA 4302: Coping With Wicked Problems (Monterey,
10

CA: Naval Postgraduate School, 2009), 1.


Peter Vaill, et al., “The Learning Premise: A Conversation with Peter B. Vaill” in Strategic Leadership,
11

ed. Sydney Finkelstein, Donald Hambrick, and Albert Cannella, Jr. (New York: Oxford University Press,
Inc. 2009), 57.
12
Bernard Bass, The Bass Handbook of Leadership (New York: Free Press, 2008), 115.
Personal interview with Mark Foulon, Professor of Economics at the Industrial College of the Armed
13

Forces, Former Acting Under Secretary of Commerce for Industry and Security, and Treasury Chief of
Staff for International Affairs; consultant with McKinsey.
See Tom Barnett, The Pentagon’s New Map: War and Peace in the Twenty-first Century (New York: G.P.
14

Putnam’s Sons, 2004); and Great Powers: America and the World After Bush (New York: G.P. Putnam’s
Sons, 2010); and Tom Friedman, The Lexus and the Olive Tree: Understanding Globalization (New York:
Anchor, 2000); The World Is Flat 3.0: A Brief History of the Twenty-first Century (New York: Picador,

x x   L e a d in g a t t h e S t r a te g i c L eve l
2007); and That Used to Be Us: How America Fell Behind in the World It Invented and How We Can Come
Back (New York: Farrar, Straus and Giroux, 2011).
Personal interview with VADM Conrad Lautenbacher, USN (Ret.), Vice President for Science, Com-
15

puter Sciences Corporation. Former Director of NOAA, President and CEO of the Consortium for
Oceanographic Research and Education (CORE), and Deputy Chief of Naval Operations (Resources,
Warfare Requirements and Assessments) in charge of Navy programs and budget.
Personal interview with Gordon Smith, former executive with American Express.
16

17
Personal interview with Ambassador Bob Loftis, Acting Coordinator for Reconstruction and Stabi-
lization; former Leader for Pandemics and Status of Forces Negotiations, Department of State.
Personal interview with Dr. John Langford, President and CEO of Aurora Flight Sciences Corporation.
18

Nik Gowing, ‘Skyful of Lies’ and Black Swans: The New Tyranny of Shifting Information Power in Crises
19

(Oxford, UK: Reuters Institute for the Study of Journalism, 2009), 13.
20
Personal interview with Langford.
21
Personal interview with Kevin Cox, Executive Vice President for HR at American Express.
Personal interview with Dr. Jeremy Kaplan, business consultant; former Director of Technical Inte-
22

gration Services at the Defense Information Systems Agency (DISA) and the DISA Chair for ICAF.
23
Kerry Bunker, Douglas Hall, and Kathy Kram, “Introduction,” in Extraordinary Leadership: Address-
ing the Gaps in Senior Executive Development, ed. Kerry Bunker, Douglas Hall, and Kathy Kram (San
Francisco, CA: Jossey-Bass, 2010), 1.
Personal interview with Dave Zuercher, Executive Vice President, International and Insurance Ser-
24

vices, Wells Fargo.


25
Research for this book includes the review of more than 400 books, 1,000 articles from refereed
journals and the popular press, and more than 30 executive and senior-leader presentations given at the
National Defense University, Stanford, Massachusetts Institute of Technology, Yale, and Harvard. Also
utilized are the data and insights from a 2006–2007 benchmarking effort of top executive leadership
programs throughout the United States and Montreal, Canada. The author and faculty colleagues from
The Dwight D. Eisenhower School for National Security and Resource Strategy (ESNSRS)—formerly
named the Industrial College of the Armed Forces, or ICAF—benchmarked the top universities and
colleges offering Executive MBA and Public Affairs programs as well as executive training organiza-
tions and corporate university programs. See appendix A for an overview of the Eisenhower School’s
superb academic program—a program that enables its students to become more effective leaders at the
strategic level.
26
The author conducted the senior-level interviews and follow-up discussions in 2010–2012.
For the list of the questions and the results of the short survey, see <www.browningleadershipmodel.
27

org/SLSurvey.html>. In presenting these questions, the author did not follow any particular order and
did not ask every question to every interviewee.

I nt ro d u c t i o n   x x i
SECTION I: Defining Strategic Leadership
CHAPTER 1 | What Is Strategic Leadership?

The World of the Strategic Leader


In today’s turbulent world, the need for effective strategic leadership is critical to any
organization’s success—government, military, nonprofit, or business/industry orga-
nization. What essentially defines a strategic leader? In general, the strategic leader
(at the apex of the organization) is ultimately responsible for the purpose, direction,
mission accomplishment, viability, integrity, cohesiveness, legitimacy, relevance, and
survivability of the organization. The strategic leader achieves sustained relevancy and
competitive advantage by establishing and applying three basic frameworks:

Goods or Services
The organization provides high-quality goods or services valued by stakeholders and
customers. To accomplish this short-term objective, the strategic leader applies a com-
bination of leadership coupled with strategic management strategies and tactics that
maximize output quality, volume, and results (effectiveness) at least cost (efficiency).
Examples include: ensuring alignment of organizational functions, deploying policies
of best practices, and motivating an engaged workforce with a culture of innovation,
creativity, and continuous process improvements. In other words, in providing goods
and services valued by stakeholders and customers, the leader strives for:
• effectiveness (the ends)—the degree to which the organization achieves stated objectives
• efficiency (the means)—using minimum resources (raw materials, money, people,
etc.) to produce the desired output.
By satisfying both stakeholders and customers, the strategic leader achieves personal
and organizational credibility and legitimacy. While he or she is ultimately accountable
for this objective and is responsible for shaping the organizational climate, culture,
and organizational structure, subordinate operational and tactical leaders lead the
primary work.

Alignment with External Environment


The organization remains aligned with its external operating environment through
which the organization achieves long-term relevance, viability, and competitive
advantage. The external environment is the sole responsibility of the strategic leader

C h a pte r 1  1
(supported by his or her strategic leadership team). It is in the external environment
that the key stakeholders, constituencies, competitors, and customers reside. If the
organization is not relevant to the needs and opportunities of the external environ-
ment, then the organization will eventually go out of business, e.g., the demise of
buggy-whip manufacturers and retailers with the introduction of the horseless car-
riage. To accomplish this objective, the leader must be aware of what is going on in
the external environment and attempt to “connect the dots.” This process enables the
leader to identify those potential threats and opportunities affecting current and long-
term viability, vitality, and success. As a result of this scanning and sense-making, the
leader can determine whether to be proactive or adaptive to the ever-changing external
environment. Depending on environmental interpretation and sense-making, the
strategic leader can:
• v alidate, refocus (or shape), or evolve the primary purpose (mission) of the organization
• identify strategic objectives, formulate alternative strategies and supporting resources
• envision and communicate a shared vision
• design and implement appropriate change initiatives (from minor organizational
adjustments to major transformational change).
In evaluating possible strategy alternatives, the strategic leader must have a clear
understanding of the organization’s ability to adapt. For example, he or she should
assess the extent to which the workforce has the agility, mindset, and necessary skill
sets to embrace the change initiatives, succeed during implementation, and control
sufficient resources to implement the changes without hurting current successful
operations and customer-desired products and services.

Stability Under Pressure


An organization that remains stable and viable during and following a crisis exemplifies
stability under pressure. This characteristic and results are solely the responsibility of
the strategic leader (supported by the strategic leadership team). From a strategic leader’s
perspective, today’s fast-paced environment will produce an increasing number of “inevi-
table surprises.” In fact, as the interviewed senior leaders emphasized, it is becoming the
new normal. “We must accept that no organization is immune from a crisis anywhere
in the world even if that organization is vigilant and actively seeks to prevent crises.”1
During a crisis, loss of reputation can lead to loss of legitimacy and could even lead to the
destruction of the organization. General Charles (Chuck) Krulak, former Commandant
of the U.S. Marine Corps and Vice Chairman of MBNA, argues that reputation is the
key risk in a crisis: “Reputational risk is the one that will kill you.”2
How the strategic leader handles a crisis will ultimately determine personal and
organizational reputations. Strategic leaders must recognize that organizational
crises can either make or break them, and the better prepared for a crisis, the better

2   L e a d in g a t t h e S t r a te g i c L eve l
the opportunity for a successful personal and organizational outcome. This means
thinking about who the leader wants to have around him or her and how the leader
wants to operate. Moreover, in facing a crisis, the strategic leader should recognize
that the organization will never return to “normal.” Rather than a focus on return-
ing to the status quo, the focus should be on where the strategic leader wants the
organization to be once the crisis is resolved. The strategic leader should look for the
opportunities embedded in or resulting from the crisis and review the strategy(ies)
used in resolving the crisis as it affects the organization’s purpose, long-term vision,
and guiding principles, while maintaining focus on achieving the mission and sus-
taining a competitive advantage.3
Furthermore, like it or not, faced with uncertainty, confusion, and unpredict-
ability—while simultaneously operating under immense pressure and scrutiny (all
in the spotlight)—it is the responsibility of the strategic leader to be at the forefront.
Consequently, future personal or organizational success or failure—actual or per-
ceived—will rest on how agile and resilient the leader and the leadership team are in
dealing with a crisis.
The foregoing strategic leader’s roles and responsibilities may seem straightfor-
ward and logical, yet the ability to perform at a high level in an environment fraught
with volatility, uncertainty, complexity, and ambiguity (VUCA) is a daunting task
for any leader.

Leadership vs. Management


Before describing or defining strategic leadership, the following offers a review of
how leadership and management relate. Prevailing wisdom is that “managers value
stability, order, and efficiency, and they are impersonal, risk adverse and focused on
short-term results . . . [while leaders] value flexibility, innovation, and adaptation:
they care about people as well as economic outcomes, and they have a longer-term
perspective with regard to objectives and strategies.”4 Most authors of management
books or textbooks view “leading” as part of management. However, this is a con-
tested area; many scholars consider leaders entirely separate, with different goals
and skill sets.
Harvard Professor John Kotter distinguishes leadership from management in this
way: “Management is about coping with complexity. . . . Good management brings a
degree of order and consistency to key dimensions like the quality and profitability
of products. . . . Leadership, in contrast, is about coping with change . . . more change
always demands more leadership.”5
Some authorities assert that the discussion of the differences between leadership
and management adds no real value. They argue that serving as a “senior manager”
or a “senior leader” requires competency in both areas to be successful, especially at
the apex of an organization (government or nongovernment).

C h a pte r 1  3
Henry Mintzberg points out, “It has become fashionable to distinguish leaders
from managers. One does the right things, copes with change; the other does things
right, copes with complexity.” He further states, “Frankly, I don’t understand what this
distinction means in the everyday life of organizations. Sure, we can separate leading
and managing conceptually. But can we separate them in practice? Or, more to the
point, should we even try?”6 Mintzberg argues that managing is ahead of leadership.
“Leadership cannot simply delegate management; instead of distinguishing managers
from leaders, we should be seeing managers as leaders, and leadership as management
practiced well.”7
Gary Yukl states, “Strong management alone can create a bureaucracy without
a purpose, but strong leadership alone can create change that is impractical. To be
effective, managers must also be leaders, and leaders must manage.”8 He chooses to
use the terms leader, manager, and boss interchangeably.9
The most popular distinction between leadership and management, as referred to
by Mintzberg above, is the statement: “Managers are people who do things right and
leaders are people who do the right thing.”10 In the early 1990s, the U.S. Navy added
an additional “right” to the leadership statement: “Leaders are people who do the right
thing at the right time.”11 Whenever and wherever leadership and management are
practiced, the timing of a specific action or decision can be critical to either success
or failure based on the situation and context at the moment.
For example, President Abraham Lincoln’s thinking and decision regarding
the Emancipation Proclamation are relevant: Would the Union cause be helped or
hindered by issuing the proclamation? Doris Kearns Goodwin posited, “All his life,
Lincoln had exhibited an exceptionally sensitive grasp of the limits set by public
opinion. As a politician, he had an intuitive sense of when to hold fast, when to wait,
and when to lead.” Quoting Lincoln, she wrote: “It is my conviction . . . that, had the
proclamation been issued even six months earlier than it was, public sentiment would
not have sustained it.” In other words, the North would not fight to end slavery, but it
would and did fight to preserve the Union. Lincoln had known this and realized that
any assault on slavery would have to await a change in public attitudes.12
For the purposes of this book, there is a distinct difference between leadership and
management. Leaders can only lead people; they cannot lead materials and time, for
example. Yet, leaders can manage strategies and plans; allocate resources—materials,
money, time, people, etc.; establish organizational structure and alignment; and decide
upon networks, technology, systems, and processes. For example, managing people
can include recruiting, processing, assigning work, training technical skills, develop-
ing leaders, and providing recognition (rewards) and benefits. Being well-versed and
proficient in both strategic leadership and strategic management is essential for any
senior-level leader’s success. For the purposes of this book, in contrast to Mintzberg’s
contention, strategic management is a subset of strategic leadership.

4   L e a d in g a t t h e S t r a te g i c L eve l
Defining Strategic Leadership
In a general sense, the term “strategic” is applied to those elements considered wide-
ranging and of primary importance (e.g., to a country or organization). Coming from
the Greek word strategia or generalship, strategy is defined as “a plan for applying
resources to achieve objectives; it is thus inseparable from, indeed it is, the relationship
in thought and action between means and ends, resources and objectives, power and
purpose, capabilities and intentions in any sphere of human activity.”13
With the term strategy equated in the past with generalship or command, and
strategic as related to strategy, it would appear that these two terms fit naturally
together and would lead to the term “strategic leadership.” As Michael Guillot sur-
mises, “Since the aim of strategy is to link ends, ways, and means, the aim of strategic
leadership is to determine the ends, choose the best ways, and apply the most effective
means. The strategy is the plan; strategic leadership is the thinking and decision mak-
ing required to develop and effect the plan.”14 The word “strategic” implies a systems
perspective and, aligned with the term “strategy,” denotes that strategic leaders envi-
sion a desirable organizational future aligned with the perceived “strategic environ-
ment,” which includes both the organization’s external and internal environments.
Yet, as with the previous discussion regarding the leadership and management
relationship, so, too, are there varied opinions regarding the term “strategic leadership.”
For example, John Schermerhorn defines strategic leadership as creating “the capacity
for ongoing strategic change . . . [and inspiring] people to continuously change, refine,
and improve strategies and their implementation.” He defines strategic management
as “the process of formulating and implementing strategies,” and strategic intent as
that which “focuses and applies organizational energies on a unifying and compel-
ling goal.”15
General David Petreaus, USA (Ret.), Director of the Central Intelligence Agency
(CIA) and former military commander in Iraq and Afghanistan, emphasized: “Stra-
tegic leadership is fundamentally about big ideas and about four tasks connected
with those big ideas: first, getting the big ideas right; second, communicating them
effectively; third, ensuring that they are executed properly; and fourth, capturing,
sharing, and institutionalizing lessons learned and best practices identified during
the execution of those big ideas.”16
The following tables provide examples of definitions and characteristics associ-
ated with leaders at the strategic level. Table 1-1 presents examples of strategic leader-
ship definitions. These definitions reflect different conceptual frameworks, some of
which are quite explicit, whereas others are more of a listing of key aspects related
to strategic leadership. Table 1-2 illustrates examples of strategic leader components
and characteristics.

C h a pte r 1  5
Table 1-1. Definitions and Concepts Associated with Strategic Leadership

AUTHOR DEFINITION
Center for Creative Individuals and teams enact strategic leadership when they think,
Leadership (CCL) act, and influence in ways that promote the sustainable competi-
tive advantage of the organization. CCL argues that strategic
leadership is not an organizational position, rather it is a process.
Owen Jacobs Strategic leadership is about defining the elements of strategy
and then bringing the strategies to fruition.
U.S. Army War College Strategic leadership is the process used by a leader to affect the
achievement of a desirable and clearly understood vision by influ-
encing the organizational culture, allocating resources, directing
through policy and directive, and building consensus within a
volatile, uncertain, complex, and ambiguous global environment
which is marked by opportunities and threats. Moreover, strate-
gic leadership is a shared responsibility within the organization,
including staff and others.
Albert Vicere Strategic leadership is the hard-to-delineate ability of leaders
to stay the course in an organization while continually “rocking
the boat” so as to enhance readiness and competitiveness in an
unpredictable environment.
John Schermerhorn Strategic leadership creates the capacity for ongoing strategic
change and inspires people to continuously change, refine, and
improve strategies and their implementation.
Kimberly Boal Strategic leadership is a series of decisions and activities, both
process-oriented and substantive in nature, through which, over
time, the past, the present, and the future of the organization
coalesce. Strategic leadership forges a bridge between the
past, the present, and the future, by reaffirming core values and
identity to ensure continuity and integrity as the organization
struggles with known and unknown realities and possibilities.
Strategic leadership develops, focuses, and enables an orga-
nization’s structural, human, and social capital and capabilities
to meet real-time opportunities and threats. Finally, strategic
leadership makes sense of and gives meaning to environmental
turbulence and ambiguity, and provides a vision and road map
that allow an organization to evolve and innovate.
Duane Ireland and Strategic leadership is the ability to anticipate, envision, maintain
Michael Hitt flexibility, think strategically, and work with others to initiate
changes that will create a viable future for the organization.

6   L e a d in g a t t h e S t r a te g i c L eve l
Table 1-2. Strategic Leader Components and Characteristics

IRELAND AND HITT ROWE DAVIES AND DAVIES


ORGANIZATIONAL ABILITY
Determining the firm’s pur- Synergistic combination of Be strategically orientated —
pose or vision managerial and visionary ability to consider both the
leadership long-term future, seeing
the bigger picture, as well
understanding the current
contextual setting of the
organization
Exploiting and maintaining Have strong, positive expecta- Develop strategic
core competencies —the tions of the performance they competencies
resources and capabilities expect from their superiors,
that give a firm a competitive peers, subordinates, and
advantage over its rivals themselves
Developing human capital Oversee operating (day-to- Align people and organi-
day) and strategic (long-term) zations —a key element of
responsibilities this ability is to encourage
commitment through shared
values
Sustaining an effective orga- Formulate and implement Determine effective strategic
nizational culture —refers to strategies for immediate intervention points —able to
the complex set of ideologies, impact and preservation of define the key moment for
symbols, and core values long-term goals to enhance strategic change in organiza-
shared throughout the orga- organizational survival, tions
nization and influences how growth, and long-term
organizational work is done; viability
“culture can be a competitive
advantage”
PERSONAL CHARACTERISTICS
Emphasizing ethical prac- Emphasis on ethical behavior Translate strategy into action
tices —“Ethical practices and value-based decisions
serve as a moral filter through
which potential courses of
action are evaluated”
Establishing balanced organi- Use strategic controls and A dissatisfaction or restless-
zational controls —the formal, financial controls, with ness with the present—
information-based proce- emphasis on strategic challenge ideas and pro-
dures used by strategic lead- controls cesses to seek better ideas
ers and managers to frame, and processes
maintain, and alter patterns
of organizational activities

C h a pte r 1  7
Table 1-2. Strategic Leader Components and Characteristics

IRELAND AND HITT ROWE DAVIES AND DAVIES


Use, and interchange, tacit Absorptive capacity—
and explicit knowledge on recognize new information,
individual and organizational analyze it, and apply it to new
levels outcomes
Use linear and nonlinear Adaptive capacity—provide a
thinking patterns flexible strategic response
Believe in strategic choice, Leadership wisdom —
i.e., their choices make a dif- capacity to take the right
ference in their organizations action at the right time
and environment

Themes of Strategic Leadership


A review of the various definitions and supporting components and characteristics
identifies several clear and compelling themes.

Future Viability
Strategic leadership has a primary focus on the future viability of the organization.
Embedded in this future-oriented focus are the acute understanding and appreciation
that to be viable in the future requires a continual focus on aligning organizational
efforts to the ever-escalating changes of the external environment.

Coping with Change


Whether it is General Petraeus’s “big ideas,” or Boal’s “roadmap” to the future, or the
Army’s desire to accomplish the “vision,” or Ireland and Hitt’s “create a viable future
for the organization,” these points of view clearly reinforce Kotter’s contention noted
previously, that “leadership . . . is about coping with change.” Moreover, the linking of
strategic leadership with formulating and executing strategy is the management pro-
cess that enables the agile strategic leader to lead and manage the continuing organiza-
tional transformational process. It is through these ongoing successful organizational
change initiatives that the strategic leader engages and motivates the organization on
the journey to a viable future sustained through a strong organizational purpose, a
competitive edge, viability, vitality, and ultimately, survival.

Balancing and Integrating Change with Current Operations


The strategic leader cannot ignore the organization’s current reality. Consequently, the stra-
tegic leader has to balance the competing or paradoxical organizational needs for meeting
stakeholders’ and customers’ near-term performance expectations by ensuring appropriate
and necessary organizational changes are ongoing and successfully implemented.

8   L e a d in g a t t h e S t r a te g i c L eve l
Relating Strategic Leadership to “Senior” Leadership, “Executive”
Leadership, or “Top-level” Leadership
Many people use these terms interchangeably. “Senior,” “executive,” and “top-level”
are terms that identify the upper echelons of a hierarchical organization; the senior
leaders occupying those positions are in organizational positions of authority and
responsibility. Depending on the organization, the specific roles and responsibilities
of these senior leaders may differ, but they can always be collectively distinguished
from the operational or tactical levels of the organization.
The leaders occupying the upper echelons of an organization are generally stra-
tegic leaders. Moreover, as illustrated by the previous discussion, strategic leadership
involves activities typically associated with the apex of the organization—yet do not
have to be associated with the actual top leader in the organization—and can be asso-
ciated with more than one person, for example, a strategic leadership team. For the
purposes of this book, the strategic leader will be the senior leader of the organization
or a member of the strategic leadership team.

Balancing Active Management of the Status Quo and


Organizational Change
To successfully survive in a VUCA (volatile, uncertain, complex, and ambiguous)
world, an agile strategic leader must be future-oriented with a focus on the organiza-
tion’s long-term viability, relevance, and vitality while maintaining the credibility,
reputation, and legitimacy of the organization in the near term. The strategic leader
proactively adapts the organization to take advantage of potential opportunities and
reactively adapts to threats by mitigating potential organizational damage or disrup-
tion. This requires the strategic leader to balance and integrate organizational change
with its members’ need for systems and personal stability.
To sustain an organization’s survival and competitive advantage, strategic leaders
formulate strategies needed to transition from current to future reality—and to inspire
stakeholders, key constituents, and the workforce to actively engage in executing those
strategies. Strategic leaders ensure that organizational structure and processes reinforce
the work and behaviors needed for successful progress toward the desired outcomes.
To embrace change, strategic leaders must “manage the organization” to enable
it to meet the challenges and ramifications of constant change. Aligning organiza-
tional structure and processes, training and developing organizational members, and
monitoring the processes and outcomes with an eye on continuing improvement are
all responsibilities of leaders at the strategic level. Through a continued focus on both
the vision and organizational performance (setting expectations), strategic leaders set
forth their strategic intent establishing “a clear sense of where they want to lead the
company and what results they expect to achieve.”17

C h a pte r 1  9
Strategic Management
It is through strategic management that the strategic leader provides the necessary
alignment between organizational capability and performance. The strategic leader
must ensure the translation of the formulated strategy and supporting resources into
effective action and execution. Transitioning to action requires planning. There is
much discussion and questioning regarding the importance of strategic planning in a
turbulent, VUCA environment. A frequent criticism of strategic plans is that as soon
as they are completed, they sit on a shelf and gather dust—never used as an effective
execution tool. As Field Marshal Helmuth, Count von Moltke argued in the 1800s, “No
battle plan survives contact with the enemy,” yet planning is essential to execution.18
The strategic planning process helps the functional components of the organization’s
infrastructure better understand and identify relative priorities, as well as aligning
functional strategic expectations, goals, and human resources.
Strategic management focuses on developing appropriate policies, communica-
tion planning, and leveraging technology, organizational structure, and supporting
processes. Processes include those that support desired:
• organizational behavior (rewards, ethics, collaboration, learning, etc.)
• mission-critical processes (those processes vital to mission fulfillment)
• evaluation and feedback on progress (e.g., metrics).
Strategic leaders functioning as strategic managers (directing, controlling, coordi-
nating) must be able to delegate effectively and set up processes and learning programs
to develop leaders throughout the organization. From an organizational behav-
ioral focus, the strategic leader must ensure a climate and culture that encourages
cross-functional networks and relationships; holds organizational leaders and staff
accountable for their actions and performance (reward and discipline appropriately
and consistently); resolves disputes; and ensures continuous process improvement.
As argued in this book, strategic management, coupled with strategic leadership
with an organizational focus—inspiring, motivating, gaining organizational members’
engagement, enthusiasm, and commitment—are both necessary for effective organi-
zational execution and sustained superior organizational performance. In essence,
strategic leaders are ultimately responsible for the viability, legitimacy, relevance,
direction, integrity, and ultimate performance of their organizations, both near- and
long-term.

Strategic Leadership in Military, Nonprofit, Business/Industry,


or Government Organizations
The public—and some politicians (especially those with a business background)—
often argue that the government needs to be run more like a business. They argue that
government is too big, too bureaucratic, too slow to respond to needs—and wasteful.

10  L e a d in g a t t h e S t r a te g i c L eve l
Others say that business leaders focus on short-term goals such as making the quarterly
numbers, and are concerned with making a profit rather than providing a service.
There are those who argue that business leaders have no real concept of what it takes to
lead a government organization. Similarly, some argue nonprofit organizations should
operate more like businesses (implying the need for more efficiency and effectiveness).
Nonprofit organizations tend to place more emphasis on accomplishing a public service
mission than operating a cost-efficient organization.
In stark contrast to the debate that surrounds leadership in the aforementioned
sectors, there is consensus regarding military leadership. The public generally believes
military strategic leaders perform their leadership roles with commendable compe-
tence and professionalism. For example, Gallup reported in 2011 that “Americans
continue to express greater confidence in the military than in 15 other national insti-
tutions, with 78% saying they have a ‘great deal’ or ‘quite a lot,’ of confidence in it.”19
Consistencies. The majority of the senior leaders interviewed for this book
agreed that the basic principles of competent strategic leadership are consistent
across government and the military, business/industry, and nonprofit sectors, while
specific motives and factors will often influence the outcomes in each sector. These
leaders contend the specific objectives may be dissimilar, but the work, leadership
competencies, and personal dimensions needed by an effective strategic leader in
disparate organizational entities are similar. For example, James Koch, President
Emeritus at Old Dominion University, noted, “Most of the basic leadership principles
that apply to government and military also apply to the private and non-profit sec-
tor. There are certain fundamental principles of leadership that span institutional
frameworks recognizing that the mythologies, histories, and cultures of an organi-
zation can be very different.”20
Military as an Exception. An example of a sector difference is the U.S. military.
Unlike their colleagues in other sectors, military leaders are responsible for the well-
being of their subordinates; unlike in nonmilitary organizations, a military member
goes home after a day’s work while his or her leader remains responsible and account-
able for that individual member, even when not on duty. Yet, similar to their colleagues
in other sectors, at the strategic level:
these high-level leaders must interface across different societal cultures in the
external environment while coordinating organizational systems across these
different cultures. Their domain takes them to the highest national and world-
wide levels as they interact with high-level political officials . . . [and] either
command large numbers of troops (General Franks commanded nearly 300,000
troops during Operation Iraqi Freedom) or are responsible for extremely com-
plex and far-reaching aspects of the military institution (managing the $108
billion Navy budget).21

C h a pte r 1  11
Furthermore, the then-Chairman of the Joint Chiefs of Staff, Admiral Mike Mul-
len, noted in May 2010 that “the biggest driver globally right now is the economy—
and I’d argue it always has been. I’m not an economist and I’m not a finance guy,
but I need to understand the global trends that work those engines. Where are these
guys putting their money? If they’re betting on certain outcomes—whether good or
bad—why?”22 Likewise, Jeff Chu of Fast Company points out military strategic leaders
are expanding their fields of vision, frames of reference, and mental models beyond
strictly military-specific issues. Chu suggested: “Admiral Mullen [was] not just a new
model for military officers—and a new kind of business titan—but also a case study
in 21st-century leadership.”23 Clearly, the role of strategic leadership in the military is
shifting toward the same challenges faced by government and global business leaders.
Relationship of CEOs with Board of Directors. Being responsible to their “own-
ers”—the shareholders and their representatives to the corporation, the Board of
Directors—business leaders must pay attention and often react to Wall Street analysts
and media who can have a major impact on public perceptions of organizational per-
formance and quality of goods and services. Similarly, Renee Acosta, chief executive
officer (CEO) of the nonprofit Global Impact, suggests that experienced and successful
nonprofit strategic leaders recognize the need to have strong relationships with their
boards. She explains her relationship with her board:
The appropriate Board/CEO relationship in a nonprofit is to understand that
it is the Board’s governance and it’s their policy that is to be implemented. As
CEO, I’m responsible for implementing their policy—ensuring the governance
and implementing their policy. On policy and governance, the board has the
final decision, and while they rely heavily on my recommendation, my core
accountability is to provide appropriate information so they can make a good
decision—but not to make their decision for them. That does not mean I don’t
heavily influence. I am a deep respecter of board process. And, I always tell our
team, “All our authorizations and permissions emanate from the board. They
are our most important customer and don’t forget it for one second.” And we
respectfully staff that appropriately.24
Evolving Roles. A significant blurring in the roles of government, humanitarian,
and private sectors is taking place. Clarity is often elusive, but needed to more accu-
rately establish and define the roles and responsibilities of each sector when operating
together within the same strategic environment. For example, in performing humani-
tarian services and relief efforts, Renee Acosta noted:
There often is a cultural divide between NGOs [nongovernmental organizations]
and military, not just in the US, but in any military. The world has changed,
now women and children and NGO workers are targets of war and conflict.

12   L e a d in g a t t h e S t r a te g i c L eve l
It’s academic for someone to say, “Well we have different purposes and differ-
ent policies.” Sorry, people are dying. Take an example of an NGO operating in
Afghanistan to help feed the people during a time of military conflict. The NGO
is going to help whoever needs to be fed. However, the military’s perspective may
be that with this action the NGO may be aiding and abetting the enemy. The
point is we—the military and the NGO—need to coalesce and work strategically
toward a common understanding, a common desire to outcome. We don’t have to
be the same to accomplish that, and in my way of thinking, that is very strategic.
It’s recognizing differences and pulling on strengths.25

Differences and Distinctions


While different organizational strategic leaders may view their leadership roles in
similar fashion—whether they’re leading government, business/industry, military, or
nonprofit organizations—there are some distinctions between these four major organi-
zational constructs that have significant effects on leadership strategies and techniques.
Addressing the differences between government and business, Michael Watkins
used a baseball analogy provided by Roy Ash, past Chairman and CEO of Litton
Industries and one-time director of the Office of Management and Budget. He relates
that “Ash . . . once observed that leadership in business and government are alike only
in their least important aspects. Going from business to government, he said, is like
going from the minor to the major leagues in professional sports.”26 Watkins continues
the analogy, arguing:
All sports have rule books, but in public-sector leadership, the book is thicker
and its relevance to what is happening on the playing field is not always as clear
as it is in the private sector. All sports have spectators, but the observers of gov-
ernment action are often noisier and more contentious than those who observe
and interpret the competitive battles between firms in the marketplace. And,
finally, it’s much more difficult to figure out “the score” in government than it
is in business. Results often are ambiguous and take time to emerge; one often
is left wondering whether the outcome was a win or a loss.27
Fiscal Influence
The largest differentiator identified between the military, government, business/indus-
try, and nonprofit sectors is fiscal influence. Bob McDonald, Chairman, President, and
CEO of Procter & Gamble, describes how fiscal issues influence government and pri-
vate organizations differently. He states: “In the government you try to spend all of your
money so you can get it back next year. It is not like that in the private sector. Ours is
about profit and loss, whereas in government it’s more that you accomplish the mission.
For example, did you get a man on the moon and bring him back?”28 Fiscal motives
do influence government, but anyone who has spent time in government understands

C h a pte r 1  13
that the bureaucracy bumper-sticker would read “If you got it, spend it!” This provides
incentive for federal organizations to spend money, even if it is unnecessary. Lieutenant
General Ron Iverson, USAF (Ret.), CEO of LGS Innovations, noted: “Government is
budget driven while businesses are economically driven.”29 In the business/industry
sector, most companies are concerned about their bottom line and attempt to be as
efficient as possible when it comes to spending money and allocating resources. These
leaders face a delicate balancing act of meeting the near-term financial expectations
of investors, while planning and investing for the organization’s long-term success.
Part of the fiscal influence is the availability of resources. Admiral Stan Arthur,
USN (Ret.), former Vice Chief of Naval Operations and President of Lockheed Martin
Missiles and Fire Control, explained: “In the private sector, you can make resources
for your organization by creating a product. In the military, you need to learn to work
with what you have.”30 The ability to create and allocate these resources often defines
organizational roles, strategies, and tactics. The reason behind this difference is the
interest in profit and loss, which allows the private sector to expand their customer base
at an increased cost in order to yield higher returns. In the government, the returns
are limited from the start, and hence so are the resources. As General George Joulwan,
USA (Ret.), President of One Team Inc. and a former Supreme Allied Commander,
Europe, explained, this requires “government to deal with a set budget because of its
restricted functions. While NGOs and private corporations are capable of expanding
or restricting their role, the government and military can rarely expand their own
horizons due to the separation of powers.”31
In the nonprofit sector, for example, many senior leaders of nonprofit organiza-
tions (and their boards) lead and manage diverse constituencies and stakeholders. They
typically need to manage multiple, often unreliable, revenue sources (e.g., donations,
fees, subsidies, grants), as well as cope with increasing pressures from all funding
sources for more effectiveness, accountability, and transparency. Some nonprofits
flounder when they lose sight of their mission and core values (ethos) while seeking
to secure financial sustainability, particularly those providing human services using
grants from public funding sources. Many of these strategic leaders spend an inordi-
nate amount of time in fund-raising.

Government Bureaucracy, Rules, and Constraints


Government organizations can face difficult challenges not typically confronted by
the private sector. Governmental strategic leaders have to work in an environment
fraught with “[an] incredible array of rules governing hiring, incentives, promotions,
firing, procurement, and work itself making it difficult to create flexible, agile public
organizations.”32 This is further complicated for the strategic leader because of “dys-
functional Rube Goldberg contraptions created by imaginative managers to get around
the system’s constraints.”33

14  L e a d in g a t t h e S t r a te g i c L eve l
The system is one that fights change; the bureaucratic nature of federal agencies cre-
ates a system where many people must say “yes” in order for change to take shape, but
it only takes one person to say “no” to stop the process dead in its tracks. This creates an
environment where the strategic leader must know the agendas and thought processes
of every decisionmaker who can influence the outcome of his or her vision. Also, many
people (especially political appointees) have limited time in office. This provides an incen-
tive for civil servants to wait for a new administration or a new Congress that might look
more favorably upon their legislative agenda. Bob Stone, former Director of Reinventing
Government for Vice President Al Gore, refers to this strategy as “waiting them out.”34
He explained: “Eventually every administration is going to change. The people are going
to be rotated or moved to a different job. So the idea of ‘Let’s wait them out’ has become
a big thing in government, but not so much in the corporate world.”35

Success Determinants
One of the differences strategic leaders face in government and nongovernment
organizations is how they measure or determine success. For example, “for-profit
organizations measure this in financial terms, whereas non-profit and government
agencies produce value that lies in the achievement of social purposes.”36 Social pur-
poses in public agencies usually relate to “political processes, involving legislation,
regulation, court action and other policy processes.”37 Whereas, for “non-profits, social
purposes are typically defined by their legal charters and by actions of their boards
of directors.”38 Evaluation of military or political performance is determined by the
end products or outcomes. For example, people viewed the Apollo space program
as a success because American astronauts walked on the moon and returned safely
to Earth—regardless of the incurred costs. Failure was not an option: success in this
scenario was mission accomplishment at all costs. Therefore, in most cases, for both
military and political organizations, mission success is almost the sole criterion of
performance management.

Executive Power
Along with the difficulties in measuring success, Jim Collins, author of Good to Great
and other books, points out another difference between government and nongovern-
ment organizations:
In business, a single individual often has enough concentrated power to simply
make executive decisions. Sam Walton could make decisions for Wal-Mart, and
the company would follow; after all, it was his company. In the social sectors,
composed of a much more complicated governance and power structure, rarely
do we find a single individual—not even the nominal chief executive—with
enough concentrated power to make the big decisions by himself or herself.

C h a pte r 1  15
Instead, he or she must architect the conditions for the right decisions to hap-
pen, through the power of language, and coalition, and shared interests, and
artful persuasion.39
Furthermore, Collins notes, “Business executives can more easily fire people
and—equally important—they can use money to buy talent. Most social sector lead-
ers, on the other hand, must rely on people underpaid relative to the private sector or,
in the case of volunteers, paid not at all.”
The complexity of government has been noted by scholars who suggest, “In the
non-profit sector, measurement of success is multi-dimensional, involving the pur-
poses of donors and contractors, and the satisfaction of clients. Therefore, some of the
analytic tasks used in developing a strategy will necessarily differ.”40 Furthermore,
they note:
Public and non-profit leaders face many of the same pressures of private sector
organizations, but often have fewer resources and a more complex set of rela-
tionships with stakeholders. Clients and citizens are different than customers;
legislatures and donors are different from stock and bondholders; organiza-
tional governance structures are often more complex and involve a greater
number of actors who must be involved in any organizational change in the
public and non-profit sectors.41
Professor Hal Rainey summarized the different areas related to organizational
roles, structures, and processes in government organizations, positing that there is
“greater vagueness, intangibility, or difficulty in measuring goals and performance
criteria; the goals are more debatable and value-laden (for example, defense readiness,
public safety, a clean environment, better living standards for the poor and unem-
ployed).”42 Furthermore, Rainey states there is “greater multiplicity of goals and criteria
(efficiency, public accountability and openness, political responsiveness, fairness and
due process, social equity and distributional criteria, moral correctness of behavior)”
in government organizations.43

Organizational Constructs
Table 1-3 illustrates some of the unique features of the four organizational constructs
(government, military, business, and nonprofits).

16  L e a d in g a t t h e S t r a te g i c L eve l
Table 1-3. Comparing Four Organizational Constructs

FEATURE GOVERNMENT MILITARY BUSINESS NONPROFIT


Funding Sources Primarily funded Primarily funded Primarily funded Primarily funded
by the Congress by the Congress by investors and by investors and
with some funds by generated by generated
from user fees profit profit
Stakeholders Significant num- Less stakehold- Stakeholders Stakeholders,
ber—subject to ers than govern- and stockhold- interest groups,
significant scru- ment, but all are ers somewhat membership,
tiny and media involved in the involved in volunteers.
attention process in some process. Can May seek media
manner generate media attention
attention
Political Strong political Strong political Medium political Medium political
Environment environment environment environment environment
Transparency High degree of High degree of Minor degree of High degree of
transparency transparency transparency transparency
(except for clas-
sified missions)
Performance Based on mis- Based on mis- Based on mis- Based on mis-
Measurement sion accomplish- sion accomplish- sion accomplish- sion accomplish-
ment ment ment ment
Performance Difficult to mea- Reasonable met- Excellent met- Difficult to mea-
Assessment sure success rics of success rics of success sure success
(metrics difficult (metrics difficult
to assign)— to assign)
Results may
not be seen for
years
Executive Often dif- Available, yet More absolute. Often dif-
Power/Authority fuse without command and Can use power fuse without
clear power control doesn’t in lieu of leader- clear power to
to execute, necessarily ship execute
especially large- affect large-
scale change scale change
initiatives initiatives

Integrating the Four Sectors


Clearly, each of the four sectors of government, military, business/industry, and non-
profits has significant impact on the other three sectors. For example, in presenting the
13th Annual Award for Corporate Excellence (ACE) on January 18, 2012, Secretary of
State Hillary Clinton acknowledged the critical importance of international corporate
businesses to the conduct of foreign affairs. Clinton remarked, “In an increasingly
interconnected and interdependent world, corporations are key actors in international

C h a pte r 1  17
affairs.” Furthermore, she added, “for many people around the world, the most direct
contact they will ever have with the United States is through American businesses . . . 
that’s how they learn what we stand for and who we are and what aspirations we share.
So this is really important, not just to the bottom line but to our national security, our
interests and our values, and the future of our global leadership.”44
Moreover, in the globalized economy, government, military, business/industry,
and nonprofits will be searching for opportunities to form alliances, partnerships, and
coalitions to meet mutual strategic objectives. The ability for any one organizational
entity to be effective by itself is increasingly less likely. For example, in the national
security environment, General James Cartwright, USMC, then Vice Chairman of the
Joint Chiefs of Staff, stressed that the U.S. military can no longer go it alone. Contrary
to the advice of the Nation’s first president, General Cartwright suggests that the
United States should adopt an “entanglement” strategy, in which nations, corporations,
and other groups contribute resources and work together to meet global strategic chal-
lenges. Those nations and corporations involved in an entanglement strategy, working
together, would have strategic advantage over those who chose not to join. In addition,
should one of the partners pull out, they may have a temporary tactical advantage, but
would lose their strategic advantage.45
As organizational entities become more networked and interdependent, strategic
leaders need to have a fine appreciation for the different, but potentially complemen-
tary, missions of government and nongovernment organizations—and the value-added
they provide. Strategic leaders in each sector should use every opportunity to learn how
their counterparts lead and manage the organizations in their respective sectors. For
example, military and government leaders should study business and nonprofit case
studies and read books and articles related to businesses and organizations different
from their own. Likewise, businesses and nonprofits should study government and
military strategic leadership applications and strategies.

VUCA Environment—Challenges Are More Complex and Uncertain


As indicated previously, the external environment is one represented by the acronym
VUCA (volatility, uncertainty, complexity, and ambiguity). Each of the interviewed
senior leaders identified VUCA, a term originally coined by the U.S. Army War Col-
lege, as the environmental profile faced by strategic leaders. Leadership scholar Owen
Jacobs states that “the system of interacting organizations, agencies, and govern-
ments is so complex that it is virtually impossible to have complete knowledge about
the factors governing strategy decisions, so it is not at all easy to learn what levers to
pull, and when to pull them, in order to achieve desired outcomes. These decisions
must, therefore, be made with incomplete understanding and all the associated risk
that brings.”46 The Army War College and Jacobs explain the differences of these four
terms as follows:

18  L e a d in g a t t h e S t r a te g i c L eve l
Volatility. Volatility refers to the increasing pace of change exemplified by the
significant changes in situations and the growing “connectedness,” as well as global
information, conditions, networking, and technology. Volatility is also relevant to stra-
tegic decisionmaking. As Jacobs notes, “As the rate of change increases, the reward for
making the right decision also increases, as indeed also does the penalty for making the
wrong decision.”47 Furthermore, he points out that “history is littered with examples
of strategic decision makers who did not see change in time, as it is also illuminated
by visionary leaders who, sometimes at great personal cost, made obviously necessary
change.”48 Therefore, the challenge to the strategic leader is to maximize external scan-
ning approaches in order to ascertain what is taking place and its impact on current
and future organizational success.
Uncertainty. “Uncertainty stems from the inability to know everything about the
current situation and the difficulty of predicting what the effects of a proposed change
today will be on the future.”49 The “unknowns” are constantly increasing, creating
doubt about courses of actions and future decision outcomes. “However,” Jacobs notes,
“‘incomplete knowledge’ also stems paradoxically from information overload—hav-
ing key elements of information, but being unable to ‘connect the dots.’”50 In addition
to scanning the external environment, the strategic leader needs to accurately access
risk and be willing to take prudent steps to ensure long-term organizational viability.
Complexity. “Complexity differs from uncertainty, though its effects may some-
times be similar. At the strategic level, there are an enormously large number of factors
that have causal bearing on a given situation.”51 Cause and effect linkages—second,
third, and multiple-order effects—have become more complex in today’s globalized,
technology-driven world.52 The temptation is to reach for short-term solutions when
under pressure to address symptoms quickly. Competing demands of various con-
stituencies enhance the complexity facing the leader, making it difficult for the leader
to formulate and execute effective strategies and policies.53 Jacobs argues that to deal
with complexity, “Strategic leaders must have the mental capacity and the motivation
to build the complex mental ‘system maps’ needed to understand the complex strategic
world.” Effective strategic leadership in a world of increased complexity, Jacobs stresses,
requires two key elements: “a frame of reference, or perspective, that is adequately
powerful for the decision maker to understand complexity and explain it to others;
and mastery of decision tools and processes that enable him or her to bring a broader
set of perspectives than just his/her own into the decision-making process.”54
Ambiguity. Ambiguity is a constant challenge for strategic leaders. Making deci-
sions based on insufficient information can have disastrous results and far-reaching
implications for the organization. Jacobs explains that “ambiguity exists when a deci-
sion maker does not understand the significance of a given event or situation—doesn’t
know what is happening.”55 Ambiguity can occur when leaders have insufficient mental
models and observed events “don’t make sense.” Ambiguity can also occur when an

C h a pte r 1  19
event can legitimately be interpreted in more than one way. The probability of misin-
terpreting events in complex situations is high when decisions are centralized, decision
pressure is high, the decision maker is powerful, and the decision maker acts alone.
This appears to be a recipe for disaster. The likelihood of good strategic decisions is
greater when the leader creates a climate that promotes a questioning attitude of the
obvious and encourages multiple perspectives that differ from [the leader’s] own.56
As mentioned in the Introduction, the challenges facing strategic leaders are
extraordinary. Leaders today describe many of the challenges as “wicked”—without
clear understanding of the problem or the possible range of solutions. Tables 1-4 and
1-5 provide a representative sampling of the many challenges that are common to all
organizations and those related to a specific sector.

Table 1-4. External Environmental Challenges in Common1

COMMON TO ALL ORGANIZATIONS: GOVERNMENT, MILITARY, CORPORATE/INDUSTRY,


AND NONPROFIT EXTERNAL ENVIRONMENTS
VUCA (volatility, uncertainty, Courts and legal institutions Immigration
complexity, and ambiguity) (e.g., fairness, justice)
Wicked problems Federal, state, local govern- Stakeholders
ments (e.g., Congress, tariffs,
taxes, laws and regulations)
Risk, threats, costs, and Politics and political forces Labor unions
opportunities
Globalization— Media and scrutiny Educational institutions
interconnectedness
Economic, financial, and Shifting of global, economic, Current and future workforce
political instability and military power (educated? trained? quality?)
Competitors Pandemics, major accidents Generational differences
climate change, global warm-
ing
Customers Cyberspace (managing, inno- Social values, beliefs
vating, and securing safe and
resilient communication and
information systems)
Access to raw raterials, Cyberspace (managing, inno- Language
resources, and energy (e.g., vating, and securing safe and
dependence on fossil fuels) resilient communication and
information systems)
Economy and economic Sophisticated and broadly Religion
policies (macro and micro available technology
economics)

2 0   L e a d in g a t t h e S t r a te g i c L eve l
Table 1-4. External Environmental Challenges in Common1

COMMON TO ALL ORGANIZATIONS: GOVERNMENT, MILITARY, CORPORATE/INDUSTRY,


AND NONPROFIT EXTERNAL ENVIRONMENTS
Suppliers Nations unwilling to abide by Government-private sector
international norms partnerships
Emerging technologies— Organizational demographic
exponential pace—often can shifts (leaders/workforce
be disruptive retiring later, greater number
of generations in workforce
with differing values, goals,
expectations; global work-
force and outsourcing).
Substitute products/services Major unforeseen strategic
disruptions or shocks—Wall
Street downturn, 9/11, natural
disasters (e.g., Haiti, Katrina)
Ethics and social responsibility Partnerships/alliances
Demographic shifts
Cultural awareness; cultural
and demographic tensions
Terrorism
Vulnerability due to weak,
fractured, and failing states
Society at large
1
“In the end, it will be our imagination and agility to envision and prepare for the future, and then adapt
to surprises, that will determine how we perform over the next 25 years.” See “No Matter the Scanning,
Resultant Strategy and Planning—We Will Be Surprised,” United States Joint Forces Command, Joint
Operating Environment (Norfolk, VA: U.S. Joint Forces Command, 2010), 5.

C h a pte r 1  21
Table 1-5. Strategic External Environment (Specific to a Sector)1

ADDITIONAL SPECIFIC ORGANIZATIONAL EXTERNAL ENVIRONMENTS


NATIONAL MILITARY CORPORATE/ NONPROFIT
SECURITY INDUSTRY
(GOVERNMENT)
National security Continuing conflict Stockholders The Board
environment more and Nation at war
severe than business
environment—
magnitude of
decisionmaking
significance
National interests/ Vulnerabilities, risks, The Board Volunteers
priorities/objectives and threats
Power and influence Strategists need to New markets Fund raising
(political/economic/ understand economic
military) reality—no longer
can afford to do it
alone—no budgets
with up vectors
Unity of effort Changes in how wars Weak market rivals Limited resources
(interagency) are fought—agile,
innovative adversaries
Diplomacy Ability to project and Growth of existing Limited training and
logistically support market leader development
military power
United Nations, Succeed in counter- Multiple bottom lines Public benefit
nongovernmental insurgency, stability,
organizations (NGOs) and counterterrorism
operations
Security capacity of Preserving industrial Hyper-competition Political support
partner states base
Proliferation of Sizing and shaping Pressure for short- Regulatory
weapons of mass the military force term results
destruction (WMD) (recruiting and reten-
tion)
Illicit trafficking and Acquisition system Outsourcing and Public opinion
transnational crime reform supply-chain conti-
nuity
Radical ideologies Collapse or severe EAT (effectiveness,
and global/violent downsizing of accountability,
extremism demand transparency)
Politics and Stakeholders
political risk

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Table 1-5. Strategic External Environment (Specific to a Sector)1

ADDITIONAL SPECIFIC ORGANIZATIONAL EXTERNAL ENVIRONMENTS


NATIONAL MILITARY CORPORATE/ NONPROFIT
SECURITY INDUSTRY
(GOVERNMENT)
Allies and alliances Technology
Budget and Clients
resources
Growth in power of Human services
nonstate actors
Treaties and
obligations
Vulnerability of
Nation and
infrastructure
1
“In the end, it will be our imagination and agility to envision and prepare for the future, and then adapt
to surprises, that will determine how we perform over the next 25 years.” See “No Matter the Scanning,
Resultant Strategy and Planning—We Will Be Surprised,” United States Joint Forces Command, Joint
Operating Environment (Norfolk, VA: U.S. Joint Forces Command, 2010), 5.

Strategic Leadership vs. Operational or Tactical Leadership


All senior leaders interviewed for this book emphasized that leadership at the strategic
level is fundamentally different from operational or tactical levels. But why is this so?
Does this contradict a common belief that “leadership is leadership”?

Leadership Is Leadership
Some perceive that “leadership is leadership”—regardless of the organizational level.
This belief is encouraged by three main factors.
Direct vs. Indirect Leadership. Most studies conducted at the operational or
tactical level resulted in theories focusing on “direct” leadership. Until recently there
was very limited research at the strategic level. Leadership authors Stephan Zaccaro
and Zack Horn found in 2003 that less than 5 percent of leadership research and
writings focused on the executive level.57 Situational theories did address leadership
styles for different environments, but never addressed the key distinction between
organizational or “direct leadership” and “indirect leadership,” with the latter being
the primary leadership approach of leaders at the strategic level. Consequently, many
theorists and practitioners developed the mindset that leadership is the same regard-
less of organizational level.
Operational/Tactical vs. Strategic Leadership. In the past, most leadership
training and development activities focused on the leader-follower relationship and

C h a pte r 1   2 3
specific organizational competencies. Most training opportunities and learning
activities focused on the first-line supervisors or junior military officers. These usually
well-constructed activities offered substantial support for tactical, and in some cases,
operational leadership. Yet, without the focused attention on developing or enhancing
the leadership skills of those performing at the strategic level, such training and focus
reinforce the mindset that leadership is leadership. In 2005 only a few government and
nongovernment leader-development programs focused on incumbent senior-level or
executive leaders.58
Strategic Leadership Fundamentally Different. Many operational leaders aspir-
ing to be leaders at the strategic level are already strong organizational leaders with
proven track records. It is easy to assume that what works for them in their current
leadership position will be equally successful at the strategic level. Unless these future
strategic leaders served at the strategic level or directly supported a strategic leader, it
may be difficult for them to conceptualize a difference in the required leadership skills
and capacity. While they will easily comprehend the increased volatility, uncertainty,
complexity, and ambiguity associated with the higher-level roles and responsibilities,
they attribute the increase in VUCA to a matter of organizational scale. Even when
operational leaders are advised that strategic leadership is fundamentally different
from operational leadership, many don’t have a conceptual feel for that difference.
Therefore, it is difficult for some of them to appreciate that the leadership capacity at
the strategic level is not “leadership as usual.”

Fundamental Differences Between Strategic Leadership and


Operational/Tactical Leadership
In addition to leading in the turbulent VUCA environment, the interviewed senior
leaders identified a number of additional key factors illustrating that strategic-level
leadership is fundamentally different from operational and tactical leadership, includ-
ing such factors as:
• different focus
• ability to deal with and balance paradoxes
• skill sets more challenging
• changed rule sets
• influence, power, and decisionmaking more complex
• scrutiny and personal impact magnified
• time pressures and demands heightened
• strong strategic leadership team vital
• continuing need to lead and manage organizational change
• crises becoming the “new normal.”

24  L e a d in g a t t h e S t r a te g i c L eve l
Different Focus. The focus at the operational level is on running the organization
and achieving operational excellence. Operational leaders adopt the vision provided
by the strategic leaders and translate it into practical daily operations. They ensure that
these operations have clear expectations and that the mission-critical processes and per-
formance standards are in place. Once operations are underway, these leaders delineate
clear organizational roles and responsibilities with appropriate accountability for results.
The focus at the strategic level is on the organization as a whole and how that
organization aligns with the strategic environment (both internally and externally).
Strategic leaders focus on the whole organization, including the external operating
environment, whereas the operational leader focuses within the organization. Focus-
ing on the strategic level enables strategic leaders the greatest opportunity to maximize
their efforts for their organization’s short- and long-term success. Sustaining their
focus, time, and intellectual energy at this level is not necessarily easy. Summarizing
this difficulty, General George Casey, USA (Ret.), former U.S. Army Chief of Staff and
Commanding General of the Multi-National Force in Iraq, asserts:
That sounds easy, but it’s not, because the things with the highest payoff are the
hardest to do—e.g., getting the strategy right in very uncertain environments;
effectively instilling the strategy in the organization; driving organizational
change; influencing organizational culture; sustaining momentum; and influ-
encing key partners that are not under your direct control. By their nature these
things are complex and difficult and do not lend themselves to simple solutions.
They require the time, energy and experience of the senior leaders in the orga-
nization to be done effectively.59
The central duty of the strategic leader is to maximize synergy between three
interconnected, yet somewhat independent areas: the ever-changing external envi-
ronment; the organization’s purpose, strategic vision, or mission; and the structure
and operation of the organization. Furthermore, overseeing the process of developing
(formulation) effective strategies is one of the important indirect levers available to
the strategic leader. Through this process, the strategic leader (and his or her strategic
leadership team) provides the organization’s operational and tactical leaders, work-
force, and stakeholders with clarity regarding the organization’s purpose, focus, and
priorities. For these important reasons, the terms “viability,” “relevance,” and “vitality”
are critical at the strategic level. If, for example, the organization is no longer relevant
(mission focus), it will lose the support of its stakeholders and customers—resulting
in lost legitimacy. This requires strategic leaders to perform and be accountable for a
number of essential yet complex functions to ensure both near-term and long-term
organizational success.
The interviewed senior leaders indicated they spend the majority of their time look-
ing outside of the organization. They argue successful strategic leaders continually scan

C h a pte r 1   2 5
the environment to discern changes taking place—and to identify and assess those with
the potential to affect the organization. This requires these strategic leaders to be master
multitaskers; while scanning externally, they must simultaneously focus on how well
the organization is accomplishing its mission, vision, strategy, and strategic objectives.
“While the strategic mandate is to see, understand, interpret, and master it, fulfilling
that mandate is anything but easy.”60
Ability to Deal with and Balance Paradoxes. At the strategic level, the leader is
required to exercise discerning judgment and decisionmaking regarding key issues fac-
ing the organization that often appear paradoxical or mutually exclusive. As examples,
the strategic leader must:
• Focus on the external environment while aligning the organization to meet emerg-
ing challenges and opportunities, while sustaining a simultaneous focus inside the
organization to ensure effective execution of the organization’s mission and meeting
of near-term expectations.
• Be proactive in understanding the need for change, while at the same time under-
standing the delicate balance between maintaining stability and the potential disrup-
tions inherent in creating change.
• Create a compelling and inspiring vision for the future, while critically evaluating
current organizational strategies, plans, and processes.
• Build a culture of creativity and innovation that engages the workforce and builds
organizational agility and resilience, while ensuring the organization is cohesive,
aligned, and functioning efficiently.
• Know current business strategies and plans, while simultaneously challenging the
value of these very same strategies and plans.
• Build strong supporting infrastructure and new technologies, while challenging the
merit of current supporting technologies and processes.
• Work as an insider, but challenge the organization as an outsider.61
Skill Sets More Challenging. The magnitude of duties and responsibilities often
surprises many leaders progressing to the strategic level. For example, Bob McDonald,
CEO of Procter & Gamble, noted that though he performed as the chief operating
officer (COO) prior to transitioning to CEO, a number of aspects related to the senior
position surprised him.62 Likewise, Jeff Immelt, who was CEO of General Electric,
noted, “I worked for this place for twenty-one years before I got the CEO job and there
were still things that shocked me when I took over.”63 Similarly, Admiral Stan Arthur,
USN (Ret.), former Vice Chief of Naval Operations and later the President of Lockheed
Martin Missiles and Fire Control, emphasized, “The environment and tasks that you
are charged with as you progress from operational to strategic [leadership] are more
complex and you have to be able to adapt in order to accommodate that change.”64
In a study of CEOs, Michael Porter and Nitin Nohria discovered that they “are
surprised by the range and intensity of new extra responsibilities: attending to share-

2 6   L e a d in g a t t h e S t r a te g i c L eve l
holders, analysts, board members, industry groups, regulators, politicians, and other
constituencies that expect to have direct contact with the CEO. This expansion of
constituencies often leads to an exponential increase in the types of interactions with
which a new CEO has little prior experience (such as appearing before a Senate hear-
ing or managing a board).”65 General George Marshall noted his need for new skills
at the time of his appointment as Army Chief of Staff:
It became clear to me that at the age of 58 I would have to learn new tricks that
were not taught in the military manuals or on the battlefield. In this position
I am a political soldier and will have to put my training in rapping-out orders
and making snap decisions on the back burner, and have to learn the arts of
persuasion and guile. I must become an expert in a whole new set of skills.66
George Read, author of Creating a Culture of Leadership Development, suggests,
“There may even be skills and abilities that are highly rewarded at one level but that
can be disastrous at the other levels.” Reed offers the following example: “Quick
decisionmaking with limited information, accompanied by technically competent
and forceful execution, is a virtue at the tactical (or direct) level; at the strategic level,
however, patience, negotiation, and consensus, combined with synthesis and integra-
tion skills, are absolutely necessary.”67
These examples reveal that the work of a strategic leader is fundamentally different
from the work of an operational leader. The responsibilities, agendas, objectives, and
strategies of those at the strategic level encompass circumstances and situations that
leaders do not deal with at the operational level.
Strategic leaders bring to that strategic level of responsibility their knowledge
and personal dimensions. Essential basic skills and behaviors include the ability to
communicate, empower others, give people the opportunity to create meaning for
themselves, challenge the process, develop leaders, model the way (being genuine or
authentic), and generate a strong sense of self or self-awareness. These basic skills and
behaviors are part of the personal dimensions the strategic leader brings to the posi-
tion. The personal dimensions are different, but overlapping, domains or frames of
reference and include the following:
• cognitive, social, and behavioral capacities
• business acumen and technical skills
• personal traits, values, and preferences.
While these basic behaviors and personal dimensions are important at all levels
of leadership, they are different and more complex at the strategic level compared to
those at the operational level.
As Owen Jacobs summarizes, “Clearly, the task of strategic leadership is formi-
dable. These leaders must have the person-to-person influence skills needed to deal

C h a pte r 1   2 7
persuasively and collegially with others who are as effectively persuasive and who add
as much value as they themselves do. They must negotiate constructively with near
equals who have both personal power and the ability to commit resources to achieve
shared objectives.”68 As these examples display, the required skills needed to be suc-
cessful at the strategic level are different from and more complex than those needed
at the operational level.
Changed Rule Sets. As noted in the Preface, the rule sets used at the operational
and tactical levels are somewhat different from those at the strategic level. Of course,
it is important that the whole organization play by the same rules, e.g., ethical behav-
ior and actions, equity between members, and consistently applied reward systems.
That said, strategic leaders are the ones who ultimately establish the rules and they
expect operational leaders to follow and implement those rules. Assimilated into the
organization’s culture, these rule sets are often difficult to change because “that’s the
way we do things around here.”
Thomas Barnett, a long-time Defense Department consultant, suggests:
Since September 11, 2001, it has gotten a lot harder for even experts to speak
authoritatively about the rule sets governing war and peace, primarily because
it seems as if the world has left one era behind and entered another that feels
very different and unfamiliar. It is almost as if we were playing football one
minute and then the game suddenly switched to soccer—the two sides in this
conflict do not seem to be keeping score in the same way, or even playing by
similar rule sets.69
In many cases, strategic leaders change the rule sets based on what is taking
place outside the organization. The external environment can influence the strategic
leaders to change rule sets. For example, the Obama administration lifted the “Don’t
Ask, Don’t Tell” policy that barred those who are openly gay, lesbian, or bisexual from
military service. Likewise, health care reforms may fundamentally change the rule
sets for the health care industry from one of serving those who are sick to a rule set
that focuses on prevention. As Dr. William Rupp M.D., CEO of the Mayo Clinic in
Florida, posited, “I think focus upon maintaining health is the biggest thing that is
going to happen in healthcare reform. Reform will be a focus on keeping people well,
which has never happened before in this country.”70
The senior leaders interviewed for this book emphasized that uncertain rules and
regulations present challenges for strategic leaders in both the private and public sectors.
For example, Lieutenant General Ron Iverson, USAF (Ret.), CEO of LGS Innovation,
explained that the uncertainty of the laws and their enforcement impedes sound strategic
planning. Referring to the ongoing congressional debate regarding possible changes in
corporate tax structure, he opined, “There are companies that don’t want to hire and
expand because they are not sure what the taxes are going to be. As a strategic leader,

2 8   L e a d in g a t t h e S t r a te g i c L eve l
you need to have certainty when it comes to what the rules are. Tell me the rules of the
game and I will play, but I will not play the game if I don’t know what the rules are.”71
Ambassador Nancy Powell, Director General of the Foreign Service for the State
Department, points out that “strategy and initiatives within the State Department
change from administration to administration. This makes long-term projections dif-
ficult due to the uncertainty of the future.”72 Another leader, a former Navy admiral,
explained, “One of the major challenges to success at the strategic level is the contin-
ued uncertainty of the international environment. This exacerbates the difficulty of
forecasting, but also presents serious obstacles to awareness.”73
Similarly, strategic leaders will change the rule sets based upon the need to change
organizational practices and processes. For example, Rupp noted a specific rule set
was hurting physician staffing at the Mayo Clinic. He explained, “Half of all medical
school graduates right now are women. Many women, early in their careers, especially
when they have children, don’t want to work full time. We used to have a strong prefer-
ence for physicians working full time. That’s crazy. That cuts out many very talented
women. Let’s hire them and develop new models for delivering high quality clinical,
educational and academic productivity using staff working less than full time.”74
Sometimes the strategic leader must take a stand regarding the changing of rule
sets. For example, the Secretary of Defense wanted to integrate men and women in
the Services’ respective boot camps. All the Services accepted this change in rule sets
with the one exception of the U.S. Marine Corps. Then-Commandant of the Marines,
General Chuck Krulak, informed the Secretary that he could not approve this change
and would be willing to submit his retirement papers. He told the Secretary, “I’ll tell
you right now, Mr. Secretary, you’re not going to find a Marine general who will agree
with changing the very ethos of the Corps by changing the way we train and make
Marines.” The Secretary assumed General Krulak would change his mind when he
faced the Senate Armed Services Committee (SASC). Senator Kay Bailey Hutchison
asked General Krulak on multiple occasions why the Marine Corps was reluctant to
integrate men and women in boot camp, and he explained his rationale a number
of times in response. Finally, she said, “Are you trying to tell me, General Krulak,
that there’s no way that this would ever happen under your watch?” General Krulak
responded, “‘Well, there is one way,’ and she got a big grin on her face, because she
figured she had it now. She said, ‘What’s that?’ I said, ‘Over my dead body.’”
Many senior leaders in the Department of Defense and the Navy, including the
two Secretaries, wanted to punish General Krulak for his stand but “a Democratic
senator on the SASC came to his defense and said, ‘Don’t do anything with that guy.
We love him.’” General Krulak concludes, “At the end of the day, what they appreciated
more than anything was the courage to take a stand if we saw something was wrong,
which is what I’ve ended up doing throughout my whole career, I try to take a stand
on those things that are central.”75

C h a pte r 1   2 9
Ideally, the strategic leader would know, as Iverson put it, “What the rules of
the game are.”76 Yet in a world of rapid change, the idea of having clear rules and
regulations is more of a dream than a reality. While understanding rule sets is the
responsibility of both operational and strategic leaders, adapting to and establishing
these rule sets are solely the responsibility of those at the strategic level.
Influence, Power, and Decisionmaking More Complex. Most leadership actions
at the tactical level are direct—face-to-face—whereas leaders use both direct and indi-
rect leadership at the operational level. Once a leader arrives at the strategic level, the
actions are primarily indirect. Rather than seeking to influence individuals at lower
levels through personal intervention, leaders influence actions more by generating
policies, specifying work procedures, and designing workflows. While strategic lead-
ers will primarily use indirect leadership to achieve desired results, they do exercise
personal influence at their own level; therefore, the requirement for face-to-face lead-
ership skills is still necessary in dealing with direct reports and peers. Referring to
strategic leaders, Jacobs asserts:
Their influence at the bottom-most levels of the organization is no longer face-
to-face except under unusual circumstances; it is indirect. This represents a
qualitative shift in the kinds of skills needed to perform effectively beyond the
production layer. A face-to-face leader, if skillful, can judge the effects of his/her
leadership in real time, by personal observation. An “indirect” leader must look
not only for outcomes in real time but also across a longer time span. Further,
the indicators of effectiveness may also be “indirect.” This is a more abstract and
complex task, requiring significantly more complex thinking skills.77
Regarding power, many of the interviewed senior leaders—supported by the research
on executives—suggest the higher one rises in the organization, the less direct power is
available to the leader. One might expect that at the senior level the strategic leader can
issue an edict and the supporting organizational leaders and workforce will take steps to
properly execute the new directive. Yet, most senior leaders indicate it does not work that
way. They acknowledge that, at the operational level, it was much easier to use position
power and command authority to drive policy and actions. At the strategic level, leaders
must implement the direction and emotional push for a new policy through indirect
leadership. If other senior leaders do not buy in to the new policy, progress will be nearly
impossible. Porter and Nohria found in their CEO research that, “CEOs soon discover
the constraints on their expanded power. Using power to overrule or make unilateral
decisions can have unintended negative consequences, such as undermining the confi-
dence of their team or paralyzing organizational decisionmaking because others start
second guessing and seeking to ensure that decisions will gain the CEO’s approval.”78
Often, leaders make decisions at the strategic level based on incomplete informa-
tion and the ramifications of those decisions are not realized for a number of years.

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Consequently, unlike the operational level, both unknowns and timescale become
factors. For example, Richard Danzig, former Secretary of the Navy, stated:
If you are thinking about implementing things that may occur over the next two,
three, four, five years, or if you are making decisions about naval aircraft that
might be constructed over the next 10 years and operate for 15, or a ship, like a
carrier, that might be operating 50 years from now, then your timescales are so
much longer and the intervening variables of volatility, uncertainty, complexity,
and ambiguity are much stronger. Therefore, the judgments you make are of a
less logical, simply linear kind. You would like to think they are still logical, but
they have a higher component of intuition and judgment.
Furthermore, he points out that “because of the ambiguities associated with these
decisions, getting people to reach consensus about the issues is a somewhat different
process than the nearer term kinds of things. So I do think strategic phenomena are
different in kind from operational ones.”79
Finally, the power to persuade is a much more important factor in the strategic
leader’s ultimate success. Many of the people the strategic leader must persuade are
people not under his or her authority or direct influence. Whether or not it is dealing
with key stakeholders, the press, investors, interagency colleagues, or the Congress,
the ability to exercise influence (including the ability to persuade and negotiate) is
essential for effectiveness at the strategic level.
Scrutiny and Personal Impact Magnified. Strategic leaders in today’s world
are constantly under scrutiny by stakeholders, media, shareholders, publics, and
organizational members. People listen to every word and evaluate every action taken
by the strategic leader. Furthermore, whatever the strategic leader says or does can
spread throughout the organization and often to the external key constituents. Porter
and Nohria point out the danger of such visibility: “The danger, of course, is that the
CEO’s words and actions can be as easily misinterpreted and distorted, as they can
deliver the message the CEO intended.”80 They give an example of a CEO whose pri-
mary background within the company was manufacturing. Because of his excellent
knowledge of the manufacturing function in the company, he decided to learn more
about the other functions within the company. Consequently, in his first year, he did
not visit any of the manufacturing sites. “To his great surprise and consternation, he
discovered a year later that the manufacturing organization felt that it was no longer
a high priority for the organization and was demoralized.”81
Porter and Nohria noted that many CEOs they worked with are surprised regard-
ing “how much their every behavior is scrutinized, and the symbolic messages people
derive from these behaviors. CEOs are constantly sending signals. . . . What the CEO
shows an interest in is quickly interpreted as being important, while what the CEO
consciously or unconsciously neglects can be as readily interpreted as being unim-

C h a pte r 1  31
portant.”82 For example, in discussing a former leader, Bob McDonald noted that this
leader “collected wines and he liked golf. As a result, everybody in the company started
talking about wines and golf. And he didn’t realize what was going on.”83 Similarly,
Bob Stevens, Chairman and CEO of Lockheed Martin, shared his experience of the
attention received when he took over as CEO:
I think I did fumble it when I first started as CEO, because you just have no idea
that people are paying such minute attention to the smallest detail. How you
dress, what watch you wear, where you dine. . . . I eat cereal at my desk. I don’t
go to lunch. I don’t go to the cafeteria. I have eaten at my desk for thirty-five
years. But, people watch that stuff and say, ‘Hey, cafeteria business has dropped
off enormously. What’s happened here?’ I don’t tell anybody, ‘Don’t go to the
cafeteria’ but I guess they think they have to eat at their desks to be part of the
team. It’s very fascinating. It’s a cultural phenomenon. You ignore it at your
own peril. You can’t fight it. You need to understand it and use it.84
As Stevens pointed out, knowing that others are scrutinizing the leader can be an
asset. Because a strategic leader’s actions are so closely monitored, the leader’s actions
and behaviors “can be used as powerful symbols and signals—to send and spread a
message widely.” Using this heightened visibility is another key reality of the strategic
leader’s job.85
It is also clear that many strategic leaders will face significant media scrutiny.
For example, General David Petraeus received enormous media coverage before the
House and Senate regarding proposals to increase force levels in both Iraq (2007) and
Afghanistan (2009). Moreover, when leaders face a crisis (Hurricane Katrina, the BP
oil spill, etc.), people expect the strategic leader to be the face of the organization and
consequently responsible—and accountable for—what he says and does.
Another reality faced by strategic leaders is that increased scrutiny can lead to
derailment. For example, people inside and/or outside the organization may observe
or perceive the leader is unethical, not authentic, not respected, viewed as a “toxic”
leader, not up to the job, doing something considered inappropriate (e.g., having an
inappropriate personal relationship with someone in the organization), or shows a
myriad of other “perceived” personal shortfalls. This can curtail a promising career
at the strategic level.
Consequently, strategic leaders need to be aware that people watch them closely
and to avoid missteps that can derail them or unwittingly cause unnecessary work by
others. It is their responsibility to use their visibility to further organizational objec-
tives. Dealing with such attention and scrutiny is required at the strategic leader level.
Time Pressures and Demands Heightened. Strategic leaders work long hours,
often at an incredible pace. As management scholar Henry Mintzberg pointed out, it is
“just plain taxing.” In observing managers (strategic leaders), Mintzberg observed them

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operating at a hectic pace, with brevity, variety, and fragmentation; lots of interruptions,
more responding than initiating and jumping from one issue to another; orientation to
action; the oral aspect of information; the lateral nature of much of the communication;
and the tricky problem of exercising control without quite being in control. When the
author raised this point with the interviewed strategic leaders, they concurred that was
a good description of their world. Yet, many made it clear that the fragmented day does
not mean fragmented thinking. These leaders continually viewed each of the incurred
fragmented actions in context with their overall mission, vision, and strategy. As
Jeremy Kaplan, business consultant and a former director at the Defense Information
Systems Agency (DISA), made clear, “There is a unity to these activities. At the same
time I am trying to figure out what my strategy should be in a certain area, whether I
should change my mission, is this the right person to do it, how do I grow these people,
do I need to implement additional training . . . I am doing all this at once.” He noted,
“If you followed me around it would look completely fragmented; but if you sat in my
head, it would all be happening at once.”86
Mintzberg further suggested that senior leaders’ jobs are inherently open-ended.
While responsible for the success of their organizations, there is no specific time or
instant when the leader can say, “I’m finished with that job.” He noted: “The manager,
in contrast to operational leaders, must always keep going, never sure when success
is truly assured or that things might come crashing down. As a result, managing is a
job with a perpetual preoccupation: The manager can never be free to forget the work,
never has the pleasure of knowing, even temporarily, that there is nothing to do.”87
Moreover, their days are a combination of both significant and mundane activities in
no particular pattern, requiring senior leaders’ moods to shift quickly and frequently.
Managers tend to favor informal mediums of communication, email, meetings, tele-
phone, etc. Moreover, Mintzberg stated: “It should be emphasized that, unlike other
workers, the manager does not leave the telephone, the meeting, or the email to get
back to work. These contacts are the work.”88
The demands on a strategic leader’s time appear to be endless and leaders are often
overcommitted. Most of the interviewed senior leaders stated how important their
schedule is to their ability to manage their time. Each indicated that they do spend time
with their executive assistant to plan their schedule. They recognize that they must tend
to the important issues facing stakeholders and the organization, yet need to take into
account symbolic meetings—presentations, promotions, awards, etc.—that provide
meaning and value to members of their organization as well as to stakeholders. Control
of the schedule is the key to managing daily activities. In this regard, a key point noted
by these leaders is the requirement for reflection. All agreed that reflection was essen-
tial at the strategic level. Some would enforce a time on the schedule for reflection and
make it sacrosanct. Others found there wasn’t time to put it on their schedule and they
must perform their reflection in an ad hoc manner.

C h a pte r 1   3 3
Strong Strategic Leadership Team Vital. Unlike at the operational level where the
leader often makes the decisions, at the strategic level most leaders practice a shared-
leadership process. In most cases, the senior leader forms a strategic leadership team
to assist in carrying out the duties of strategic leadership. However, regardless of the
willingness to share leadership, e.g., with a CEO or an agency secretary, the ultimate
decisionmaking responsibility remains with the senior strategic leader.

This section left blank by design.

The old phenomenon of a CEO or senior leader operating by command and


control methods is rare in today’s complex and uncertain environment. To do so,

3 4   L e a d in g a t t h e S t r a te g i c L eve l
according to Porter and Nohria, “is a dangerous way to do the job.” They assert that
even if an organization faces just modest complexity, there are too many decisions
for one person to make. In addition, they argue, “If the CEO tries to make too many
decisions, the organization can grind to a halt. The CEO lacks the time to make most
of the decisions even if he or she wants to. Worse yet, if the CEO starts deciding, oth-
ers stop deciding; they simply wait for the CEO, rather than risk making decisions
that will be disapproved or overruled.”89 This leads to “decision creep.” The strategic
leader cannot be all-knowing. Having a diversity of thinking and mental models from
members of the executive team can be helpful in debating key issues and strategies
that can, if managed effectively, generate better organizational decisions.
Clearly, selecting who will serve on the executive team is critical. The strategic
leader needs to have a fine appreciation for the abilities of those chosen to serve as
members of the team, especially their strengths and weaknesses. Most of the inter-
viewed strategic leaders made use of strategic leadership teams. Some noted that they
inherited their executive team and had to make changes. Those inheriting an executive
team indicated that if they had the chance to go back and do something different, it
would be to let go one or more “cancerous” members of their executive team sooner.
In other words, they subscribe to Jim Collins’ point that to be successful one had to
make sure the right people were on the bus and they were in the right seats.90
Continuing Need to Lead Organizational Change. Change is always arriving! “It is
as ceaseless as the waves that wash up on the seashore. And the future is the past before
we know it. No sooner has it arrived than it is past.”91 Leading and managing change are
a critical responsibility of the strategic leader. As Yukl notes, “Leading change is one of
the most important and difficult leadership responsibilities. For some theorists, it is the
essence of leadership and everything else is secondary. Effective leadership is needed
to revitalize an organization and facilitate adaptation to a changing environment.”92
There are two major approaches to organizational change. The first is incremental
change; examples include process improvements—often associated with such programs
as Total Quality or Lean Six Sigma. These changes often occur at the operational level
and within the existing system. The second is major transformational change. This is a
fundamental change to the organization—often requiring a change in vision, mission,
and strategic objectives. It often calls for a recalibration of the organizational culture, and
internal changes to organizational structure, processes, reward systems, etc. Effective
transformational change requires direct involvement of the strategic leader.
Jacobs summarizes: “So leading organizational change—transforming organiza-
tions in the ultimate case—is at the heart of what strategic leadership is all about. . . . Stra-
tegic leaders must have a masterful blending of skills reflecting the best of organizational
and human understanding.”93 Clearly, whether in government or nongovernment
organizations, improving the core competency in leading and managing change should
be a continuing effort on the part of anyone working as or supporting a strategic leader.

C h a pte r 1   3 5
Crises Becoming the “New Normal.” Crises are becoming the “new normal.” All
organizations, be they government, military, business/industry, or nonprofits, will face
a crisis sometime in the future. As noted previously, from a strategic leader’s perspec-
tive, today’s fast-paced environment will produce an increasing number of “inevitable
surprises.” Organizational crises will make or break the strategic leader and the better
prepared he or she is for a crisis, the better the opportunity for a successful personal
and organizational outcome. Furthermore, when in a crisis, stakeholders, constituen-
cies, customers, employees, media, and possibly the general public want to see the orga-
nization’s leadership—not some underling or public relations spokesperson—as the
face of the organization. Like it or not, it is the responsibility of the senior leadership,
namely, the CEO, government agency secretary, or president, to be at the forefront.
Operational leaders will face organizational crises, such as production line stop-
pages, accidents, failure to meet customer expectations, and so on. Yet, these leaders
usually handle these crises at their level. When the legitimacy of the organization is
in question or the stakeholders believe the organization is in crisis, it is a strategic
crisis—requiring the direct intervention of the strategic leader.

Conclusion
Essentially, the magnitude of all of these factors relative to the organization and its mis-
sion creates major challenges for strategic leaders. Organizational and tactical leaders
rarely face these types of challenges. As the interviewed senior leaders espoused and
the research supported, strategic leadership is fundamentally different from operational
and tactical leadership.

Notes
1
W. Timothy Coombs and Sherry J. Holladay (eds.), The Handbook of Crisis Communications (West
Sussex, UK: Wiley-Blackwell, 2010), 17.
2
Personal interview with General Chuck Krulak, President, Birmingham-Southern College; Board of Direc-
tors for Union Pacific and nonexecutive director for Aston Villa British Soccer Club; former Commandant,
U.S. Marine Corps; former Vice Chairman of MBNA: and Chairman and CEO for MBNA Europe Bank.
3
Strategic thinking in the 1980s and 1990s defined the ultimate goal for an organization as gaining
and sustaining competitive advantage. For example, in 1989, Boston Consulting Group chairman Bruce
Henderson emphasized: “Strategy is a deliberate search for a plan of action that will develop a business’s
competitive advantage and compound it.” (Bruce Henderson, “The Origin of Strategy,” Harvard Business
Review, November 1989, 140.) Leadership scholar Owen Jacobs posited: “Much of the behavior of orga-
nizations, societies, and nations is calculated to gain or preserve competitive advantage so as to reduce
resources dependence and thus the power others have over them.” (T. Owen Jacobs, Strategic Leadership:
The Competitive Edge [Washington, DC: National Defense University, 2005], 4.) Harvard professor and
leader of Harvard’s Strategy Unit, Cynthia Montgomery, argues that competitive advantage is a critical
component, but not the only component, of strategy. Strategy must address the purpose of the organization,
as well as what the strategic leader desires the organization to be in the future. Furthermore, she states:

3 6   L e a d in g a t t h e S t r a te g i c L eve l
“Competitive advantage is essential to strategy. But it is only part of a bigger story, one frame in a motion
picture.” (Cynthia Montgomery, “Putting Leadership Back into Strategy,” Harvard Business Review, Janu-
ary 2008, 59–60.)
4
Gary Yukl, Leadership in Organizations, Seventh Edition (Upper Saddle River, NJ: Prentice Hall,
2010), 7.
5
John Kotter, “What Leaders Really Do,” Harvard Business Review, May-June 1990, 104.
6
Henry Mintzberg, Managing (San Francisco, CA: Berrett-Koehler, 2009), 8.
7
Ibid., 9.
8
Gary Yukl and Richard Lepsinger, Flexible Leadership (San Francisco, CA: Jossey-Bass, 2004), 10.
9
Yukl, Leadership in Organizations, 9.
Warren Bennis and Burt Nanus, Leaders: The Strategies for Taking Charge (New York: HarperCollins,
10

1985), 21.
The author added the term in developing training programs while he was serving as the director of
11

the U.S. Navy’s leader development and command excellence programs in the early 1990s. Yukl and
Lepsinger, Flexible Leadership, 19, acknowledge this point as well..
12
Doris Kearns Goodwin, Team of Rivals (New York: Simon & Schuster, 2005), 501.
Terry Deibel, Foreign Affairs Strategy: Logic for American Statecraft (New York: Cambridge University,
13

2007), 3.
W. Michael Guillot, “Strategic Leadership: Defining the Challenge,” Air and Space Power Journal,
14

2003, 68.
15
John Schermerhorn, Jr., Management, 10th Edition (Hoboken, NJ: John Wiley & Sons, 2010), G-12.
David Petraeus, videotaped presentation to students at the Industrial College of the Armed Forces,
16

August 2009.
John Pearce II and Richard Robinson, Jr., Strategic Management, 10th Edition (New York: McGraw-
17

Hill, 2007), 361.


Quoted in <http://militaryhistory.about.com/od/1800sarmybiographies/p/vonmoltke.htm> (accessed
18

April 23, 2011).


Jeffrey Jones, “Americans Most Confident in Military, Least in Congress,” Gallup, June 23, 2011, at
19

<www.gallup.com/poll/148163/Americans-Confident-Military-Least-Congress.aspx> (accessed October


16, 2011).
Personal interview with Dr. James V. Koch, Board of Visitors Professor of Economics and President
20

Emeritus at Old Dominion University, and coauthor with Jim Fisher of the book Presidential Leadership.
Leonard Wong, Paul Bliese, and Dennis McGurk, “Military Leadership: A Context Specific Review,”
21

The Leadership Quarterly, 2003, 14, 662.


22
Jeff Chu, “Joint Venture,” Fast Company, May 1, 2010, 74, at <http://proquest.umi.com/pqdweb?ind
ex=8&sid=3&srchmode=2&vinst=PROD&fmt=6&startpage=-1&clientid=3921&vname=PQD&RQT
=309&did=2027258201&scaling=FULL&ts=1300402681&vtype=PQD&rqt=309&TS=1300402744&c
lientId=3921> (accessed March 17, 2011).
23
Ibid.
24
Personal interview with Renee Acosta, CEO, Global Impact.
25
Ibid.
Peter Daly, Michael Watkins, and Cate Reavis, The First 90 Days in Government: Critical Success
26

Strategies for New Public Managers at All Levels (Boston, MA: Harvard Business School, 2006), 4.

C h a pte r 1   3 7
27
Ibid., 5.
28
Personal interview with Bob McDonald, Chairman, President, and CEO, Procter & Gamble.
Personal interview with LTG Ron Iverson, USAF (Ret.), CEO of LGS Innovations (subsidiary of
29

Alcatel-Lucent and the classified portion of Bell Labs); former 7th Air Force Commander and Deputy
Commander of United States Forces in Korea.
30
Personal interview with ADM Stan Arthur, USN (Ret.), former Vice Chief of Naval Operations;
former President of Lockheed Martin Missiles and Fire Control.
Personal interview with General George Joulwan, USA (Ret.), President, One Team, Inc.; former
31

Supreme Allied Commander, Europe (SACEUR).


Steve Cohen, William Eimicke, and Tany Heikkila, The Effective Public Manager, 4th Edition (San
32

Francisco, CA: John Wiley & Sons, 2008), xii.


33
Ibid.
34
The National Partnership for Reinventing Government was the Clinton-Gore administration’s ini-
tiative to reform the way the Federal Government works. Its mission was to create a government that
“works better, costs less, and gets results Americans care about.”
35
Personal interview with Bob Stone, author and speaker. former Director for Reinventing Government
for Vice President Al Gore; former Deputy Assistant Secretary of Defense for Installations; coauthor of
the book, The Ethics Challenge: Strengthening Your Integrity in a Greedy World; and author of Confes-
sions of a Civil Servant: Lessons in Changing America’s Government and Military.
Elizabeth Thatch and Karen Thompson “Trading Places: Examining Leadership Competencies
36

Between For-profit vs. Public and Non-profit Leaders,” Leadership & Organization Development Journal
28, no. 4 (2007), 357.
37
Cohen, Eimicke, and Heikkila, xii.
Elizabeth Davis, James Kee, and Kathryn Newcomer, “Strategic Transformation Process: Toward
38

Purpose, People, Process and Power,” Organization Management Journal, vol. 7 (2010), 67.
Bridgestar, “Interview with Jim Collins,” February 2009, at <www.bridgestar.org/Library/Interview-
39

Collins.aspx> (accessed March 17, 2011).


40
Davis, Kee, and Newcomer, 67, 66–80.
41
Ibid., 68, 66–80.
Hal Rainey, Understanding and Managing Public Organizations (San Francisco, CA: John Wiley &
42

Sons, 2005), 75.


43
Ibid.
See Hillary Clinton’s presentation and transcript at <www.state.gov/secretary/rm/2012/01/181489.
44

htm> (accessed April 28, 2012).


Personal interview with James Cartwright, Vice Chairman of the Joint Chiefs of Staff; former Com-
45

mander, U.S. Strategic Command.


T. Owen Jacobs, Strategic Leadership: The Competitive Edge (Washington, DC: National Defense
46

University, 2005), 11.


47
Ibid., 12.
48
Ibid., 13.
Stephen Shamback, Strategic Leadership Primer, 2nd Edition (Carlisle, PA: U.S. Army War College,
49

2004), 12.
50
Jacobs, 14.

3 8   L e a d in g a t t h e S t r a te g i c L eve l
51
Shamback, 12.
52
Ibid.
53
Ibid., 12.
54
Jacobs, 18.
55
Ibid., 19.
56
Shamback, 12.
Stephen Zaccaro and Zack Horn, “Leadership Theory and Practice: Fostering an Effective Symbiosis,”
57

The Leadership Quarterly, vol. 14 ( 2003), 773.


John Storey, “What Next for Strategic-level Leadership Research?” Leadership 1, no. 1 (2005), 90.
58

Downloaded from lea.sagepub.com at University of Miami on January 11, 2011.


59
Personal Interview with General George Casey, Jr., former Chief of Staff of the United States Army
(2007 to 2011) and Commanding General, Multi-National Force in Iraq (2004 to 2007).
60
Jacobs, 11.
61
Narendra Laljani, Making Strategic Leaders (Hampshire, UK: Palgrave Macmillan, 2009), 37.
62
Interview with McDonald.
63
Thomas Neff and James Citrin, You’re in Charge—Now What? (New York: Crown Business, 2005), 14.
64
Interview with Arthur.
Michael Porter and Nitin Nohria, “The CEO’s Role in Large, Complex Organizations” in Handbook of
65

Leadership Theory and Practice, ed. Nitin Nohria and Rakesh Khurana (Boston, MA: Harvard Business
Press, 2010), 437.
66
Shamback, 1.
George Reed, “Creating a Culture of Leadership Development,” in Strategic Leadership: The General’s
67

Art, ed. Mark Grandstaff and Georgia Sorenson (Vienna, VA: Management Concepts, 2009), 8.
68
Jacobs, 7.
69
Thomas Barnett, The Pentagon’s New Map (New York: Berkley Books, 2004), 9.
Personal interview with Dr. William Rupp, M.D., Vice President, Mayo Clinic, and CEO of Mayo
70

Clinic Jacksonville.
71
Interview with Iverson.
Personal interview with Ambassador Nancy Powell, Director General of the Foreign Service, Depart-
72

ment of State.
Personal interview with RADM Bob Sutton, USN (Ret.), President, Basic Engineering Concepts &
73

Technologies, Inc.; former Vice President and Director of the Systems Engineering and Ranges Business
Groups (ITT Industries); Director, Navy International Program Office.
Interview with Rupp.
74

75
Interview with Krulak.
76
Interview with Iverson.
77
Jacobs, 33.
78
Porter and Nohria, 437.
79
Personal interview with Richard Danzig, Chairman of the Center for a New American Security;
former Secretary of the Navy.
80
Porter and Nohria, 440.

C h a pte r 1   3 9
Ibid., 460.
81

82
Ibid., 459.
83
Interview with McDonald.
84
Personal interview with Bob Stevens, Chairman and CEO of Lockheed Martin.
85
Porter and Nohria, 440.
Personal interview with Dr. Jeremy Kaplan, Business Consultant and former Director of Technical
86

Integration Services at the Defense Information Systems Agency (DISA).


87
Mintzberg, 20–26.
88
Ibid., 26.
89
Porter and Nohria, 443.
Jim Collins, Good to Great: Why Some Companies Make the Leap… and Others Don’t (New York:
90

HarperCollins, 2001).
Annabel Beerel, Leadership and Change Management (Thousand Oaks, CA: SAGE, 2009), 21.
91

92
Yukl, Leadership in Organizations, 298.
93
Jacobs, 7.

4 0   L e a d in g a t t h e S t r a te g i c L eve l
CHAPTER 2 | A Strategic Leadership Model

This chapter introduces a strategic leadership model outlining and contextualizing


the essential elements necessary for effective strategic leadership as illustrated in
figure 2-1. It will provide a framework for “Strategic Leader Readiness—Personal
Dimensions,” identifying what the strategic leader brings to the leadership posi-
tion as outlined in figure 2-2. It will also provide an overview of Stratified Systems
Theory—a theory relevant to strategic leadership—supported by an example of a
large-scale organization illustrated in table 2-1. Finally, it will conclude with a linear
framework reflecting on morals and maturity as they relate to strategic leadership
as compared in figure 2-3.

Overview of Strategic Leadership Model


Figure 2-1 reflects and illustrates the essential components of strategic leadership,
including:
• Th
 e environment in which the strategic leader functions (illustrated by the
outer ring).
• Th
 e requirement for the strategic leader to be the interface between the turbulent
VUCA (volatile, uncertain, complex, and ambiguous) environment and the organiza-
tion (illustrated by the ring between the external and internal environments). This
ring includes two parts: the readiness of the strategic leader to perform as indicated
by his or her personal dimensions; and, the leader’s use of personal dimensions to
scan, analyze, and make sense of the external environment so as to formulate a vision
and strategy for organizational direction and action at the strategic level.
• Th
 e internal organizational work for which the strategic leader is accountable, illus-
trated by the ring of seven pie-shaped sectors.
• S uccessfully using his or her personal dimensions to do the required work at the
strategic level, the strategic leader achieves “success” as illustrated by the center
circle or “bull’s-eye.” The strategic leader’s successful execution leads the organiza-
tion to near-term credibility and legitimacy as well as long-term vitality, viability,
and ultimately, survival.

C h a p t e r 2   41
Figure 2-1. Strategic Leadership Model

© J. Browning 2012

External Environment
The outer circle, “External Environment of the Organization,” represents the operating
environment in which the organization exists. The outer jagged line represents the
turbulent nature of the VUCA environment. This is purposely large proportionally
to illustrate the significant importance and impact of the external environment in
relationship to organizational success. The partial circle, “Environmental Shift,” illus-
trates that the external environment is constantly changing (moving) and the strategic
leader’s primary job requirement is to see that the organization remains viable in rela-
tion to the external environment. To do so, the strategic leader must either adapt the
organization to the changing the environment—seemingly chasing or reacting to the
environment—or create an innovative organization that can possibly shape the exter-
nal environment, appearing to move the strategic environment to the organization.

Interface between External and Internal Environments


Strategic Leader Readiness—Personal Dimensions. The outer segments of this ring

4 2   L e a d in g a t t h e S t r a te g i c L eve l
represent the personal dimensions (including knowledge, skills, and abilities) which
the senior leader brings to the organization that, in turn, enable or diminish the oppor-
tunities for sustained organizational success. It is through the individual’s personal
dimensions that the strategic leader identifies and prioritizes changes needed by or
within the organization to respond to developments in either (or both) the external
and internal environments (see figure 2-2).
Perform Strategic Scan. The inner segment of the ring illustrates the critical work
required of the strategic leader at this level. The long-term viability of an organization
typically depends on its ability to either shape or respond to the external environment
and focus the internal environment appropriately.
• Th
 e scanning dimension illustrates that the external and internal scanning require-
ment is an all-encompassing, never-ending process regardless of what phase (sector)
of organizational work is in progress.
•B ased on strategic scanning and the ongoing assessment and evaluation of the
environment as it relates to the vision, mission, and values of the organization, the
strategic leader (or strategic leadership team) compares the organization’s strengths
or weaknesses against the perceived threats and opportunities (usually referred to as
a SWOT analysis), performs strategic analysis, and develops a strategic assessment.
• Th
 e ability of the strategic leader (typically supported by his or her strategic leader-
ship team) to scan that environment, collect significant information, analyze and
make sense of the information, and translate the results into a vision of the desired
organizational future state is essential for organizational success. In this effort, the
strategic leader formulates tangible strategies and organizational short- and long-
term planning and actions.
Consequently, as depicted in the model, the organizational elements required to antici-
pate and neutralize external threats and take advantage of opportunities lay between
organizational success and the external environment.

Internal Environment
The model’s seven sectors (as well as the strategic management sector) illustrate key
activities that strategic leaders perform to ensure the organization is successful in both
accomplishing its mission and adjusting to the external environment. They suggest that
the strategic leader needs both actions and relationships to convert the turbulence of
the external environment into the energy and motivation needed for organizational
success. The seven sectors are:
•B  uild and Lead Strategic Leadership Team
•M  ake Decisions and Resource
• S hape Climate and Culture
•L  ead Organizational Change

Chapter 2  4 3
•E
 nsure Implementation
•C
 ontrol and Diagnose
•E
 nsure Feedback and Adapt.
These sectors are enclosed by the circle “Internal Environment of the Organiza-
tion” and represent the work of strategic leaders. It is through these seven coequal,
continuous, interactive (not linear or sequential) activities that the strategic leader sets
organizational direction, ensures alignment, and builds commitment. The “Strategic
Management” component of the model reflects the reality that both strategic leader-
ship and strategic management are necessary within these sectors to achieve levels of
sustained superior internal organizational performance.
Build and Lead Strategic Leadership Team. The majority of senior leaders inter-
viewed for this book stated unequivocally that leading a large organization in today’s
VUCA environment exceeds the capabilities of any single strategic leader—no matter
how talented—thus requiring effective strategic leaders to build and lead a strategic
leadership team.
Make Decisions and Resource. The strategic leader (strategic leadership team)
must exercise discerning judgment while evaluating risks and uncertainty affecting
current goals, objectives, operations, and intended organizational results. Resources
are finite in organizations (e.g., subject to sales/costs forecasts, agency budget allo-
cations, and fundraising projections). Therefore, important decisions are required
regarding resources, their identification, funding, and allocation.
Shape Climate and Culture. The model depicts both climate and culture as focus
areas for both external and internal environments to the organization. For example,
developing a specific strategy may include establishing alliances or partnerships with
outside government, nonprofit, or business organizations. To do so will require a flex-
ible and adaptable organizational culture to integrate effectively with outside entities
pursuing a common strategic objective. Likewise, to be an innovative, flexible, and
agile organization that can shape or effectively react to a volatile external environment,
the organization will need a supportive climate and culture that thrive in a creative,
innovative environment with strong ethical and learning values and supporting
processes. Strategic leaders mapping out new organizational strategies and direc-
tions should assess and consider the current organizational climate and culture when
making changes to organizational policies, structure, work routines, and processes.
Lead Organizational Change. The reality of organizational success in the 21st
century—the constant and ever-increasing rate of change in the external environment,
coupled with shifting organizational challenges, e.g., workforce skill sets and demo-
graphics, technologies, processing and sharing information—suggests that organiza-
tional change will be the new “constant.” Obviously, the strategic leader must be alert
to balance workforce needs (and supporting processes) for stability with the ongoing

4 4   L e a d in g a t t h e S t r a te g i c L eve l
need for the organization to have a climate and culture that embrace change in order
to stay viable, meaningful, and competitive. Most often, incremental changes reflect
upgrading or modifying mission-critical and supporting processes. Six Sigma and
TQM (total quality management) are examples of process improvement approaches.
Transformational change, however, requires establishing and nurturing a climate for
change; gaining buy-in, engagement, and enabling of the affected organization; and
establishing systematic processes that institutionalize the required change.
Exercise Strategic Management. The exercise of strategic management begins
with the implementation phase of “Lead Organizational Change” and concludes
within the “Ensure Feedback and Adapt” phase. This range reflects the reality that
change includes elements of strategic management. It illustrates that strategic manage-
ment relates to the execution of all business processes by ensuring efficient and reliable
processes; aligning values, vision, and mission to strategy; translating strategy into
action; preparing and aligning the organization to efficiently and effectively execute
the strategy; designing appropriate metrics to determine successful implementation;
and providing feedback mechanisms for process corrections. For the organization to
perform these functions effectively requires both strategic management and strategic
leadership. Strategic management refers to organizing and aligning systems to improve
and achieve a more efficient and effective organization. Strategic leadership (with an
internal focus) reflects the communication of a compelling sense of purpose, values,
vision, and mission as supported by a climate and culture of innovation, achievement
orientation, and proactive engagement.
Ensure Implementation. Represented by the “Ensure Implementation” function
is the requirement to manage completion of work performed by the organization. This
area of performance is the critical component necessary to provide the products and/
or services that meet or exceed the expectations of internal and external stakeholders,
key constituents, and customers. Implementation includes the translation of strategy
into strategic and operational planning; the selection of short- and long-term objec-
tives and performance criteria; the development of policies and resource requirements;
and delegation, financial management, and logistics for organizational effectiveness
and efficiency. It represents the requirement to organize and align systems, assets, and
activities to achieve strategic goals and objectives. Organizational challenges include
people, organizational structure, organizational processes, networks and relationships,
and the leveraging of technology.
Control and Diagnose. Measuring and monitoring processes, progress, and
results are included within the function of “Control and Diagnose.” Are we accom-
plishing the mission and achieving our vision? Are we meeting our customers’ expec-
tations? These questions help identify whether the strategy (pathway to action) is
working and appropriate, or whether it needs adjustment. This sector reflects the use
of performance plans, meeting strategic and operational plans’ targeted organizational

Chapter 2  4 5
outcomes to see if the execution results effectively met or exceeded expectations. This
sector includes use of various tools, such as the McKinsey 7-S Model for alignment,
the Balanced Score Card for organizational performance, and the After Action Review
(AAR) for performance review and analysis.
Ensure Feedback and Adapt. Based on customer and stakeholder feedback,
changes in the external environment, and identified shortcomings in execution,
strategic and operational leaders must ensure that the overall organization remains
flexible, agile, and adaptable while embracing and incorporating the changes needed
to ensure future organizational effectiveness, success, and competitive advantage.
Success. The center of the model, the bull’s-eye, illustrates organizational success,
i.e., “in support of the organization’s purpose and vision of its desired future state,
successful efficient mission accomplishment is realized through sustained organi-
zational excellence, effectiveness, and competitive advantage.” How an organization
envisions or determines success will vary according to various criteria unique to the
organization’s strategic leadership, key stakeholders, constituencies, and custom-
ers. For example, success for a government or military organization may be mission
accomplishment; success for a business may be sustained growth and profit margins;
for a nonprofit organization, success may be successfully raising sufficient funding
and attracting enough volunteers to feed the hungry. While most scholars and prac-
titioners agree that organizational efficiency, effectiveness, and competitive advantage
are usually the bottom-line performance criteria, how leaders and stakeholders judge
these criteria will vary with the type of organization and the domain in which the
organization operates.
The Strategic Leadership Model (figure 2-1) serves as the design and representation
used throughout this book. Clearly, the entire model is both dynamic and iterative. Fur-
thermore, leaders must learn and develop their ability to perform each of the elements
depicted in the model through formal education and training programs, dedicated
learning and self-development, focused stretch assignments, and on-the-job experience.

Strategic Leader Readiness—Personal Dimensions


Personal Dimensions represent the collective capacities, competencies, attributes,
values, expertise, experience, organizational knowledge, judgment, and wisdom a
strategic leader brings to the table—be that as a strategic leader, serving a strategic
leader, or aspiring to be a strategic leader.
The personal characteristics, skills, and abilities needed by strategic leaders are
reflected by five different, but overlapping, domains or frames of reference as depicted
in figure 2-2, including:
• c ognitive capacity
• s ocial capacity

4 6   L e a d in g a t t h e S t r a te g i c L eve l
•p
 ersonal traits, values, and preferences
•b
 usiness acumen/technical skills
•b
 ehavioral capacity.

As illustrated in figure 2-2, as a leader moves from the tactical to the strategic
level, the requirement increases for each of the three capacities, for business acumen,
and—to a lesser extent—for personal traits, values, and preferences. While some
environmental factors may potentially stifle growth, the graphic depicts that the
growth in each of the personal dimensions is primarily determined by a leader’s self-
awareness and continuous learning focus and efforts, be they organization-driven
(training, stretch assignments) or individually driven (continuous learning activities,
self-development).
The following is a brief overview of these five domains. Chapter 3, Parts I and
II, “Strategic Leader Readiness—Personal Dimensions,” provides a more in-depth
examination of each of these five domains and their importance as a leader progresses
to a strategic leader position.

Figure 2-2. Personal Dimensions Framework

© J. Browning 2012

C h a p t e r 2   47
1. Cognitive Capacity. Cognitive Capacity is the collective ability to maximize
remembering, perceiving, thinking, and reasoning skills and abilities. Cognitive
capacity often includes complex mental models and frames of reference as well as
development of solutions to conceptualize, analyze, and evaluate the complex and
often wicked problems faced by strategic leaders.
2. Social Capacity. Social Capacity includes the leader’s ability to use an individu-
alized collection of interpersonal and emotional intelligence skills, knowledge, and
technologies to influence effectively individuals, groups, and organizations through
a varied mix of communications media that inform, persuade, or motivate others to
action.
3. Personal Traits, Values, and Preferences—Personal Characteristics. The
personal traits, values, and preferences segment in the graphic indicates expansion as
a leader moves to the strategic level; however, it does not reflect as much anticipated
growth as the other segments. This recognizes the general opinion that many people
find it difficult to modify their traits, values, and preferences to any great degree.
However, with strong self-awareness and with focused attention and effort, a leader
can modify his or her personal characteristics.
All people have fundamental or core values that influence, and some would argue,
drive personal behavior. Personal values are usually stable and evaluative beliefs that
guide a leader’s preferences for selecting courses of action. Major personal and orga-
nizational issues and challenges can arise if the strategic leader’s values are misaligned
with the organization’s core values.
4. Technical Skills and Business Acumen. Combined in this singular domain are
Technical Skills and Business Acumen—both address technical and functional skills
required of a leader. Specifically:
Technical Skills include specialized expertise, particularly as it relates to indi-
vidual systems or hardware, brought to the organization by the individual through
prior experience and training or that which they acquire during his or her tenure in
the position. Applied technical skills are important in supporting the organization’s
ability to fulfill its mission.
Business Acumen suggests the individual’s aggregated understanding of how
the various skills and knowledge of organizational members fit and align within
the organizational structure. In addition, it supports the mix of processes that add
mission-enhancing value to the entire functional area and, when organizationally
paralleled and replicated, to the entire enterprise. For government, the Office of
Personnel Management (OPM) defines Business Acumen as “the ability to manage
human, financial, and information resources strategically.”1
5. Behavioral Capacity. The ability of a leader to change or adapt habitual behav-
ior patterns to embrace new or additional behaviors needed to fulfill a strategic leader-
ship role is included within the area of behavioral capacity. It includes the ability to

4 8   L e a d in g a t t h e S t r a te g i c L eve l
understand what behavior is most appropriate for the circumstances and will bring
about the desired responsive behavioral outcomes by others. Individuals reflecting this
important capacity exhibit the flexibility to select appropriate leadership behaviors
that exercise positive influences and directions on the strategic environment (both
externally and internally).

Leadership Approach
As depicted in figure 2-2 (Leadership Approach = Leadership Style + Context + Situa-
tion), an effective strategic leader does not apply just one of these five personal dimen-
sions at a specific time or context. Rather, an effective leader makes the best collective
use of all personal dimensions. The leader may change or alter actions based on his
or her perspective regarding the context, urgency, magnitude of risk, decisionmaking
process, and potential second and third order of consequences.
Because leadership style usually is not associated with a specific situation or con-
text, studies by many researchers and scholars demonstrate that personal leadership
style seems to have little effect on what strategic leaders do. As Henry Mintzberg pos-
ited, “Personal [leadership] style is important, no question. But that seems to be more
about how managers do things, including the decisions they make and the strategies
they shape, than what they do as managers. . . . Style matters and context matters, but
mostly they matter together, in a symbiotic relationship.”2 To avoid confusion with
the term “leadership style,” the term “leadership approach” is used.
Addressing the integration of cognitive, social, and behavioral skills and their
relationship to strategic leadership, executive leadership scholar Steve Zaccaro stated:
Indeed, several researchers have argued that . . . cognitive and social or behav-
ioral skills are necessary precursors to successful executive leadership. . . . Cogni-
tive skills are used in the processes of making sense of organizational environ-
ments and establishing organizational directions. Behavioral skills are used
in the implementation, within complex social domains, of strategies, goals,
and tasks that are derived from leader sense-making and direction-setting.
Accordingly, to fully understand executive leadership, both cognitive complex-
ity and social and behavioral complexity need to be the bases for an integrated
conceptual model.3

Summary of Personal Dimensions


Clearly, imbedded in each of the five sectors are elements of one or more of the other
sectors. The key is to recognize that all are important. One by itself is insufficient for
a strategic leader’s success. The graphic gives the reader an opportunity to identify,
explore, and correlate these five segments to gain a greater appreciation and under-
standing of what constitutes the foundations for an individual’s readiness to serve as

Chapter 2  4 9
an effective strategic leader, namely, his or her personal dimensions. In other words,
these are what the prospective strategic leader brings to the table (the organization),
including: operational values, a belief system, personal disposition, engaging per-
sonality, effective social skills, self-efficacy, risk-taking, initiative, expertise, mental
skills and models, emotional control, and fortitude. The collective best use of these
personal dimensions greatly facilitates the leader’s ability to align successfully the
organization with its constantly evolving operating environment. Consequently, hav-
ing self-awareness and objective understanding of one’s personal dimensions, coupled
with dedicated efforts to expand one’s personal capacity in each, are major factors for
ultimate success as a strategic leader.

Disclaimer
While scholars and practitioners generally understand cognitive capacity in com-
parison to the other two identified capacities, there is a variance regarding behavioral
capacity and social capacity. Some may view behavioral flexibility, complexity, and
capacity to be part of social capacity. While this may be a legitimate position, it is not
the intent of figure 2-2 to argue one way or another. Rather, the graphic is a conceptual
model; by separating social and behavioral capacity it clearly illustrates the importance
of both. In addition, personal characteristics will have a major impact on behavior.
Researchers, scholars, and practitioners all agree that values and personal belief sys-
tems drive behavior. For example, as Zaccaro points out, “Behavioral flexibility can
become behavioral vacillation under conditions of uncertainty unless the executive
leader possesses a degree of self-discipline that forces closure on a behavioral action
even when social cues do not point clearly to a particular appropriate response.”4
Furthermore, he notes that researchers argue that “flexibility, and related personal
qualities (e.g., adaptability, openness), are important executive personality charac-
teristics.” In many ways, how a strategic leader behaves will communicate more with
stakeholders, customers, and organizational members than any other aspect, i.e., the
ability to “walk the talk.”

Stratified Systems Theory


Stratified Systems Theory (SST) is a seminal theory related to strategic leadership and
organizational hierarchy and serves as a key framework for understanding the impor-
tance of cognitive capacity of strategic leaders. SST, initially developed by Elliott Jaques,
focuses on an individual’s cognitive power and ability to reason over a specific period of
time—to think through complex and interactive sequences of cause and effect. Based on
their research performed with senior Army officers and civilian executives, Jaques and
leadership researcher and scholar Owen Jacobs argued “leadership in large part reflects a
cognitive, or problem-solving process.”5 Using SST, they demonstrated this requirement
by finding that, as a person moves up the organizational leadership hierarchy, “problem

5 0   L e a d in g a t t h e S t r a te g i c L eve l
types and decision choices become more ambiguous, less structured, more novel, and
more differentiated at higher organizational levels.”6 This required a more complex
cognitive capacity at each of the higher levels of leadership.
Jaques and Jacobs identified seven levels or strata of organizational work. As a
leader progresses to a higher level, they added unique value at that level. They grouped
these seven levels in three layers reflecting strategic, organizational or general manage-
ment, and tactical supervision. The top two layers reflected indirect leadership and
the bottom layer reflected direct leadership. See table 2-1 for an overview of SST for a
large-scale organization.
To perform with the requisite cognitive ability, the leader must have matching
frames of reference or complex mental models that align with the complexity of the
job at a specific leadership level. “A causal frame of reference provides the basis for a
leader’s understanding and interpretation of information and events encountered in
the organization’s operational environment.”7 Zaccaro writes that “the frames of refer-
ence or causal maps developed by senior leaders must be more complex than those of
leaders at lower organizational levels.” He explained:
This required difference results because (a) executive leaders’ maps must accom-
modate many more causal elements; (b) these elements have more complex
interconnections and associations; (c) multiple causal chains may be occurring
simultaneously, requiring both differentiation and integrations; (d) antecedental
events occur over longer time frames at higher organizational levels, greatly
increasing the difficulty of perceiving and integrating them into a comprehensive
causal map; and (e) executives who are operating within the external environ-
ment also need to factor into their frames of reference the strategies and purposes
of executives of other co-acting and competing organizations.8
Therefore, Zaccaro argued, “The requirement of increasingly complex models and
causal maps at upper organizational levels dictates the need . . . for higher order cogni-
tive skills and capabilities at those levels.”9
An important concept related to the SST model is the time span (the right hand
column of table 2-1). The higher a leader progresses within the organization, the more
time he has to plan and think within longer time spans—the length of time required
from the inception point of a specific task or program to its completion date. Making
strategic-level decisions has multiple-order as well as long-term consequences that
affect future organizational leaders for decades to come. For example, in January
2011, Secretary of Defense Gates cancelled the development of a $14 billion amphibi-
ous Marine vehicle.10 This decision directly affected the future of Marine capabilities
over the next decade or longer as well as indirectly affecting several thousands of jobs
during the next decade. To develop a military vehicle or weapons system takes years
to plan, develop, test, and certify as operationally ready, and may take 10 to 20 years

C h a p t e r 2   51
Table 2-1. Levels of Organizational Stratification Proposed by Stratified Systems Theory (SST)
TASK REQUIREMENTS AND CHARACTERISTICS

TYPE OF UNIT WITH CIVIL SERVICE


AND BUSINESS CORRELATES SCOPE OF WORK SST TIME
RANK/ CIVIL SYSTEM RESOURCES AND POLICY NUMBER OF SPHERE OF SPAN OF
STRATUM DOMAIN GRADE MILITARY SERVICE BUSINESS TASK REQUIREMENTS SUBORDINATES INFLUENCE WORK
Unified or Create/integrate complex systems;
Indirect Cabinet 500,000–
VII General Specified C-Level organize acquisition of major resources; International 20+ years
Secretary 1,000,000
Command create policy
Strategic/ Lieu-
Deputy Oversee directly operation of subordinate 10–20
VI Systems tenant Corps Group 50,000– 60,000 National
Secretary divisions; allocate resource; apply policy years
General
Major Under Direct operation of complex systems; allo- 5–10
V Division Full DMS 11,000–12,000 Regional
General Secretary cate assigned resources; implement policy years
Brigadier Separate
Organizational/ Direct operation of systems; organize
General Brigade Assistant Medium- 5,000 Sector

5 2   L e a d in g a t t h e S t r a te g i c L eve l
Operational resources allocations to interdependent
IV Secretary sized 4–7 years
subordinate programs and subsystems;
Division Business 10–15
Colonel implement policy 2,500
Brigade kilometers
Lieu-
tenant
Principal Develop and execute plans and tasks; 4,000–5,000
Colonel/ Battalion One-man 500–600
Staff organize subsystems; prioritize resources; meters
III Sergeant Business or 1+ years
Major translate and implement policy and assigned
Unit
missions
Battalion
Direct Major 100–200 1,500 meters
ORT Level
Supervise direct performance of subsys-
Captain/
Company Assistant tems; anticipate/solve real-time problems; 3+
II First Section 3–40
Platoon Principal shift resources; translate and implement months
Sergeant
Tactical/ policy
Command Lieuten-
ant/
Non-
NCOs Office Direct performance of work; use practical Less than
I commis- Supervisor
and Ors Supervisor judgment to solve ongoing problems 3 months
sioned
Officer
(NCO)
Source: Adapted from Steven Zaccaro, The Nature of Executive Leadership: A Conceptual and Empirical Analysis of Success (Washington, DC: American Psy-
chological Association, 2001), 27. Reproduced with permission of American Psychological Association—All Rights Reserved.
to conclude. For example, military actions in Iraq and Afghanistan following 9/11
used military equipment planned, funded, and developed many years before George
W. Bush took office. These examples illustrate the time spans necessary at different
leadership levels depicted by SST; in making these types of decisions, military strategic
leaders require the necessary foresight and reasoned assumptions on what they believe
warfighting will be 10 to 20 years hence.
To meet effectively the cognitive capacity required at the higher levels of SST, the
strategic leader must develop complex frames of reference and mental models that
will be sufficient to deal with today’s VUCA external environment and the wicked
problems and challenges faced at the strategic level. Such cognitive capacity requires
adept thinking skills, including metacognition—thinking about how one thinks.
“These more complex frames of reference allow executives to consider multiple options
and multiple strategies, to deal with more complex forms of organization and a wider
variety of influential constituent groups.”11

Maturity and Experience Framework


Figure 2-3 illustrates the growth or maturity of an individual based on increased
experiences, the development of informed intuition, and role responsibilities within
organizational levels. The diagram suggests the conceptual framework within which
one matures as the individual learns and grows with experience (although somewhat
limiting in moral reasoning growth as noted below).
The three horizontal lines in figure 2-3 depict separate planes on which one can
assess an individual’s maturity. Starting at the top, the first line signifies a person’s
experience level. One’s placement on this line represents the amount and diversity of
experience performing tasks relevant to his or her position within the organization.
The second line segment illustrates the stages of cognitive growth. The farther to the
right on this line one travels, the more developed one’s cognitive capacities are. For
example, someone on the far right end of the spectrum has a better ability to think
and act swiftly in complex situations than those on the far left. The final line segment
portrays the stages of moral growth. An individual’s placement on this spectrum
reflects his or her development in demonstrating good beyond himself or herself,
circumscribed by the similar goods of others.

Chapter 2  53
Figure 2-3. Strategic Leader Maturity

Most people agree that as a person matures with age, ability to grow cognitively,
socially, and behaviorally also improves. For example, in the area of decisionmaking,
there is evidence that younger strategic leaders often are greater risk takers than older
executives. In addition, presumably it takes time to gain experience and expertise that
will allow a leader to progress up the organizational hierarchy. This implies that those
leaders progressing to positions that are more senior do so because of learned develop-
mental experiences. Studies in Stratified Systems Theory demonstrate that executives
develop with—adapt and adjust to—the changing performance requirements at each
organizational level.
Included in the maturation process is growth in moral and ethical thinking and
practice, as well as the development of wisdom. For example, in the 1920s and 1930s,
Jean Piaget conceived and presented studies that demonstrated developmental stages
in infants from birth to 24 months. Building on Piaget, Erik Erikson expanded the
developmental concept to eight stages throughout a lifetime (not just childhood).
According to Erikson, each stage is a result of a crisis experienced by an individual.
The better an individual deals with a crisis, the healthier and better the individual’s
development. Erikson’s eight stages include:12
1. Trust versus mistrust (experienced in the first year of life)
2. Autonomy versus shame and doubt (1–3 years)
3. Initiative versus guilt (3–6 years)
4. Industry versus inferiority (6–11 years—transition from play to desire for achievement)
5. Identify versus identity confusion (12–18 years—Erikson coined the term “Identity
Crisis,” efforts to identify a sense of self; he suggests that up to this stage development
mostly depends upon what is done to us. From here on out, development depends
primarily upon what we do)13
6. Intimacy versus isolation (18–35 years—seeking companions and love)
7. Generativity versus stagnation (36–65 years—creative and meaningful work is
important; many wish to “be in charge,” rather than experience the fear of meaning-
lessness and inactivity)
8. Integrity versus despair (65 years to death—life has meaning versus a life of failures).

5 4   L e a d in g a t t h e S t r a te g i c L eve l
In 2005,14 Gene Cohen argued that as one gets older, the better one is at thinking.
He emphasized that, like the body, an individual needs to use or lose one’s brain and
subsequently his or her thinking skills. He identified four stages:
1. Reevaluation (35–65 years—individuals reevaluate their lives and meaning)
2. Liberation (55–75—doing something new)
3. Summing up (65–90—giving back)
4. Encore (75–death—reaffirming life).
Also following Piaget’s development model was Lawrence Kohlberg’s six devel-
opmental stages of moral development. Specifically:
Stage 1: Pre-Conventional—no reason to do right except for “fear of punishment or
respect for authority,” or avoiding punishment.
Stage 2: Conventional—self-interest orientation—right is relative to the immediate
interests of an individual—or the “What’s in it for me?” syndrome.
Stage 3: Social norms—efforts to gain interpersonal accord and identify with what
others view as good behavior—“caring based on the Golden Rule and on values such
as trust, loyalty, respect, and gratitude.”
Stage 4: Law and order morality—an appreciation that there is a “generalized moral
system that defines the rules and roles.”
Stage 5: Social contract—while still believing that values are relative to one’s own group,
individuals “uphold these values out of regard for a social contract.”
Stage 6: Principled conscience—“the development of personal commitment to universal
moral principles such as justice, equal human rights, and individual dignity.”15
While originally focused on children, many researchers posit that the six stages
of moral development represent a continual process that occurs throughout an indi-
vidual’s lifespan. According to Kohlberg, a person must achieve each of the six stages
in order, one cannot skip a stage, and each stage is a new perspective but includes the
integration of previous stages.16 Unlike the previous examples, Kohlberg does not
identify specific times within a lifespan.
For example, using actual quotations from U.S. congressional debates on a resolu-
tion supporting President George H.W. Bush administration’s policy on Iraq’s invasion
of Kuwait, Johanna Shapiro of Illinois Wesleyan University used Kohlberg’s six stages
to evaluate arguments for and against U.S. involvement. Her results were:17

Arguments against U.S. involvement:


• “ We shouldn’t consider war . . . because it would hurt our economy” (Stage 1)
• “ because we’ll have more money for domestic issues” (Stage 2)
• “ because we don’t want to appear too militaristic” (Stage 3)
• “ because war is killing and killing is against the law” (Stage 4)

Chapter 2  55
“even though the situation is bad, war is damaging to people and property and society
agrees that is bad” (Stage 5)
“although atrocities have been committed, it would be an even greater atrocity to wage
war” (Stage 6).
Arguments for U.S. involvement:
• “ We should consider war . . . because our oil is threatened” (Stage 1)
• “ because we can gain security of the oil supply” (Stage 2)
• “ because we don’t want the world to see us as weak” (Stage 3)
• “because the UN has laid down written resolutions which should be upheld” (Stage 4)
• “the situation is extreme enough that society’s rights are threatened and need to be
defended” (Stage 5)
• “evil is on the march, and it would be morally wrong to allow it to continue” (Stage 6).
The above example demonstrates that adults engaged in the debate operated at
all six stages of moral development. Therefore, regardless of organizational position,
age, or maturity, moral reasoning and development are specific to the individual and
not necessarily associated with position or age. Yet, growth in moral reasoning can
occur as one progresses up the hierarchal ladder, providing the individual reasons and
practices to do so. In addition, some researchers criticize Kohlberg’s focus on aware-
ness and moral reasoning, by pointing out that thinking about moral issues does not
necessarily mean an individual will behave morally.

Summary
This chapter offered a strategic leadership model that reflected more fully the essential
elements necessary for effective leadership at the strategic level. Supporting the model
was a framework for “Strategic Leader Readiness—Personal Dimensions” (what the
strategic leader brings to the table) and a linear framework reflecting on morals and
maturity as they relate to strategic leadership. Also presented was an overview of Strati-
fied Systems Theory—an important theory related to strategic leadership.

Notes
1
Office of Personnel Management, “Executive Core Qualifications (ECQs),” at <www.opm.gov/ses/
recruitment/ecq.asp> (accessed December 21, 2010).
Henry Mintzberg, Managing (San Francisco, CA: Berrett-Koehler, 2009), 130.
2

Stephen Zaccaro, The Nature of Executive Leadership (Washington, DC: American Psychological
3

Association, 2001), 171.


Ibid., 299.
4

Ibid., 24.
5

5 6   L e a d in g a t t h e S t r a te g i c L eve l
6
Ibid.
7
Ibid., 26.
8
Ibid.
9
Ibid.
Crag Whitlock and Greg Jaffe, “Gates Wants to Drop $14 Billion Marine Landing-craft Program,” The
10

Washington Post, January 5, 2011, at <www.washingtonpost.com/wp-dyn/content/article/2011/01/05/


AR2011010506374.html> (accessed June 1, 2011).
Cynthia McCauley, “Successful and Unsuccessful Leadership,” in The Nature of Leadership, ed. John
11

Antonakis, Anna Cianciolo, and Robert Sternberg (Thousand Oaks, CA: Sage, 2004), 212.
David Rock and Linda Page, Coaching with the Brain in Mind (Hoboken, NJ: John Wiley & Sons,
12

2009), 208.
13
Arlene Harder, “The Developmental Stages of Erik Erikson,” Learning Place.Com, 2009, at <www.
learningplaceonline.com/stages/organize/Erikson.htm> (accessed December 12, 2010).
14
Gene Cohen, The Mature Mind (New York: Basic Books, 2005).
“Kohlberg’s Stages of Moral Development and Their Relationship to Leadership Ethics,” MPA 8300,
15

Villanova University, <www83.homepage.villanova.edu/richard.jacobs/MPA%208300/theories/kohl-


berg.html> (accessed December 29, 2011).
Anne Colby, J. Gibbs, M. Lieberman, and L. Kohlberg, A Longitudinal Study of Moral Judgment: A
16

Monograph for the Society of Research in Child Development (Chicago, IL: The University of Chicago
Press, 1983).
Johanna Shapiro, “Dr. Kohlberg Goes to Washington: Using Congressional Debates to Teach Moral
17

Development,” Teaching of Psychology 22, no. 4 (December 1995), 245–247.

Chapter 2  57
SECTION II: The Strategic Leader—
Key Interface between the Organization’s
External and Internal Environments
CHAPTER 3a | Strategic Leader
Readiness—Personal Dimensions, Part I

As the Strategic Leadership Model in chapter 2 illustrates, the strategic leader (with the
support of his or her strategic leadership team) has the primary responsibility for the
organization’s short-term credibility by achieving strong organizational performance
and long-term legitimacy, vitality, viability, and survival. The model places the strategic
leader at the interface between the external and internal environments. At this interface,
the strategic leader and his team scan the external environment to identify and assess
threats and opportunities that may affect their organization. Likewise, as part of this
strategic scanning process, the strategic leader must ensure that the organization has the
agility and adaptability to respond (proactively or reactively) to the changing nature of the
volatile, uncertain, complex, and ambiguous (VUCA) environment. Through scanning
and sense-making, the strategic leader seeks to connect the dots and create the foresight
needed to identify, define, and articulate the vision and strategies required by the organi-
zation to remain true to or modify organizational purpose; plan and execute the strategies
to achieve the vision, mission, and strategic objectives; and sustain competitive advantage.
To fulfill the required responsibilities, the strategic leader individually (and the
leadership team collectively) brings to the organization his or her personal knowledge
and abilities to perform effectively the work required at the strategic level to ensure
short- and long-term organizational effectiveness. The adjacent ring on the model
identified as “Personal Dimensions” represents the requisite personal knowledge and
capacities essential at the strategic level. This chapter describes the five personal dimen-
sions and examines the components of each, followed by the activities required at this
interface, scanning, and making sense of the strategic environment.
There are five dimensions identified as encompassing the strategic leader’s per-
sonal dimensions, including:
• c ognitive capacity
• s ocial capacity
•p  ersonal traits, values, and preferences
•b  usiness acumen and technical skills
•b  ehavioral capacity.
In addition, this chapter examines the universal requirements for strategic lead-
ers to have a strong sense of self—to understand themselves and to continually learn

C h a pte r 3 a  61
and grow to fine tune, and acquire new personal capacity, as well as effectively deploy
those abilities.
Some strategic leadership authors place more emphasis on one set of personal
dimensions than the others. For example, leadership researchers P.M. Lewis and T.
Owen Jacobs suggest that the critical individual difference variable in leader effective-
ness is the conceptual competence to do the required work.1 Alternatively, executive
leadership researcher Stephen Zaccaro suggests that social capacities are equally as
important as conceptual ones.2 Regardless of the dimension considered most impor-
tant, research findings recognize that all these dimensions are requisite skills for
strategic leader effectiveness.

Personal Dimension: Cognitive Capacity3


The first dimension examined is cognitive capacity. This is also the longest section
in this chapter due to the multitude of recognized thinking skills and abilities that
strategic leaders need to master to enhance their effectiveness. Do not infer, however,
that though Cognitive Capacity is longer and more complex in explanation than the
other dimensions that it is more important. The complex explanations are simply to
assist examination and understanding.
Lieutenant General Ron Iverson, USAF (Ret.), CEO of LGS Innovations, stated,
“The growing complexity of the environment necessitates an increase in your cogni-
tive capacities.”4 Steve Zaccaro suggests that cognitive capacity includes the ability of
leaders to perceive and develop complex mental models and frames of reference that
enhance their ability to take action, make decisions, and achieve superior organiza-
tional performance.5 This chapter expands Zaccaro’s definition of cognitive capacity
to include the ability of a leader to maximize all thinking skills to develop and employ
complex mental models and frames of reference to conceptualize, analyze, evaluate,
and create solutions to complex and often wicked problems faced by strategic leaders.
Cognitive capacity includes, but is not limited to, those thinking skills and abilities
listed in table 3a-1.
While several of these concepts have similarities, they are different enough in
this context to warrant a separate listing. One important note is that the mastery and
exercise of all or many of these thinking skills is what facilitates effective problem-
solving and decisionmaking. Many of these terms are defined in greater detail in
following chapters.

6 2   L e a d in g a t t h e S t r a te g i c L eve l
Table 3a-1. Thinking Skills Associated with Cognitive Capacity
conceptual capacity thinking skills (systems, envisioning
creative, critical, intuitive,
and reflective)
sensemaking (mental models reducing complexity dealing with uncertainty
and frames of reference)
understanding indirect recognizing blind spots formulating strategy
effects (multiple order effects
of consequential decisions)
metacognition (thinking about identifying personal bias communicating (both oral and
how one thinks) written)
reframing (and perspective exercising foresight exercising discerning judg-
taking) (anticipating the future— ment and wisdom learning
insight/”aha” moments “seeing around corners”) and growing capacity
environmental scanning multitasking/ developing
absorptive capacity (ability to
process lots of information)

This section addresses the thinking skills of frames of reference, mental mod-
els, reframing, perspective-taking, metacognition, multitasking, critical thinking,
intuition, “Aha!” moments, insight, reflective thinking, and creative thinking. Each
of these thinking skills is required to be an effective leader, and more importantly, a
successful strategic leader.

Strategic Thinking
When serving as the commander of Multi-National Force–Iraq, General George Casey
asserted, “I’ve got all the operational commanders I need. Send me strategic thinkers.”6
In his reference to “operational” commanders, General Casey was referring to his two-
and three-star generals. He indicated that while these general officers were superb in
combat operations, many were limited in their ability to think and communicate in
strategic terms with senior leaders outside of the combat theater of operations.7
So what is a strategic thinker? Quite obviously, a strategic thinker is someone
who exercises strategic thinking. The following examines some definitions of strategic
thinking and concludes with a definition of a strategic thinker.
Many authors have proffered a definition of strategic thinking. For example, Pro-
fessor Greg Foster stated that strategic thinking is the “very essence of strategic leader-
ship,” and is an expected quality from leaders at the upper echelons of organizations,
institutions, or states that claim superpower status.8 He defined strategic thinking as
having “far less to do with substantive content of what one thinks about than with the
process of how one goes about thinking.”9 Finally, Foster espoused that leaders who
think strategically must:

C h a pte r 3 a   6 3
take the long view, to focus on the big picture, to recognize the inherent interre-
latedness of all things otherwise seemingly unrelated, to appreciate the residual
and hidden consequences of action (and inaction), to anticipate and prevent
unwanted events and conditions, and to identify the underlying causes of big
problems rather than reacting to the more proximate, visible symptoms of the
moment that dominate politics, public policy, and public management.10
Authors Mark Grandstaff and Georgia Sorenson proposed strategic thinking (ST):
focuses more on long-term problems and processes from a systems perspective
rather than short-term crises, and deals with more tenuous situations that
are not susceptible to easy answers. ST includes different lenses and thought
processes that are useful in any endeavor, but they are critical for senior leaders
in a time of accelerating change that brings both threats and opportunities. In
short, ST deals with problems that are much wider in scope, more intertwined
with other problems, laden with ethical dilemmas, and that sometimes must
be managed rather than solved.11
Jacobs defined strategic capacity not so much as the different facts that the deci-
sionmaker knows, but rather as the meaning the facts have within the strategic
context. As General Martin Dempsey, Chairman of Joints Chiefs, stated, “When I go
into a meeting to discuss policy, discuss strategy, discuss operations, plans, whatever
it happens to be, he who has the best context generally prevails in the argument, not
necessarily who’s got the best facts. There’s a difference. It’s who has the best context
in which those facts exist.”12
Similar to the concept of strategic thinking, Jacobs defined a strategic leader’s
conceptual and decision skills as the ability to:
gather information from external and internal sources, make sense of it, and
provide interpretations to subordinate echelons. They frequently are in a bet-
ter position than most others to have the “big picture” information needed to
understand a complex unfolding situation in a way that permits early adap-
tive action. The importance of this critical function stems from the very long
time-spans required for strategic initiatives to get planned, resourced, and
implemented. Lead-time is consequently of immense value. To the extent that
leaders can think further ahead, or think through complexity faster, they can
create lead-time advantage for their organizations that can then be turned into
competitive advantage.13
Jacobs identified seven key functions regarding a strategic leader’s conceptual
skills, including environmental scanning; decisionmaking where options are conse-
quential, situations may not have clear cause-and-effect outcomes, and/or plausible

6 4   L e a d in g a t t h e S t r a te g i c L eve l
courses of action; reducing complexity; systems understanding; understanding indi-
rect effects; future focus and vision; and proactive reasoning.14
Each of the aforementioned definitions offers several similar characteristics about
the nature of strategic thinking. For our purposes, strategic thinking requires a “long-
term, multiple and systems perspective in dealing with more complex problems that
have more indirect, consequential, and far reaching outcomes than non-strategic
thinking . . . [and] a proactive and anticipatory nature in scanning the environment
and identifying future threats and opportunities.”15 Given this definition of strategic
thinking, a strategic thinker then is one who has and can use mental models that are
sufficiently complex to address strategic issues.
A strategic thinker is one who possesses the conceptual understanding of the
increasing levels of sophistication in the breadth and complexity of the variables con-
stituting a strategic environment. Likewise, the strategic thinker is conscious of the
limitations of his or her mental models and uses compensating techniques. A strategic
thinker uses multiple frames of reference (his or her own and executive team’s) and a
multidimensional, systems perspective to analyze and solve wicked problems. As the
strategic leader acquires more information, data, and evidence from the VUCA envi-
ronment, he or she reassesses and reframes the problem and continuously considers
the multiple order consequences of his or her projected decisions.16
Whether one can become a strategic thinker depends on having the requisite
conceptual capacity and the experience from which these mental models are built.
Zaccaro suggested that “the most critical executive skill is the conceptual complexity
or cognitive capacity that allows the senior leader to develop a frame of reference that
appropriately maps the complexity of the organizational operating environment.”17
Authors Lewis and Jacobs defined conceptual capacity as the “breadth and complexity
with which an individual organizes his or her experience . . . reflects the level of sophis-
tication of an individual’s organizing processes,” and is a “description of the nature of
the meaning making process.”18 As these experiences become increasingly complex,
with more obscure cause-and-effect relationships, individuals require more abstract
thinking abilities to develop the requisite cognitive maps.19 Furthermore, Lewis and
Jacobs suggested that for leaders, “there are advantages to having a conceptual work
capacity that somewhat exceeds one’s current conceptual work requirements.”20 So
conceptual capacity, or cognitive horsepower, is the initial component required to be
a strategic thinker.
However, conceptual capacity is not sufficient by itself. A successful strategic
thinker benefits greatly by the experience of operating and making decisions in a
strategic context. Barney Forsythe and Herbert Barber, professors at the U. S. Military
Academy and Army War College, respectively, stressed the importance of challenging
high-level work experiences in developing the leader’s cognitive structures required
for action at the strategic level.21 This experience at the strategic level is usually lacking

C h a pte r 3 a   6 5
in a leader’s first 10 to 15 years of leadership and is more prevalent when leaders reach
higher levels of responsibility in the organization.
In view of the above discussion, there is a presupposition that those serving as
strategic leaders have the fundamental conceptual capacity to conceive, build, adapt,
and use cognitive frames or maps that represent their thinking, work experiences
reflections, and to solve problems. As Zaccaro pointed out, a leader’s “effectiveness
is in part a function of how well a frame of reference provided by the leader patterns
the causal and other mechanism in the environment [the leader is] operating.”22 The
assumption is that a leader progressing to the strategic level has the requisite concep-
tual capacity and experience to develop and use his or her mental models and frames
of reference. This point, however, does not necessarily mean to imply that a leader
operating at the strategic level has the requisite complex, sophisticated cognitive skills
and models to function successfully as an effective strategic thinker. It is only through
dedicated effort and learning that the strategic leader can improve his or her cognitive
capacity. This point is perplexing for many “Millennials” who desire rapid promotion
to senior organizational positions, yet do not currently process the sophisticated cogni-
tive skills and experience necessary to be successful at the strategic level (see chapter
10 for additional Millennial discussion).
While conceptual capacity and strategic leader experience are essential for becom-
ing a strategic thinker, mastery in the art of strategic thinking improves by under-
standing when and how to exercise the strategic thinking skills listed in table 3a-1.
Leaders certainly used these same thinking processes and exercised these same skills
in their previous leadership experiences; however, the scope and quality (power) of the
mental models used in employing these skills at the strategic leadership level is what
sets them apart from past leadership experiences. The following paragraphs address
many of the thinking skills and abilities outlined in table 3a-1.

Sense-making: Mental Models and Frames of Reference


The two cognitive capacity frameworks people use to make sense of their world are
mental models and frames of reference. It is through a strategic leader’s mental models
and frames of reference that he or she attempts to connect the dots of information
and patterns in the environment that might help to define and solve the problem. The
more comprehensive and complex one’s models, the more variables and relationships
among the variables that the leader has to consider, and thus, the quicker the leader is
able to “see” the connection of the dots, and thus the possible solution(s). However, a
leader’s mental models typically reflect years of experience, reasoned intuition, reflec-
tion, values, assumptions, biases, and many other variables. Consequently, history (or
past performance) is an important foundation for the models or frames of reference
available to the strategic leader. While perhaps often effective in the past, the use of
existing models to deal with near- and long-term challenges and problems can be

6 6   L e a d in g a t t h e S t r a te g i c L eve l
problematic—especially when operating in an ever-changing VUCA environment.
Consequently, the key point of this segment is to emphasize that successful strategic
leaders constantly reflect on their mental models and frames of reference, incorporat-
ing new frames and models, testing them to verify their relevance and reliability, seek-
ing different perspectives from others, and exploring other approaches that enhance
the overall sophistication and effectiveness of their models and frames.

9/11: Mental Models and Frames of Reference—Mini Case


Study23
Clearly, prior to the attack, the intelligence services had difficulty making sense of
various pieces of information regarding the motives of the terrorists. Despite available
data regarding the potential of using aircraft to fly into buildings, as well as terrorists
receiving flight training (even if this data were more widely shared), authors Yoram Wind
and Colin Crook argued that it was not necessarily as much the failure of intelligence
as it was the inability to make sense of what they were seeing. They suggested it was
the existing mental models and frames of reference that inhibited intelligence agencies
and the airlines from seeing something “different.” For example, their existing mental
models missed these data points as being different:

•M
 iddle-class, clean-cut young working men with everything to live for did not fit the
profile of the stereotypical wild-eyed young fanatics who became suicide bombers—
therefore, their requesting flight training raised no red flags.
•H
 istorically, hijacked planes and their crews taken hostage typically flew to remote
locations, where the hijackers made demands. Instructions to pilots suggested the
best course of action for passengers and crew was not to resist.24

The events of 9/11 also demonstrated how quickly mental models and frames of ref-
erence can be altered. Wind and Crook explain using passenger actions aboard United
Flight 93 (the fourth plane in the attack that crashed in Pennsylvania):

When passengers on . . . Flight 93 received reports by cell phone from friends


and family about the attack on the World Trade Center, several quickly real-
ized that this was not a typical hijacking. They could see that their own aircraft
would be used as a missile against another target. In a matter of minutes, they
were able to transform their mental models and take heroic actions to stop the
hijackers. As a result, the last plane failed to reach its target, crashing in a field
in western Pennsylvania, a tragedy that could have been much worse if some
of its passengers hadn’t been able to make sense of what was going on and
move to stop it. The passengers and crew of Flight 93 were presented with a
picture that was similar to the hijackings earlier that day. What they suddenly

C h a pte r 3 a   6 7
developed, however, was a different mental model. They were able to quickly
make sense of what was happening and to act on this new understanding. And
that made all the difference.25

—Pause—Take a moment to test your own mental models and frames of reference
with two simple and fun exercises below. (Upon completing the exercises, see this
endnote for solutions.)26
1. What is the pattern of the following objects?

2. Add one line to each of the three symbols below to create a new number:

V Answer _______
VI Answer _______
IX Answer _______

Mental Models (or Mindsets)


Mental models are “deeply ingrained assumptions, generalizations, or even pictures
or images that influence how we understand the world and how we take action.”27
According to Jacobs, a mental model is a decisionmaker’s dynamic representation
of the decision space within which he or she must operate.28 Some consider mental
models as the leader’s mini-decision support system. These models, if accurate and
comprehensive, can reveal cause-and-effect linkages—leading to problem-solving.
Shaped by personal experiences, mental models carry all the biases from those experi-
ences with it. They organize one’s perceptions of the world, limit what one sees, and
limits what and how one thinks. Some leaders are not aware of their mental models
or the effects they have on their decisionmaking. Consequently, it is important for
strategic leaders to be aware of their own biases and limitations, solicit other perspec-
tives in thinking and decisionmaking, and expand their exposure to other sources of
perspectives to enhance their own model of varied contexts, situations, and problems.
Being able to think differently is critical when creating effective and relevant men-
tal models and frames. In today’s VUCA world, strategic leaders must continually chal-
lenge their assumptions, biases, values, and worldviews; reflect on the relevancy of their

6 8   L e a d in g a t t h e S t r a te g i c L eve l
models and frames; and creatively explore alternatives and different perspectives. For
example, in September 2003, the following statement was circulating on the Internet:
Aoccdrnig to rscheearch at Cmabrigde uinervtisy, it deosn’t mttaer waht oredr
the ltteers in a wrod are, the olny iprmoetnt thing is taht the frist and lsat
ltteres are at the rghit pcleas. The rset can be a toatl mses and you can sitll raed
it wouthit a porbelm. Tihs is bcuseae we do not raed ervey lteter by ilstef, but
the wrod as a wlohe.29
For English speaking adults, most reading the statement were able to understand
the meaning. This is an example of how a mental model can work. Yet it also illustrates
that much of what one “sees” really is not seen. As Wind and Crook poignantly asked,
“Does the rest of your life have this many holes that you are not seeing?”30
Referring to the two previous exercises, many people taking exercise 1 (the ques-
tion referring to a “pattern of objects”) were trapped within the mental model (image)
of “black” objects. Consequently, they used a “black” on “white” mental construct
that made it impossible to see the word FLY, which was a white on black construct.
Yet if asked differently, for example, find the word displayed or embedded within
these objects, many would see it immediately. This is also true for the second exercise:
Using Roman numerals for the first and second figures embeds into the conceptual
(thinking) process of many people so that they think the third figure also requires a
Roman numeral. As such, many people using that framework had difficulty in solving
the third item until they were able to change their frame or mental model from the
Roman numeral framework. Only then could they see the Arabic numeral system,
spelled out in English, contained the number SIX.
Thus, leaders’ self-awareness of their own limitations in the mental models
they use enables them to choose alternative perspectives deliberately in resolv-
ing problems and making decisions. Likewise, as indicated earlier, obtaining the
perspectives of others is an effective technique in challenging and troubleshooting
one’s perspective. This is essential to strengthening the quality of one’s frame of
reference and ultimately one’s decisionmaking. To better appreciate the importance
of a leader’s self-awareness of the limitations of his or her own mental models (as
well as the necessity for having others to challenge one’s own mental models), review
the simple exercise below.

—Pause—Take a moment to respond to the following exercise directions (refer to


figure 3a-1). This exercise addresses the question: “Is it possible for two people look-
ing at the exact same event, yet each to have a totally different perspective of what
they are seeing and they both can be correct?”

C h a pte r 3 a   6 9
Figure 3a-1. Rotating Hand and Finger Clockwise

Figure by Niki Byrne

Stand up and put your hand up over your head with your index finger pointing at the
sky. Now start rotating your hand and finger in a clockwise motion while keeping your
eyes on the hand and finger. Now, as you are rotating your hand and finger—keeping
the finger pointing to the sky and your eyes on your hand and finger—slowly move
your hand down under your chin. Though the motion of your hand and finger has not
changed, the hand and finger are now moving in a counter-clockwise position. This
exercise demonstrates that people can have totally different perspectives of the same
event and be correct—depending on where they are (looking up or looking down).

This exercise demonstrates the need for strategic leaders to recognize and encour-
age different perspectives and not to automatically discount or dismiss those per-
spectives that are different from his or her own. Deliberately shifting perspectives
can lead to enhanced understanding of complex issues, increased skill in resolving
ill-structured problems, and enhanced strategic negotiation skills.

Frames of Reference
The other concept that is fundamental to cognitive capacity is frames of reference.
Jacobs pointed out that “Effective strategic leaders have rich conceptual frames of
reference for understanding and influencing the strategic environment [italics in
original].” He defined a frame of reference as “an organized perspective—a mental
or cognitive map—that enables a decision maker to see a problem in perspective, i.e.,
with an understanding of how it relates to other problems in a cause-and-effect way
and therefore what is relevant to its solution.”31

70   L e a d in g a t t h e S t r a te g i c L eve l
—Pause—Take a moment to complete the following short exercise (see exhibit 3a-1).
Step 1: Each term in the left column has four possible explanations. Read the pro-
posed explanations and decide which one, or ones, describe your sense of the term.
Weight your selection by allocating 10 points among one or more definitions that fit.
The larger the number, the more that description fits your definition of the concept.
For example, you might weight the explanations of “planning is” as follows:

PROCESS NAME (COLUMN) A (COLUMN) B (COLUMN) C (COLUMN) D


Planning is: (10 0 1 3 6
points per row)

Step 2: When you have finished, add up the numbers in each column and enter column
totals at the bottom.

Exhibit 3a-1. Organizational Processes—Four Interpretations

PROCESS NAME A B C D
Planning is: A tool to set objec- A means to build A way to identify An activity that
(10 points per row) tives and coordi- consensus and conflicts and shows nature of
nate resources participation establish coalitions the organization’s
Score: ___ Score: ___ Score: ___ leadership
Score: ___
Decisionmaking is: A rational pro- A tool for investi- A time to establish An activity that
(10 points per row) cess weighing gating options and priorities for shows the value
advantages and contingencies resources the organiza-
disadvantages Score: ___ allocation tion places on its
Score: ___ Score: ___ members
Score: ___
Reorganizing is: Realigning roles Balancing perfor- Redistributing Communicating
(10 points per row) and responsibili- mance require- resources to organizational
ties to fit tasks and ments and human ensure continued values and goals
environment capabilities commitment to key to members and
Score: ___ Score: ___ objectives external observers
Score: ___ Score: ___
Evaluating is: Using rewards and Helping individuals Assessing commit- Confirming the
(10 points per row) penalties to main- grow and improve ment of members formal and informal
tain performance Score: ___ to organizational contracts between
Score: ___ goals organization and
Score: ___ member
Score: ___

C h a pte r 3 a  71
Exhibit 3a-1. Organizational Processes—Four Interpretations

PROCESS NAME A B C D
Handling Restoring rational Fully exploring the Managing competi- Defining a key
Conflict is: decision processes basis for conflict tion to determine element in the
(10 points per row) the best position or organization’s
Score: ___ Score: ___ course of action culture
Score: ___ Score: ___
Goal Setting is: A necessary step An activity to A process to Giving meaning to
(10 points per row) before laying out ensure personal ensure that all everyday activities
detailed plans and organizational members are on of all organizational
goals are inte- board with what is members
Score: ___ grated desired by the Score: ___
Score: ___ top-level leaders
Score: ___
Communication is: Passing along facts A way of satisfying Essential in estab- Reaffirming the
(10 points per row) and information human social lishing the ground value of the roles of
needed to make needs as well as rules for operating the members
decisions and do organizational and conducting Score: ___
work needs business
Score: ___ Score: ___ Score: ___
Meetings are: Occasions for A context in which An opportunity A way to reaffirm
(10 points per row) reviewing or consensus and to renew debate the identity of the
making plans, commitment can be about objec- organization
and coordinating renewed tives and to seek Score: ___
activities Score: ___ re-allocation of
Score: ___ resources
Score: ___
Motivation is: Commitment based A desire by A strong desire Commitment to
(10 points per row) on incentives pro- organizational to overcome the the values and
vided by the organi- members to opposition and be traditions of the
zation for effective improve and grow on the winning side organization
performance Score: ___ Score: ___ Score: ___
Score: ___
YOUR SCORE Add column Add column Add column Add column
Total Score: ___ Total Score: ___ Total Score: ___ Total Score: ___

This exercise is an adaptation of “Exhibit 15.1—Four Interpretations of Organizational Processes.” Lee


Bolman and Terrence Deal, Reframing Organizations, 4th ed. (San Francisco, CA: Jossey-Bass, 2008),
314–315. Reproduced with permission of John Wiley & Sons—All Rights Reserved.

The preceding short exercise was to identify which of Lee Bolman and Terrence
Deal’s four frames of reference is your dominate frame of reference—the four columns
represent Structural (A), Human Resource (B), Political (C), and Symbolic (D) frames
of reference.

7 2   L e a d in g a t t h e S t r a te g i c L eve l
A B C D
STRUCTURAL HUMAN RESOURCES POLITICAL SYMBOLIC
(Mission First; Orga- (People Always; (Alliances, Allocating (Traditions, Symbols,
nizational Alignment: Social Capacity— Scarce Resources, Myths, Vision, Val-
Core Processes, Clar- Emotional Intelli- Bargaining and Nego- ues, Heroes, Stories,
ity and Consistency gence, Interpersonal tiation Skills, Power Rituals, Ceremonies,
of Goals) Skills, and Relation- and Politics) and organizational
ships) culture)

Step 3: Now answer the next two questions.


Which of the four frames do you use most often in interpreting information, behav-
iors, actions, and solving problems? For example, experience in using this short survey
with students at the Dwight D. Eisenhower School for National Security and Resource
Strategy (formerly named the Industrial College of the Armed Forces) demonstrates
that many will score high usage on the structural (bureaucratic) frame due to their
experience and work in large government agencies and military Services.
Which is your second most dominant frame?
The purpose of this short exercise is to enhance your self-awareness for your pre-
ferred frame(s) of reference and to suggest that using multiple frames of reference will
enhance the quality of your analysis by assessing more variables across several frames.
Incorporating more variables of the problem or decision in your analysis should then
enable you to assess more aspects of the problem or decision, and thus improve the
overall quality of your solutions and enhanced decisions. Furthermore, a leader may
wish to have members of his or her leadership team complete this survey to ascertain
the dominant frames of those serving on the team. While sometimes causing more
conflict or taking more time in resolving problems, diversity of frames of reference
among team members can be beneficial to the quality of analysis and solutions. Keep
in mind that no frame is inherently better than any other one—the key is the greater
the number of frames of reference, perspectives in viewing opportunities, threats, or
solving problems, the greater the opportunity for a successful outcome. In addition,
though this exercise focused on Bolman and Deal’s four frames, there are many other
frames available to the strategic leader (for example, legal, economic, spiritual, technol-
ogy, growth, and national security).
Being aware of one’s dominant frame of reference alerts the leader to potential
biases and beliefs associated with the preferred frame. These biases and beliefs may
create blind spots or conflict as others using a different frame may see the same issues
and problems differently from the leader. People both internal and external to an
organization will have multiple perspectives and frames of reference and, as such,
experience multiple realities. As the above exercise illustrates, people can view familiar
processes through different lenses. As Bolman and Deal explained, “any event can be
framed in several ways and serve multiple purposes. Planning, for example, produces

C h a pte r 3 a   7 3
specific objectives. But it also creates arenas for airing conflict and becomes a sacred
occasion to renegotiate symbolic meanings.” Moreover, they stated, “Multiple realities
produce confusion and conflict as individuals look at the same event through different
lenses.”32 Jacobs posited, “When people differ in their frames of reference, they may
well differ in the solutions they offer to problem situations. When they are unaware of
their frames of reference, and how frames of reference may differ, they may well lack
insight into why their solutions are different and/or what to do about it.”33
Effective strategic leaders do not limit themselves to one frame of reference. Rather,
due to the interdependence of the relevant relationships and the complexity of the
issue, such leaders use (and encourage their leadership teams to use) multiple frames
of reference, mental models, and perspectives. Doing so creates synergy between the
various models, thus providing the resources needed for a more nuanced robustness
during their application to a complex challenge or problem.

Leadership Characteristics and Frames of Reference


Bolman and Deal34 suggested the following leadership characteristics based on the
leader’s prominent frame of reference:
Structural Leadership
• S tructural leaders do their homework.
• S tructural leaders rethink the relationship of structure, strategy, and environment.
• S tructural leaders focus on implementation.
•E  ffective structural leaders experiment.
Human Resource Leadership
•H
 uman resource leaders communicate their strong belief in people.
•H
 uman resource leaders are visible and accessible.
•E
 ffective human resource leaders empower others.
Political Leadership
•P
 olitical leaders clarify what they want and what they can get.
•P
 olitical leaders assess the distribution of power and interests.
•P
 olitical leaders build linkages to key stakeholders.
•P
 olitical leaders persuade first, negotiate second, and coerce only if necessary.
Symbolic Leadership
• S ymbolic leaders lead by example, using symbols to capture attention.
• S ymbolic leaders frame experience.
• S ymbolic leaders communicate a vision.
• S ymbolic leaders tell stories.
• S ymbolic leaders respect and use history.

74   L e a d in g a t t h e S t r a te g i c L eve l
In summary, a strategic leader needs to be aware of his or her frames of reference,
as well as to learn and appreciate the frames of references of others. Understanding
others’ frames of reference enhances the leader’s ability to influence thinking, deci-
sionmaking, and behavior by reframing the issues into configurations more likely to
resonate with those the leader desires to influence. In addition, understanding others’
perspectives is crucial to gaining buy-in, support, and commitment.

Reframing and Perspective-taking


Similar to frames of reference is the thinking skill of reframing. For strategic thinking
to truly take place, the strategic leader must be open to changing his or her frames
of reference and mental models. Therefore, reframing is the thinking skill involved
with viewing and thinking about problems from a different frame(s) of reference, or
perspective, than initially used. Reframing has two important conceptual qualities
that are important to the strategic leader. The first is to recognize that every person has
an existing frame of reference on how each sees the world. Therefore, frames of refer-
ence have built-in biases and assumptions based on a person’s particular background
and experience. To counter these frame issues and constraints, strategic leaders need
to view and think about the challenges, problems, and opportunities they face using
expanded frames of reference—approaches including multiple frames and incorporat-
ing different perspectives than initially used. Having the ability to view a situation with
multiple frames of reference (or perspectives) provides the leader with greater capacity
to address, manage, or solve the increasingly complex challenges and problems with
their multiple variables and relationships inherent in the VUCA environment.
The second important aspect of reframing relates to the strategic leader’s ability to
reframe challenges, problems, and strategies to resolve them. This reframing approach
usually is a key component to the decisionmaking process. How a leader frames
the issue can develop different approaches to dealing with that issue. This aspect or
reframing is similar to the concept of perspective-taking. Perspective-taking selects
a conscious view or multiple views of a problem to enhance the analysis and solution
of a complex problem. The strategic leader must develop the ability to view a situation
through multiple frames or perspectives to be effective at the strategic level. Chapter
7 examines this aspect of reframing.

Metacognition
Often considered the most important thinking skill, metacognition enables a leader to
reflect on, challenge, and ultimately change the mental models and frames of reference
used in solving problems and making decisions. Jacobs defined this skill as metacogni-
tive awareness or metacognition, and stated it is “thinking that understands the nature
of the situation or problem at hand, the kind of thought process required to deal with
it, and the kind of thought process being employed at the time.”35 Likewise, researcher

C h a pte r 3 a   7 5
and author Richard Paul explained that it is the “Mirror to the mind, enabling us to
take ownership of the instruments that drive our learning. Not only to think, but to
think how we are thinking, is the key to our development as learners and knowers.”36
This ability to think about one’s own thinking is critical as it is only when a leader can
understand how he or she thinks, with all the personal thinking “baggage”(mental
models, frames of reference, perceptions, and biases) included, that the leader can
then assess and compare multiple perspectives from others in improving the problem
solutions and decisionmaking.
Knowing how he or she thinks enables the strategic leader to apply the most
appropriate thinking skills based on the situation and context. For example, knowing
when and how to use both intuitive and rational thinking skills in decisionmaking
affords the leader the best of both skills. As Jacobs suggested:
A leader with metacognitive awareness is situationally aware. This involves
understanding the nature of the situation or issue at hand, the kind of thought
process required to deal with it, and the kind of thought process employed at
the time. Critical and creative thinking are inextricably linked, but should not
be confused. An aware leader understands where he/she is at any point in time,
and can move away from that place if it is not being productive.37
This self-awareness of how a leader thinks is really the first step to enhancing
the quality of a strategic leader’s thinking and hence the organization’s effectiveness.

Systems Thinking
Systems thinking is another essential thinking skill for an effective strategic thinker.
It is the ability to see the interconnected and interrelated whole and not just the parts;
to see the interrelationships and processes rather than a static picture or snapshot;
and to synthesize seemingly disparate elements into a unified whole.38 H.L. Mencken
once stated, “For every complex problem, there is a solution that is simple, neat, and
wrong.”39 Author Ron Zemke noted that Mencken’s statement was “a wake-up call to
managers who mistakenly think that making a change in just one part of a complex
problem will cure the ails of an entire system.” He suggested that “Everyday manage-
ment thinking too often looks for straightforward cause and effect relationships in
problem solving that ignores the effect on, and feedback from, the entire system.”
Today’s strategic leaders have “to think differently—to think about the synergy of the
entire system, not just the sum of its parts.”40
Thus, for a strategic leader, Jacobs wrote:
Systems thinking requires an appreciation of how processes relate to each other
and change depending upon lagged feedback effects. The causal sequence is not
linear, as in process thinking, but rather is multi-causal and circular. Rather

76  L e a d in g a t t h e S t r a te g i c L eve l
than two-dimensional and linear, it is three-dimensional (or more) and multi-
directional. From a systems perspective, there may be many ways to intervene,
none of them simple, and all carrying unforeseeable risk.41
In general, a leader who demonstrates good systems thinking is able to:
• s ee the whole as well as the parts
• s ee multiple processes, not simply events
•u  nderstand how feedback loops promote or thwart change
• a ppreciate lagged and indirect (second- and third-order) effects
•u  nderstand multiple causality and multiple effects from causal events
• t hink in terms of attributes and tendencies of whole organizations.
Systems insight about an organization gives leaders greater influence potential and
faster decisionmaking capabilities. A systems-thinking perspective is a prerequisite
to effectively analyze and solve problems for a strategic leader.

Reflective Thinking
In the leadership literature today, there are many terms used to define reflection, for
example, introspection, contemplation, meditation, and self-reflection. Jacobs defined
reflection as “a process of examining an issue or a situation—including what one knows,
or thinks one knows—in relation to other elements of knowledge.”42 The key point is that
reflective thinking is a deliberative, purposeful act with the intent to gain a more in-depth
understanding (sensemaking) of an experience. Individuals and groups can conduct such
a process. As a group process for example, for decades the Army and many organizations
used the After Action Review (AAR) as a formal means to reflect on actions taken to
gain lessons learned.43 It is through such a process that the leader and/or group or orga-
nization uses the information and knowledge from the review process to enhance best
practices and standard operating procedures. This in turn may lead to reevaluating the
current operating procedures or mental models of how to do things in the organization,
and if necessary, to create new ones. In essence, reflective thinking is a learning activity.
Unfortunately, while most strategic leaders recognize the power of reflective
thinking, taking the time to reflect is difficult. In some cases, to take the time to just
sit and reflect goes against the culture of fast-paced, action-oriented organizational
environments. Some leaders just do not “feel” right sitting with their feet up on their
desk thinking about a previous experience, or attempting to connect the dots of some
peripheral bits of information. Nevertheless, this is exactly what is required of effective
strategic leaders. They, and their subordinate leaders, must make time to reflect on and
assess previous events in order to better assess the environment for future opportuni-
ties. Likewise, they must be able to reflect on the problem-solving and decisionmaking
processes used in order to improve on them for future planning and execution.

C h a pte r 3 a   7 7
For example, in performing AARs, “hot washes,” or “postmortems,” leaders often
pay little attention to the thought processes used during the project or process being
examined that could lead to better thinking and decisionmaking in the future. What
were the leaders thinking at the time? What were their assumptions? What mental
models or frames of reference did the leaders use and were these mental models
adequate for the task? If there were mistakes or wrong decisions, what was the think-
ing that led to those decisions? Included in formal or informal reflection processes,
leaders should capture the thinking that was involved. What assumptions, thought
patterns, or actions worked well and what areas could be improved for next time? Were
some decisions made through the leader’s “gut feelings”? If so, were they useful or did
they lead in the wrong direction. Including the thinking behind the decisions during
a reflection effort will enhance both subsequent thinking and reframing processes.44
More specifically, after completion of an event or project, leaders should schedule a
postmortem discussion as usual, but this time include a section called “What Were We
Thinking?” Start by capturing the “plusses and deltas”—the things that went well and
those that identified for improvement next time. Taking the list of areas for improve-
ment, look at each one and identify the assumptions and other thought patterns that
led to the problem. Attempt to answer the “What were we thinking?” question. In
addition, examine the thinking for those tasks and initiatives that went well. “Which
thinking patterns helped you and which ones hurt you? Step back and think about
what you can do to change the way you lead your next project. You may find that you
made some key decisions with only your gut feelings, and not a deliberate thinking
process, or vice versa. Now is your chance to take a step back and assess the quality of
your thinking processes so you can improve upon it the next time.”45
Despite recognizing the value of reflecting thinking, Jacobs noted that some lead-
ers are still reluctant to take the time to reflect due to their preferences. He explained:
Both reflection and thoroughness take time, and there are significant differences
between people in how much time they are willing to spend in being reflective
or thorough. These differences relate to preferences. Leaders who have a prefer-
ence for the here and now (concrete, realistic and pragmatic)—just the facts and
nothing but the facts—tend to be less reflective. Leaders who are intellectually
curious and have a preference for exploring possibilities (abstract, imaginative,
and original) tend to be more reflective. The important point is that the deliber-
ate practice of reflective thinking will lead to more systematic understanding
of complex issues, and this, in turn, has substantial potential for value-added
when dealing with strategic issues.46
The lesson learned for leaders with reluctance for reflective thinking is to develop
mechanisms within the leader’s organization that will overcome the preference.
Some examples include scheduled group AARs with subordinate leaders or staff,

7 8   L e a d in g a t t h e S t r a te g i c L eve l
or scheduled recurring individual reflection time on the leader’s calendar, or with
a coach.
In summary, reflective thinking is a valuable skill that can enhance the quality
of a strategic leader’s thinking processes, problem-solving, and decisionmaking. The
important point is that reflective thinking is essential to gaining wisdom. Experiences
by themselves do not necessarily create wisdom; it is only through reflecting on those
experiences in the deliberate act of examining what can be learned from the experience
that enhanced understanding and meaning is gained. This creates wisdom.

Creative Thinking
IBM surveyed 1,500 executives in corporate and public organizations around the world
in 2010. One of the objectives of that survey was to rank order the most important leader-
ship competencies required during the following 5 years. The number one response from
these executives, 60 percent, identified creativity as critical to organizational success in
the future: “CEOs now realize that creativity trumps other leadership characteristics.
Creative leaders are comfortable with ambiguity and experimentation. To connect with
and inspire a new generation, they lead and interact in entirely new ways.”47 The need for
creative thinking was further emphasized by former Defense Secretary Robert Gates in
a 2008 address at West Point when he stressed the need for “leaders willing and able to
think and act creatively and decisively in a different kind of world.”48 As most research-
ers and practitioners agree, creative thinking is a core competency of strategic leaders.

—Pause—Take a moment to test your creativity by answering the following ques-


tions. Answer each one prior to going to this endnote for the suggested answers.49

Problem 1: Without lifting your pen/pencil from the paper, draw four (and only four)
straight lines that connect all nine dots shown below.

C h a pte r 3 a   7 9
Problem 2:
You have four separate pieces of chain, each three links in length.
It costs $100 to open a link and $150 to close a link.
All the links now are closed.
Your task is to join all 12 links into a single circle without spending more than $750.
Goal/Endstate: All 12 links into a single circle without spending more than $750.

Problem 3: Find “x.”

x 3

Regardless of how you did on the exercises above, everyone is creative to some
degree. Yet creative thinking does not just happen. Creativity does not depend on the
possession of special skills or talents, but rather on the use of existing skills and talents
that most people, typically, allow to remain dormant. It often seems that the more
experience or longer that one works in an organization, the more fixed that person is in
following organizational policies and standard operating procedures—particularly if
that behavior is rewarded consistently with promotions and recognition. Hence, more
effort is required to think beyond organizational boundaries to develop creative solu-
tions. For example, some believe that third graders exhibit more creativity and entre-
preneurial skills than those graduating from high school. They suggest the reduction
in creativity is a direct result of the school’s system for order and discipline—teachers’
viewing the creative thinking students as on the edge and often encouraging them
to think more like the other students. This dynamic has its parallel with leaders and
organizational members.

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Limitations on Creativity. How can leaders be more creative? There are both
external and internal factors that limit leaders in exercising quality thinking, particu-
larly quality creative thinking. There are several external factors, both organizational
and environmental variables, that can inhibit the development and effective use of
creative thinking skills. These include a strong organizational culture, often typical
of large bureaucracies that members must follow the rules, standard operating proce-
dures, regulations, and processes developed for solving problems and making deci-
sions—that is, “that’s the way we’ve always done it here.” Often peers and supervisors
will tell a member who has a new and creative idea or way of conducting a task that the
new way is incorrect, or that there is one way to accomplish the task—the traditional
way. This tradition factor is a powerful limitation for any new ideas to rise to the top.
Other external limiting factors include peer pressure or a desire to conform,
especially for new organizational members. It is typically difficult enough trying to
fit in and finding out how the organization works for a new member, no less raising
new and creative ideas for solving problems. While many think that competition
spurs creativity, this is not always the case. When competition is among the team
in an organization, it can be unhealthy as it can prevent collaboration and the shar-
ing of ideas among members. Moreover, collaboration is critical for sharing ideas
among team members in coming up with creative solutions. Finally, external factors
include a high degree of stress, lack of time, lack of resources, and lack of leader
emphasis and support.
There are several internal factors that preclude quality creative thinking as well. As
previously discussed, individual preferences, such as being more comfortable with the
past or the tried and true, may not support the inclination to explore new possibilities
in resolving problems. Likewise, personal characteristics such as a lack of confidence
and being risk averse can act as limitations on a leader’s creative thinking.
Creative Thinking Improvement Techniques. Do these limitations on creative
thinking automatically deny leaders the advantages of creativity in fulfilling their
responsibilities in large organizations? Creativity can be stimulated, developed,
accessed, and increased in individuals, teams, and organizations. To do so, the strategic
leader must value, encourage, and reward creativity and innovation within the organi-
zation. Several authors prescribed different techniques to overcome these limitations.
For example, researchers and authors Po Bronson and Ashley Merryman50 suggested
some techniques by which a strategic leader could improve his or her creative thinking
skills or the organization’s abilities to nurture a creative culture and climate:
•D
 on’t tell someone to “be creative.” Such an instruction may just cause people to
freeze up. However, according to the University of Georgia’s Mark Runco, there is a
suggestion that works: “Do something only you would come up with—that none of
your friends or family would think of.” When Runco gives this advice in experiments,
he sees the number of creative responses double.

C h a pte r 3 a  81
•G
 et moving. Almost every dimension of cognition improves from 30 minutes of
aerobic exercise, and creativity is no exception.
•T
 ake a break. Those who study multi-tasking report [the disadvantages of trying to
work] on two projects simultaneously [multitasking is examined later in this section].
•R
 educe screen time. According to University of Texas Professor Elizabeth Vande-
water, for every hour a child regularly watches television, his overall time in creative
activities—from fantasy play to arts projects—drops as much as 11 percent.
•E
 xplore other cultures. Five experiments by Northwestern’s Adam Galinsky showed
that those who have lived abroad outperform others on creativity tasks. The theory
is that cross-cultural experiences force people to adapt and be more flexible. Just
studying another culture can help. In Galinsky’s lab, people were more creative after
watching a slide show about China: a 45-minute session increased creativity scores
for a week.
•F
 ollow a passion. Rena Subotnik studied children’s progression into adult creative
careers. Kids do best when they are allowed to develop deep passions and pursue
them wholeheartedly—at the expense of well-roundedness.
The Center for Creative Leadership suggested the following as techniques for
generating ideas:
•b  rainstorming
•b  rainwriting: an idea-generating process—participants write down ideas and pass
them to someone else who keys off those ideas
• r estating the problem: often in generating new ideas, participants lose sight of the
problem they’re attempting to resolve
•p  erspectives: participants use a list of frameworks to stimulate ideas
•m  etaphor: metaphoric content can be found in the imagination of the participants
• e xcursion: this is the opposite of “restating the problem.” Examples include visual
connections (photos), field trips (zoo), future fair (imaginary trip to the future), and
novel scenarios (a visualization process).51

Divergent Thinking
Another term often used in place of creative thinking in the literature is divergent
thinking. Divergent thinking is the search for many diverse and novel alternatives
to a challenge or problem-solving process. Divergent thinking is a concerted, disci-
plined effort to explore possibilities, gather additional ideas and information (espe-
cially those that are new and novel), and take multiple perspectives and viewpoints.
For example, most everyone is familiar with the creative process of brainstorming.
Effective brainstorming requires that participants generate ideas in a free-flowing
manner and not make judgments on these ideas when presented. Jacobs points out,
however, that such activity at the beginning of the creative process is often difficult
to achieve. He stated:

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Evaluation and criticism are the enemies of creativity, so this first phase of
the process needs to be generative, without evaluation. This is a difficult task.
Especially when there is some external pressure to find a problem solution,
many members of the group will want to find “something—anything—that
will work, and can be implemented quickly.” Few will have the patience to look
for unseen contingencies, unanticipated second- and third-order effects, and
unwanted opportunity costs. Inexperienced leaders characteristically will feel
that this is wasted time. In addition, it is energy intensive, especially when there
is time pressure on the decision. To ensure that it is not given short shrift, the
divergent thinking phase therefore needs to receive a specific allocation within
the total available time by the leader in advance, as a part of his/her overall
time management. Creative thinking is always harder than critical thinking.
However, experience in using the method with ill-structured problems will bring
skill, and the method will prevent hasty and ill-conceived action.52
Mindmapping
For individuals, an excellent creativity tool is mindmapping. It allows nonlinear
thinking in the development and records the natural flow of one’s ideas. Mindmap-
ping can be handwritten or used with software programs.53 Figure 3a-2 is an example
in a simplified form.54

Figure 3a-2.

An additional creativity tool for either individuals or groups is the Implications


Wheel® developed by futurist Joel Barker. Using a graphic design to involve nonlinear

C h a pte r 3 a   8 3
thinking patterns, Barker’s Implications Wheel allows the strategic leader to examine
the possible implications of a specific issue or change. It enables strategic leaders to
explore and evaluate potential opportunities as well as possible second- and third-
order consequences before they materialize. Though similar in design as the mindmap
noted above (both processes start in the center of a page), the Implications Wheel is
not the same as mindmapping or brainstorming. Barker reported the benefits of this
creative thinking approach include helping to anticipate the future, providing an
equal playing field, allowing talk without getting into debate, showing connections,
allowing participants to see the exact order of discovery, providing a wide range of
ideas without losing focus, and is inclusive.55
For further discussion on how leaders can develop and sustain a creative organi-
zational culture, see chapter 10.

Critical Thinking
The preceding segment focused on creative or divergent thinking. This segment
focuses on critical thinking. Essentially, creative thinking opens the thinking process
to new ideas, brainstorming, and so forth—not looking for solutions to a challenge,
opportunity, or problem. Critical thinking brings that process to closure; it is conver-
gent thinking. While creative thinking often includes emotion as well as logic, critical
thinking is a logical process of narrowing down ideas, concepts, and choices. This is
the point at which facts and analytical consequential reasoning occurs.
Although a strategic leader uses creative and critical thinking skills at different
times and stages (with different objectives), the leader needs to use both to be effective.
Figure 3a-3 illustrates the connection between creative and critical thinking. Figure
3a-4 illustrates their association in the problem-solving or decisionmaking process.
The key point is that an effective strategic leader needs to ensure these two critical
thinking skills are balanced. For example, many leaders often jump to the critical
decisionmaking process (anxious to solve the problem or to demonstrate decisive
decisionmaking)—bypassing the divergent or creative thinking process—thereby pos-
sibly solving a symptom of the problem rather than the root cause. A simple example is
someone noticing some weeds in the yard and mowing the lawn. It looks good—until
the weeds grow back. Clearly, the basic problem was not to mow, but to eliminate the
weeds. Creative thinking helps in problem identification.

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Figure 3a-3. Connection between Creative and Critical Thinking

CREATIVE THINKING CRITICAL THINKING

Making Clarifying
Generative Discriminating
Producing Analysis
Novelty Reasoning
Originating Standards

Figure 3a-4. Creative and Critical Thinking in Problem-solving and Decisionmaking


DIVERGING CONVERGING Divergent Thinking
–Explore possiblities
TIME –Gather more information
–Consider various views
–See problem many ways
PHRASE PHRASE –Understand implications
GENERATING EVALUATING
–Introspection/Reflection –Discussion/Implementing Convergent Thinking
–Subjectivity –Objectivity –Narrow the situation
–Innovation/Ideas –Adaptation –Limit to relevant information
–Creative Thinking –Critical Thinking –Take only key views
–Doing Things differently –Doing Things Better –State the “real problem”
–Alternatives –Human Consequences –Prepare for action
–Closure

In his discussion of critical thinking, Peter Facione suggested there is not a clear
definition of critical thinking. He noted that an international group of experts was
unable to reach a consensus regarding the meaning of critical thinking. He offered
the following expert consensus statement regarding critical thinking (CT) and the
ideal critical thinker:
We understand critical thinking to be purposeful, self-regulatory judgment
which results in interpretation, analysis, evaluation, and inference, as well as
explanation of the evidential, conceptual, methodological, criteriological, or
contextual considerations upon which that judgment is based. CT is essential
as a tool of inquiry. As such, CT is a liberating force in education and a power-
ful resource in one’s personal and civic life. While not synonymous with good

C h a pte r 3 a   8 5
thinking, CT is a pervasive and self-rectifying human phenomenon. The ideal
critical thinker is habitually inquisitive, well-informed, trustful of reason, open-
minded, flexible, fair-minded in evaluation, honest in facing personal biases,
prudent in making judgments, willing to reconsider, clear about issues, orderly
in complex matters, diligent in seeking relevant information, reasonable in the
selection of criteria, focused in inquiry, and persistent in seeking results which
are as precise as the subject and the circumstances of inquiry permit. Thus,
educating good critical thinkers means working toward this ideal. It combines
developing CT skills with nurturing those dispositions which consistently yield
useful insights and which are the basis of a rational and democratic society.56

Convergent Thinking
Some researchers and authors describe rather than define critical or convergent
thinking. For example, convergent thinking is a focused and affirmative evaluation
of alternatives, supported by such skills as:
•d  eveloping—strengthening, improving, fleshing out the overall option so that it
appears doable.
•p  rioritizing—determining the rank order among options.
• s creening—keeping some and discarding others for particular reasons.
• s orting—categorizing or grouping by some implicit or explicit schema.
• s upporting—examining for positive attributes, identifying and putting them forward
to be considered further.57
Two leading experts on critical thinking, Linda Elder and Richard Paul, describe
and define critical thinking as “that mode of thinking—about any subject, content, or
problem—in which the thinker improves the quality of his or her thinking by skill-
fully analyzing, assessing, and reconstructing it. Critical thinking is self-directed,
self-disciplined, self-monitored, and self-corrective thinking.”58

Perception
Perception is a process that links people to their environment. It is through perception
that people form viewpoints, opinions, and develop or alter mental models or frames
of reference. Richards Heuer of the Central Intelligence Agency described percep-
tion as an active (not passive) process of inference in which people construct (rather
than record) their own version of reality based on information provided through the
five senses. The tendency of people to perceive what they expect to perceive is more
important than any tendency to perceive what they want to perceive.59 The following
mini case study is an excellent example.

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Pearls Before Breakfast—A Mini Case Study60
“He emerged from the Metro at the L’Enfant Plaza station [in Washington, DC] and
positioned himself against a wall beside a trash basket. By most measures, he was
nondescript: a youngish white man in jeans, a long-sleeved t-shirt and a Washington
Nationals baseball cap. From a small case, he removed a violin. Placing the open case
at his feet, he shrewdly threw in a few dollars and pocket change as seed money, swiv-
eled it to face pedestrian traffic, and began to play. It was 7:51 a.m. on Friday, January
12, 2007, the middle of the morning rush hour. In the next 43 minutes, as the violinist
performed six classical pieces, 1,097 people passed by.”
Did people stop to listen? Did they just go ahead without paying attention? Did they
throw some money into the violin case?
“No one knew it, but the fiddler standing against a bare wall outside the Metro in an
indoor arcade at the top of the escalators was [Joshua Bell], one of the finest classical
musicians in the world, playing some of the most elegant music ever written on one of
the most valuable violins . . . worth $3.5 million dollars.”
Moreover, 3 days before his playing in the subway, he sold out at a theater in Boston
and the seats averaged $100. Arranged by the Washington Post, his subway perfor-
mance was as an experiment in context, perception, and priorities.

The above exemplifies how people will perceive what they believe they are seeing.
Without checking their assumptions, biases, and, of course, work schedules, they
missed a unique experience at the Washington Metro.61
There is an old saying that perception is reality. However the strategic leader or
his leadership team perceives a challenge, opportunity, or a problem, that perception
becomes their reality. Consequently, previous discussions regarding mental models,
frames of reference, and disciplined thinking skills all contribute to either enhance or
inhibit the strategic leader’s ability to perceive and make sense of a given situation and
context. The previous discussion regarding assumptions, values, and biases directly
reflect how well the leader perceives “reality.”

Intuition, Insight, and Aha! Moments


Intuition is the use of mental models and frames of reference without thinking about
them when seeking a solution to an issue or making a decision. Generally founded
on in-depth knowledge and experience in a specific domain, it provides people a
“sense” about an approach, strategy, or decision. Often referred to as a “gut” feeling,
intuition usually occurs without any conscious analysis or supporting evidence. As
such, strategic leaders need to have a fine appreciation regarding the use of their own

C h a pte r 3 a   8 7
intuition and its importance to their problem-solving and decisionmaking processes.
The combination of logical, analytical reasoning and informed intuition enhances the
decisionmaking process. Contrasting logical thinking with intuition, Herbert Simon,
an expert in artificial intelligence, noted:
Intuitive thinking is frequently contrasted with “logical” thinking. Logical
thinking is recognized by being planful and proceeding by steps, each of which
(even if it fails to reach its goal) has its reasons. Intuitive thinking . . . proceeds
by a jump to its conclusions, with no conscious deliberateness in the process,
but intuitive and logical thinking can be intermingled. The expert, faced with a
difficult problem, may have to search planfully and deliberately, but is aided, at
each stage of the search, by intermediate leaps of intuition of which the novice is
incapable. Using what appear to be macros, the intermediate steps of which are
these intuitions, the expert takes long strides in search, the novice tiny steps.62
Donald Trump described how he makes decisions, and emphasized that he first
gathers all the facts, listens to those he trusts to have the relevant information, and
conducts due diligence and analytical reasoning that lead him to a proposed best solu-
tion or decision. He then listens to his gut. If he feels something is not right, he does
not make the decision to go forward with the identified solution. He acknowledged
that when it comes to making business decisions, he listens to his gut.63 Trump’s
decisionmaking process is typical of many of the leaders interviewed for this book.
The intuition or gut feel that these leaders described is known as expert intuition,
which is “always fast, and it only works in familiar situations.”64 Malcolm Gladwell’s
Blink and Johnah Lehrer’s How We Decide provided excellent examples of observed
and neuroscience-supported views regarding intuition, especially expert intuition.65
Strategic leaders who are experts in a specific domain are most likely suc-
cessful in using their intuition. Yet there are many examples when using one’s
intuition can lead to wrong results or even failure. The often used example of
intuition leading someone astray is the one when one is working late at the office
and at midnight starts heading to his or her car parked in a lot across the street.
The street light is out and it is dark. For the sake of this example, assume this
person is you. As you head for your car, you hear footsteps behind you. You cross
the street to go to the parking lot and the footsteps remain behind you. In fact, the
sound indicates that the person behind you is gaining. You begin to feel anxiety,
your heart starts beating more rapidly, and you even feel your palms sweating.
You worry if the person behind is planning to mug you or something even worse.
You might quicken your movement to the car—yet the footsteps are getting closer.
Finally, you decide to confront your nemesis and turn around prepared to defend
yourself and you hear, “Hi Bob, it looks like we both had a long night.” Suddenly,
you recognize your coworker and immediately have a great sensation of relief. The

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preceding is an example of how one’s past mental models and intuition (or “gut”
feelings) can sabotage intuition.
Based on the above example and discussion, it is clear that using intuition can be
an important component of the thinking and decisionmaking processes. When the
strategic leader has strong expertise within a specific domain (for example, business
acumen), the opportunity for effective use of intuition is more likely. However, when
operating outside of one’s expertise, or facing complex and uncertain issues encap-
sulated within the VUCA environment where the leader’s mental models and frames
of references are inadequate for the specific situation and context or distorted, using
intuition may not only be wrong, but also devastating to one’s organization.
In addition, expert intuition can be detrimental to creativity and innovation.
Intuition—similar to mental models on which it is based—may be so dominant that
it prevents new data and information from being used—and in some cases making the
leader even incapable of “seeing” important and relevant new data. This phenomenon
can limit or prevent leaders from making the necessary adjustments to their frames
and models that would enable them to better exploit new opportunities or identify
different associations and possible solutions.
Author William Duggan argued that what is required in a new situation is to “turn
off your expert intuition. You must disconnect the old dots, to let new ones connect
on their own.” Duggan suggests there is a need for “strategic intuition.” He suggests
that “strategic intuition shows how flashes of insight leap beyond the forces around
you and who you are within them.”66
Duggan offered the example of Bill Gates and Paul Allen and the building of
Microsoft. Gates and Allen developed a variant of the computer language BASIC using
Harvard’s PDP-8 minicomputer with Intel’s new 8080 chip. They were having difficulty
getting people interested in their program. In 1974, they were discouraged and planned
to leave for the holidays when Allen happened to see the cover of a magazine depicting
the Altair—a new computer developed by MITS (a small New Mexico company). This
was the first small computer they had seen, and they began to think that small com-
puters might be the wave of the future. They offered their BASIC program to MITS.
At the time, MITS did not have a prototype to give Gates and Allen, but agreed to use
their BASIC operating system for the Altair. Duggan stated:
Gates and Allen put together four existing elements they did not invent: the
Altair, its 8080 chip, BASIC, and the PDP-8. Their presence of mind let the new
combination come together as a flash of insight that changed their goals, to
establish a software company for microcomputers, which they had never thought
of before. One minute Gates was preparing to fly home to Seattle for the holidays
. . . and the next minute they were off in a new direction. . . . Strategic intuition
gave Gates the vision. He did not have vision before the Altair. . . . In the von

C h a pte r 3 a   8 9
Clausewitz view, the flash of insight comes first and then comes the vision for
where it can take you. This is a key feature of strategic innovation in business:
it gives you a new vision.67
In essence, strategic intuition is not the act of inventing something new; rather,
it is taking current disparate pieces of data, information, and experience to form
something new and different. Wind and Crook 68 offer a number of suggestions
strategic leaders should keep in mind that can enhance their intuitive capabili-
ties, including:
•P
 ractice intuition only in your area of expertise. Intuition is associated with deep
knowledge in a given category. Therefore, the first key decision is to practice intu-
ition only in an area where you feel you have significant knowledge and experience.
Attempting to become intuitive in areas outside your expertise is a fool’s errand.
Neophytes, except for the rare savant with a natural talent, do not generally have good
intuition. Intuition comes from a deep immersion in the subject until it becomes a
tactile feel rather than an analytical process.
•L
 earn to trust your “gut.” The first requirement is to feel “good,” confident, or com-
fortable with your area of expertise or knowledge. This is fundamental to having
faith in your intuitive decisions. Create space to listen to your intuition. Cultivate
the process of “letting go” and making your intuition self-manifest, stopping the
world and listening to your intuition. Learn to exploit the full range of your human
decisionmaking processes—including emotions, feelings or prejudices.
•P
 ractice, practice, practice. Through practice, one can learn to come quickly to a
decision under difficult conditions. Analytical training demands structured data and
support tools to analyze problems. Deciding intuitively requires that you “get” the
problem and “see” the solution. . . . In particular, practice making intuitive decisions
in situations of inadequate data, time pressure, and high stress. By such practice, you
can get used to, and enjoy your “gut feel” about the decision that arrives and avoid
feeling desperate if a decision does not arrive.
•B
 uild up your extended guru community. [Build networks of] . . . deep expertise
enhanced by gaining access to a broader community of knowledge.
•V
 alidate your intuition. While you can’t stop for validation at every point along
the way without eroding the [potential] benefit of being able to act quickly, it is
important to test your intuition periodically. Has it led you in the right direction,
or has it led you astray? Is it out of step with your colleagues or out of step with
your environment? Has your environment changed in a way that undermines the
value of your experience?
•K
 eep your intuition relevant. In a complex and changing environment, maintain a
healthy curiosity and an external focus to keep your intuition relevant. Since intu-
ition is characterized by an unknowable process, you need to continue exploring a
given area to maintain superior mental models. This includes openness to new ideas,
experimentation, and even outright speculation. Above all, learn to reflect on these
novel things and consolidate the experiences. Keep an external focus.

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•B
 eware of confusion and uncertainty. When you experience confusion and uncer-
tainty, it may be a sign . . . [that your intuition is failing or inadequate in this situation].
Deep expertise is associated with a superior repertoire of mental models. Intuition is
the ability to access these mental models subconsciously in a repeatable and effective
way in order to make sense of things quickly. This implies you are always on top of
things, not just when you are within a decision process. If confused about a decision
and not receiving a clear direction from your gut, it could mean your intuition has
failed and you need a more analytical process, more experience, more knowledge or
more information.
•C
 ultivate a practice of “letting go.” You need to cultivate the ability to frequently
and consistently “let go” in order to listen to the still, small voice of intuition within
you. . . . To develop your intuition, break the habitual stream of normal activities and
create space for contemplating new things.
•C
 ombine intuition with analysis. When you have the time, information and
resources to work out an analytical solution, it is often a good idea to do so. You
can still test against your intuition, and they also might modify your intuition about
the correct decision.
Often the terms insight and intuition are used as if they are interchangeable. Even
the dictionary associates insight with intuition as “the act or result of apprehending the
inner nature of things or of seeing intuitively.” Furthermore, in the previous example
of Microsoft, Duggan implies strategic intuition is different from expert intuition in
that insight is the result of a sudden “putting together disparate pieces” that are not
directly tied to solving an existing issue, but together lead to something new that was
not previously contemplated.
Contrasting insight with intuition, Wind and Crook suggested that
“Insight . . . occurs suddenly and without warning, an ‘Aha!’ moment. [Whereas]
[i]ntuition is rooted in deep, direct knowledge of a type different from that arrived
at by reasoning or perception. Intuition puts one close to solving a problem before
the solution is consciously apparent, and even before the problem is diagnosed and
articulated.”69 Likewise, preeminent neuroscientists John Kounios and Mark Jung-
Beeman explained, “Insight is a sudden comprehension—colloquially called the ‘Aha!
moment’—that can result in a new interpretation of a situation and point to the solu-
tion to a problem. Insights are often the result of the reorganization or restructuring
of the elements of a situation or problem, though an insight may occur in the absence
of any preexisting interpretation.”70 Simon argued:
The process differs from intuition in that: (1) the insight is preceded by a period
of unsuccessful work, often accompanied by frustration, (2) what appears sud-
denly is not necessarily the solution, but the conviction of its imminence, (3)
the insight involves a new way of looking at the problem (the appearance of a
new problem representation accompanied by a feeling of seeing how the prob-
lem works) and (4) sometimes (not always), the insight is preceded by a period

C h a pte r 3 a  91
of ‘incubation,’ during which the problem is not attended to consciously, and
occurs at a moment when the mind has been otherwise occupied.71
Unlike focusing on a problem framed (or bounded) by how leaders “see” the
problem, Aha! moments occur when they do not focus on the problem. The brain
has a great number of bits and pieces available for retrieval. When not focused on
the immediate challenge, problem, or issue, the brain is free to “associate” different
pieces of information until, like a Kaleidoscope, suddenly the pieces begin to form a
pattern that results in the “it-all-came-together—Aha!—moment.” Many of the lead-
ers interviewed for this book described these breakthrough moments as occurring
when they were jogging, working out, taking a shower—times when it seemed that
their minds were relaxed.
The founder of the NeuroLeadership Institute, David Rock, asked leaders attend-
ing his various workshops over the years how they solved turbulent, complex problems.
He reported their answers were consistent: “No one solves complex problems at will.
The answers always suddenly arrive, either as you fall asleep; in the middle of the night;
as you wake up; as you exercise, shower, or drive; or while you do something pleasant
and repetitive such as knitting, gardening, or cooking.”72
Based on his interviews with Kounios and Jung-Beeman, Jonah Lehrer discussed
factors that reduce or negatively affect a leader’s ability to create an Aha! moment.
He explained, “You’ve got to know when to step back. If you’re in an environment
that forces you to produce and produce, and you feel very stressed, then you’re not
going to have any insights. . . . Concentration, it seems, comes with the hidden cost of
diminished creativity.” “There’s a good reason Google puts Ping-Pong tables in their
headquarters,” Kounios said. “If you want to encourage insights, then you’ve got to
also encourage people to relax.”73 In addition, “the scientists are convinced that it’s
only a matter of time before it becomes possible to ‘up-regulate’ insight. ‘This could be
a drug or technology or just a new way to structure our environment,’” Jung-Beeman
said. “I think we’ll soon get to the point where we can do more than tell people to take
lots of showers.”74
Rock’s research suggested that “as much as a 500 percent improvement in having
insights can be reached by following a few simple rules.”75 Specifically:
• Quiet: Just as it is hard to hear a quiet cell phone at a loud party, it is difficult to notice
signals that have less energy than the general energy level already present in the brain.
Hence, we tend to notice insights when our overall [brain] activity level . . . is low.
This happens when we’re not putting in a lot of mental effort, when we’re focusing
on something repetitive, or when we are just generally more relaxed such as we are
when we wake up. Insights require a quiet mind because they themselves are quiet.
• Inward looking: A second quality of insights relates to the first, though it is slightly
different. Our attention at any moment can be externally focused (for example,
reading the words in a magazine), or [it can be internally] focused—for example, on

9 2   L e a d in g a t t h e S t r a te g i c L eve l
an image you might see in your mind’s eye that is activated by a word. We tend to
flip between these two states all the time. . . . Therefore, insights are more likely [to
occur] when you can look inside yourself and not focus on the outside world, and
when you feel safe enough to reflect on deeper thoughts and not worry about what
is going on around you for a moment.
• Slightly happy: There is a lot of research showing that being slightly happy, versus
slightly anxious, helps people solve more problems and be more creative.
• Not effortful: This final piece of the puzzle is a bit confounding. If you want insights,
you need to stop trying to solve a problem. This can be confusing because, usu-
ally, insights happen because we become stuck at an impasse. The impasse tends to
involve a small set of solutions on which we fixated. And the more we work on the
same wrong solution, the more we prime the brain for that solution and the harder
it is to think of new ideas.76
In researching the relationships of these three terms, intuition, insight, and Aha!
moments, the findings suggest strongly there could be an ordering of these terms, for
example, in solving a problem regarding which the leader is unaware of the solution.
However, he or she believes (intuitively) there is a solution—but it is unknown. The leader
expands his or her thinking, challenges existing assumptions and frames of reference,
seeks new information, collaborates with others, and identifies possible solutions—yet
the solution remains elusive. The leader goes home for the weekend, plays a round of
golf, or reads a book, performs other tasks and suddenly, apparently out of nowhere, the
answer comes into the leader’s head. He or she exclaims, “Aha!” Not only does the leader
see the solution, but how to accomplish it. It is from the insight that the leader builds a
new mental model and frame of reference. An interesting phenomenon is that once the
leader receives the insight, he or she cannot go back to the previous mental model; the
new frame of reference and mental model becomes the dominant model.
In summary, it is clear that strategic leaders need to understand intuition, insight,
and Aha! moments and how to use and benefit from them—this is especially true as
leaders face ever-increasing multiple-dimensional challenges and problems. In addi-
tion, they need to take specific steps to foster an organizational climate and culture
that support the increased opportunity for leaders within the organization to develop
and experience robust informed intuition and generate insights and Aha! moments.

—Pause—Take a moment and reflect on the following questions. Note your initial
insights and Ahas!
Do you use intuition when you make decisions? Why or why not? When was the
last time you trusted your intuition to make the final decision about an important
project or decision?
When do you experience insight or Aha! moments?
Can you think of a time when your intuition led you astray? Have you seen other
strategic leaders “burned” by their intuition?

C h a pte r 3 a   9 3
Survey of Strategic Leaders
Of the strategic leaders interviewed for this book, 44 completed a survey regarding
cognitive and social skill sets and leadership traits. In the cognitive set of 18 skills, the
respondents picked the top 5 required of a strategic leader. Of these 18 skill sets, they
chose 6 thinking skills: systems, strategic, creative, critical, reflection and metacog-
nition. Some researchers and scholars (as well as some of the leaders completing the
survey) indicated that they believe one or more thinking skills are a subset of another
thinking skill. For example, some noted their belief that creative and critical thinking
are a subset of strategic thinking. The intent of the survey was to seek some insight as
to how these leaders viewed the relative importance of each of these six thinking skills.
The surveyed leaders ranked thinking skills in the following order: strategic, critical,
creative, reflective, systems, and metacognition.
As these 6 thinking skills represented one-third of the skills noted in the
cognitive section of the survey and the respondents had to choose the top five out
of the 18 skills, the expectation was that a respondent may only choose one of the
six thinking skills. Of the 44 respondents, 18 picked one, 17 picked two, 4 picked
three, and 1 picked four. Interestingly, two picked none. (To review the results, see
appendix C.)

Multitasking: Is a Strategic Leader’s Cognitive Capacity


Sufficient?
With the advent of multiple information technologies and communication capabilities,
there is a belief that Generation X and Millennials are much more adept at multitasking
than those of an older generation. This begs the question: “Can people—regardless of
the technology—multitask effectively?”
In the New York Times, Edward Hallowell stated, “Multitasking is shifting focus
from one task to another in rapid succession. It gives the illusion that we’re simultane-
ously tasking, but we’re really not. It’s like playing tennis with three balls.” In addition,
in a University of Michigan study in 2001, it was reported that all “participants lost time
when they had to move back and forth from one undertaking to another, and that it took
significantly longer to switch between the more complicated tasks.”77
Furthermore, Stanford researchers Eyal Ophir, Clifford Nass, and Anthony Wag-
ner found in their 2009 studies that multitasking may actually impair an individual’s
cognitive control. They reported that multitaskers do not pay attention, control their
memory, or switch from one task to another as well as those who completed a task one
at a time.78 These researchers admit that they “don’t know what is happening—other
than that they [the multitaskers] seem to like to be flooded with information,” adds
Nass. “It’s almost as if they prefer to scan the environment and look for new informa-
tion rather than ponder what they have. We don’t know if there are advantages to this,
but all we can say is: multi-taskers are lousy at multitasking.”79

9 4   L e a d in g a t t h e S t r a te g i c L eve l
Finally, John Medina, author of brain rules, stated emphatically, “Multitasking,
when it comes to paying attention, is a myth.”80 Moreover, he argues, “To put it bluntly,
research shows that we can’t multitask. We are biologically incapable of processing
attention-rich inputs simultaneously.”81 He notes that studies demonstrate that those
people who interrupted (that is, multitasking) take more than 50 percent time to
accomplish a task and are most likely to have 50 percent more errors. Other studies
indicate that younger people have a greater ability to switch tasks than older people,
but the attention of the younger people is not stronger once the task is switched. Con-
sequently, though chronic media multitasking is becoming ubiquitous, the strategic
leader needs to be aware of its limitations regarding attention, focus, task completion,
and productivity.
The previous discussion regarding cognitive capacity and a strategic leader’s
thinking ability when dealing with challenging complex issues, coupled with per-
sonal experience, should improve one’s ability to successfully analyze and operate in
a variety of environments.

Summary
As shown on figure 2-1, the cognitive capacity dimension is one of five requisite sets of
skills for effective strategic leaders. Each of the thinking skills listed on table 3a-1 rep-
resents critical individual components of the cognitive capacity dimension. Although
this chapter defines and discusses thinking skills as separate, they are actually inter-
twined with each other and almost impossible to separate in actual use. In fact, their
complementary use is often encouraged in a strategic leader’s individual and team
thinking processes, problem-solving, and decisionmaking. For example, a strategic
leader’s mutually supportive use of both deliberate and intuitive thinking skills enables
the strengths of both types of thinking to influence the solution or decision. Thus, it is
the mastery of how and when to use each of these thinking skills and abilities in the
cognitive capacity domain that will ensure strategic leader effectiveness.

Notes
1
P.M. Lewis and T. Owen Jacobs, “Individual Differences in Strategic Leadership Capacity: A Con-
structive/Development View,” in Strategic Leadership: A Multiorganizational-level Perspective, ed. R.L.
Phillips and J.G. Hunt, 121–137 (Westport, CT: Quorum, 1992).
2
Steve Zaccaro, The Nature of Executive Leadership: A Conceptual and Empirical Analysis of Success
(Washington, DC: American Psychological Association, 2001), 293–294.
3
The author thanks ICAF colleague Dr. Mark McGuire for his valuable contributions and insights in
cowriting this section on cognitive capacity.
Personal interview with LTG Ron Iverson, USAF (Ret.), CEO of LGS Innovations (subsidiary of
4

Alcatel-Lucent and the classified portion of Bell Labs); former 7th Air Force Commander and Deputy
Commander of United States forces in Korea.

C h a pte r 3 a   9 5
5
Zaccaro.
6
Alan Whittaker, “Introduction to ICAF,” presentation to new students, Fall 2009.
7
Interview with General George Casey, USA (Ret.), former Chief of Staff, U.S. Army, November 16,
2011.
Gregory Foster, Teaching Strategic Thinking to Strategic Leaders (Washington, DC: National Defense
8

University, 2005), 2–3.


9
Ibid.
10
Ibid.
Mark Grandstaff and Georgia Sorenson, Strategic Leadership: The General’s Art (Vienna, VA: Man-
11

agement Concepts, 2009), xxiv.


12
Martin Dempsey, “Chairman of Joint Chiefs Praises New Defense Strategy,” speech at Duke Univer-
sity, January 12, 2012, available at <http://today.duke.edu/2012/01/dempseytalk>.
Mark McGuire, “Pulling Back the Curtain: Developing Strategic Thinkers at ICAF,” Joint Force
13

Quarterly 63 (4th Quarter 2011), 123.


14
Ibid., 124.
15
Strategic Leadership Course Material for ICAF, 2011.
16
Ibid.
17
Zaccaro, 38.
18
Lewis and Jacobs, 124.
19
Zaccaro, 26.
20
Lewis and Jacobs, 132.
21
George Forsythe and Herbert Barber, “Expert-Novice Differences in the Structure and Content of
Cognitive Representations: Military-Strategic Thinking U.S. Military Academy, U. S. Army War Col-
lege,” paper presented at the Annual Meeting of the American Educational Research Association, San
Francisco, CA, April, 1992.
22
Zaccaro, 39.
Information related to the 9/11 discussion derived from Yoram Wind and Colin Crook, The Power
23

of Impossible Thinking (Upper Saddle River, NJ: Wharton School Publishing, 2006), xlvii–xlviii.
24
Ibid.
25
Wind and Crook, xlviii.
Exercise 1 source: Edward Scannell and John Newstrom, The Complete Games Trainers Play (New
26

York, NY: McGraw-Hill, 1994), 2.397–2.399.


Answer to exercise 1: the word FLY.
Exercise 2 source: Roger von Oech, A Kick in the Seat of the Pants (New York: Harper and Row, 1986), 64.
Answer to exercise 2:
VI or IV
VII
SIX
Peter Senge, The Fifth Discipline: The Art and Practice of the Learning Organization (New York:
27

Doubleday, 1990), 8.
T. Owen Jacobs, Strategic Leadership: The Competitive Edge (Washington, DC: National Defense
28

University, 2005), 63, 77.

9 6   L e a d in g a t t h e S t r a te g i c L eve l
According to snopes.com, this linguistic point circulated on the Internet in September 2003. The
29

origins are unknown, and though there were some researchers looking into the matter, there is not a
specific university identified with the specific passage.
30
Wind and Crook, 9.
Jacobs, ii.
31

Lee Bolman and Terrence Deal, Reframing Organizations, 4th ed. (San Francisco, CA: Jossey Bass,
32

2008), 313.
33
Jacobs, 64.
The preceding adapted from Bolman and Deal, 356–372. Reproduced with permission of John Wiley
34

& Sons—All Rights Reserved.


35
Ibid., 92.
Richard Paul, “The State of Critical Thinking Today,” Foundation for Critical Thinking, available at
36

<www.criticalthinking.org/print-page.cfm?pageID=523>.
37
Jacobs, 92.
38
Senge, 68–69.
Henry Lewis Mencken “The Divine Afflatus,” New York Evening Mail, November 16, 1917, available
39

at <http://wist.info/mencken-hl/2781/>.
40
Ron Zemke, “Systems Thinking,” Training 38, no. 2 (February 2001), 40.
41
Jacobs, 107.
42
Ibid., 90.
Gordon Sullivan and Michael Harper, Hope Is Not a Method (New York: Broadway Books, 1996),
43

195–197; Jacobs, 90.


44
Lisa Callahan, “Blink or Think?” T+D, February 2010, 69.
45
Ibid.
46
Jacobs, 90.
Samuel J. Palmisano, “Capitalizing on Complexity: Insights from the Global Chief Executive Officer
47

Study,” IBM 2010, available at <http://www-935.ibm.com/services/us/ceo/ceostudy2010/index.html>.


Robert M. Gates, Evening Lecture at the U.S. Military Academy, April 21, 2008, available at <www.
48

defenselink.mil/speeches/speech.aspx?speechid=1233>.
49
Solution to Problem 1:

Solution to Problem 2:
Open all three links in one chain, breaking that chain into separate links. Cost: $300. Use each open
link to connect two of the other chains by inserting two links into the open link and then closing it.
Cost: $450. Result: one 12-link circle. Total cost: $750.

Solution to Problem 3:

x 3

Here it is
4

C h a pte r 3 a   9 7
Po Bronson and Ashley Merryman, “Forget Brainstorming: What you think you know about fostering
50

creativity is wrong. A look at what really works.” Newsweek, July 12, 2010. Reproduced with permission
of Po Bronson—All Rights Reserved.
Stan Gryskiewicz and Sylvester Taylor, Making Creativity Practical (Greensboro, NC: Center for
51

Creative Leadership, 2003), 20–26.


52
T. Owen Jacobs, The Competitive Edge (Washington, DC: National Defense University, 2005), 121.
A number of Web sites offer information on mindmapping: <www.mindmapping.com/>; <www.
53

mindmap.com/>. For a discussion for the use of mindmapping in executive educations, see Anthony J.
Mento, Patrick Martinelli, and Raymond M. Jones, “Mind mapping in executive education: applications
and outcomes,” The Journal of Management Development 18, no. 4 (January 1999), 390–407.
See <www.largescaleinterventions.com/documents/mindmapping%20in%208%20easy%20steps.
54

pdf>.
55
For more information regarding Joel Barker’s Implications Wheel, a number of Web sites are available.
Neither the author nor National Defense University endorses any of the listed sites. They are provided
for information sources only: <http://implicationswheel.com/>; and <www.vhafoundation.org/Prior-
Initiatives/DisasterPreparedness/ImplicationsWheelsForHospitals/Pages/Default.aspx>.
Peter Facione, Critical Thinking: What It Is and Why It Counts (Millbrae, CA: The California Aca-
56

demic Press, 2010), 22.


Gerard Puccio, Marie Mance, and Mary Murdock, Creative Leadership: Skills That Drive Change, 2nd
57

ed. (Thousand Oaks, CA: Sage, 2011), 66.


58
Linda Elder and Richard Paul, “Our Concept of Critical Thinking,” available at <www.criticalthink-
ing.org/aboutCT/ourConceptCT.cfm>.
59
Richard Heuer, Psychology of Intelligence Analysis (Washington, DC: Center for the Study of Intel-
ligence, 1999), 9, available at <https://www.cia.gov/library/center-for-the-study-of-intelligence/csi-
publications/books-and-monographs/psychology-of-intelligence-analysis/PsychofIntelNew.pdf>.
60
This mini case study was developed from Gene Weingarten, “Pearls Before Breakfast,” The Wash-
ington Post, April 8, 2007, available at <www.washingtonpost.com/wp-dyn/content/article/2007/04/04/
AR2007040401721.html>.
To view the performance, go to <www.youtube.com/watch?v=myq8upzJDJc>.
61

Herbert A. Simon, “Explaining the Ineffable: Al on the Topics of Intuition, Insight and Inspiration,”
62

941, available at <http://ijcai.org/Past%20Proceedings/IJCAI-95-VOL%201/pdf/121.pdf>.


Donald Trump and Bill Zanker, Think Big and Kick Ass in Business and Life (New York: Harper, 2008),
63

100.
64
William Duggan, Strategic Intuition (New York: Columbia Business School, 2007), 2.
See Malcolm Gladwell, Blink: The Power of Thinking Without Thinking (New York: Little, Brown and
65

Company, 2005); and Jonah Lehrer, How We Decide (New York: Houghton Mifflin Harcourt, 2009).
66
Duggan, 4.
67
Ibid., 82–83.
Adapted from Yoram Wind and Colin Crook, The Power of Impossible Thinking. Printed, adapted,
68

and electronically reproduced by permission of Pearson Education, Inc. All rights reserved.
69
Wind and Crook, 176.
John Kounios and Mark Jung-Beeman, “The Aha! Moment,” Current Directions in Psychological
70

Science 18, no. 4 (August 2009), 210.

9 8   L e a d in g a t t h e S t r a te g i c L eve l
71
Simon, 942.
72
David Rock, “Neuroscience Provides Fresh Insight Into the ‘aha’ moment,” T&D, February 2011, 46.
Jonah Lehrer, “The Eureka Hunt: Why do good ideas come to us when they do?” The New Yorker, July
73

28, 2008, 44.


Ibid.
74

75
Rock, 46.
76
Ibid., 47–49.
Alina Tugend, “Multitasking Can Make You Lose . . . Um . . . Focus,” The New York Times, October
77

25, 2008, B7.


Adam Gorlick, “Media multitaskers pay mental price, Stanford study shows,” Stanford University
78

News, August 24, 2009. For access to the study, see Eyal Ophir, Clifford Nass, and Anthony D. Wagner,
“Cognitive control in media multitaskers,” available at <www.pnas.org/content/106/37/15583.full.
pdf+html>.
79
Gorlick.
John Medina, Brain Rules: 12 Principles for Surviving and Thriving at Work, Home, and School (Seattle,
80

WA: Pear Press, 2008), 84.


81
Ibid., 85.

C h a pte r 3 a   9 9
CHAPTER 3b | Strategic Leader
Readiness—Personal Dimensions, Part II

Personal Dimension: Social Capacity


The leader’s ability to use the collection of interpersonal and emotional intelligence
skills, knowledge, and abilities to effectively communicate and influence individu-
als, groups, and organizations defines social capacity. Sometimes referred to as “soft
skills,” these competencies are fundamental for strategic leaders to achieve success
both personally and professionally. Emphasizing this point, Linda Washington, former
Assistant Secretary for Administration, U.S. Department of Transportation, argued:
To be an effective strategic leader in the Federal Government requires strong
interpersonal, social, and emotional skills, especially in the interagency process.
To exercise influence, to be persuasive, to negotiate effectively, and recognized
as a collaborator, the strategic leader must have the capacity to generate respect
and mutual trust. I believe that how well a leader builds and sustains rapport
with other leaders—both inside and outside organizations—enhances the
leader’s ability to accomplish his or her objectives. Chances for success improve
if the leader is an engaging personality, listens well, and expresses warmth and
friendliness. It is crucial, therefore, that strategic leaders have a keen apprecia-
tion that interpersonal skills are the bedrock skills for influencing people.1
Strategic leaders are “enmeshed in an interpersonal environment.”2 And, as illus-
trated in chapter 14, leadership researchers Michael Lombardo and Robert Eichinger
identified 67 leadership competencies and 19 “Career Stallers and Stoppers.”3 Of the 19
career stallers and stoppers (illustrated in table 14-1), more than 50 percent are related
to social capacity. Consequently, poor interpersonal and social skills can have a major
impact on a leader’s ability to perform effectively at the strategic level and often lead
to derailing the leader. Consequently, as with cognitive and behavioral capacities, a
leader’s social capacity must be able to handle the social complexity inherent at the
strategic level.
Social capacity includes but is not limited to such skills and abilities as listed in
table 3b-1. Keep in mind that many of the listed competencies are interrelated to the
dimensions presented in this chapter:

C h a pte r 3 b  101
Table 3b-1. Examples of Skills Associated with Social Capacity

ability to negotiate emotional self-control exercising influence and


collaboration aspects of social intelligence persuasion

understanding others communication and listening boundary-spanning


management
self-awareness the use of power and politics
cultural awareness
trust-building development of senior (both organizational and
empathy executive leaders and international)
coaching skills in subordinate
passionate leaders interpersonal skills and
motivating abilities
establishing rapport emotional competence
networking

Commenting on the list of suggested social capacity competencies, Vice Admiral


Ann Rondeau, USN (Ret.), former President of National Defense University, empha-
sized that building trust is critical for strategic leaders: “I think that trust is essential,
and I must tell you that . . . if you don’t have trust and if you don’t have passion, I think
you have difficulties in doing anything else. Of the social skills, you must have trust
and passion—everything else follows.”4
Social capacity includes interpersonal skills, social skills, and, emotional intelli-
gence (EI). This segment addresses these interpersonal and social skills, and the four
domains of emotional intelligence: self-awareness, self-management, social awareness,
and, relationship management. While listing these components makes it appear they
are discrete skills, in fact, each is highly interrelated with the others.

Interpersonal Skills
Leadership scholar Gary Yukl defined interpersonal skills as “Knowledge about human
behavior and interpersonal processes, ability to understand the feelings, attitudes,
and motives of others” from what they say and do (empathy, social sensitivity), ability
to communicate clearly and effectively (speech fluency, persuasiveness), and ability
to establish effective and cooperative relationships (tact, diplomacy, listening skill,
knowledge about acceptable social behavior).5 The more effective a strategic leader’s
interpersonal skills, the more effective he or she will be in influencing others. As Yukl
noted, “Influence tactics and impression management tactics are used more effectively
by people who have strong interpersonal skills.”6
Interpersonal skills are essential to building and sustaining relationships. While
strategic leaders may make decisions, assign tasks, and give instructions, it is through
their interpersonal skills that the leader translates the intent of these decisions resulting
in increased energy, enthusiasm, and commitment by those doing the work.

10 2   L e a d in g a t t h e S t r a te g i c L eve l
Social Skills
Through social skills and social reasoning, the strategic leader gains awareness and
understanding of the social cues of people and groups, both inside and outside of the
organization. With the ability to exercise social perceptiveness, strategic leaders are
able to ascertain the interactive and determinate social relationships and processes in
stakeholders, teams, departments, and organizations. Such perceptiveness enhances
the leader’s ability to determine best approaches to take that will generate gain buy-
in for decisions and major change initiatives. In addition, using this skill may lead
the strategic leader to believe that a change in climate and culture must take place to
enhance mission and organizational success. Commenting on social perceptiveness,
Yukl explained:
Social perceptiveness involves the conceptual skills and specific knowledge
needed for strategic leadership, including the ability to identify threats and
opportunities that are jointly determined by environmental events and the core
competencies of the organization, and the ability to formulate an appropriate
response. Social perceptiveness also involves interpersonal skills (e.g., empathy,
social sensitivity, understanding of group processes) and knowledge of the
organization (structure, culture, power relationships), which jointly determine
whether it is feasible to initiate change and the best way to do it.7
Social skills enhance the strategic leader’s ability to collaborate across boundaries
(for example, cross-functional teams, departments, and organizations), understand
and appreciate different cultures, and build and sustain trust. It is through under-
standing of the social mores that the strategic leader can develop personal and orga-
nizational respect, as well as create synergy with and among all members of a team
or organization.
Social capacity and skills enhance a leader’s ability to know when to make a deci-
sion or to act. As noted in the previous segment on “cognitive capacity,” frames and
references, mental models, and biases all shape a leader’s thinking and strategy. It is
not sufficient simply to have the necessary social intelligence and personal skills to
shape people’s views and opinions, effective strategic leaders also need to know when
to take action to gain momentum and commitment.

Emotional Intelligence
Summarized in their seminal book Primal Leadership, Daniel Goleman, Richard
Boyatzis, and Annie McKee incorporated intrapersonal and interpersonal skills
within a model that has come to define “emotional intelligence.” The terms EI or EQ
are now a part of today’s senior leadership lexicon. Professors Manuel London and
Todd Maurer define EI as “understanding the effects of emotions on human behavior

C h a pte r 3 b  10 3
and knowing how to identify and manage one’s own and others’ emotional response.”
They emphasized the key to EI is self-awareness: “Leaders need self-awareness to know
what’s happening with their own emotions, maintain a positive state, keep distress-
ing emotions out of the way, be empathetic, and prime positive emotions in others.”8
This is not simply about interpersonal or “touchy feely” dynamics. The Hay Group
reported, “Research has confirmed a significant performance gap between leaders who
display the qualities of emotional intelligence and those who don’t.” They noted their
“own work . . . revealed that the most admired organizations report their executives
demonstrate higher degrees of emotional intelligence—and that the lack of these
qualities contribute significantly to the failure of high-potential executives.”9 More-
over, Boyatzis and McKee reported, “emotional intelligence . . . accounts for 85 to 90
percent of the difference between outstanding leaders and their more average peers.”10
The EI model identifies four key domains: self-awareness, self-management, social
awareness, and relationship management. These domains constitute a framework for
putting key individual interpersonal skills into a context that explains how success-
ful leaders develop and apply their personal and social competencies, and how they
generate rapport, build trust, and successfully manage a wide variety of relationships
inside and outside their organizations. Table 3b-2 provides an overview of the emo-
tional intelligence domains and associated competences.

Table 3b-2. Emotional Intelligence Domains and Associated Competencies

PERSONAL COMPETENCE SOCIAL COMPETENCE


HOW WE MANAGE OURSELVES HOW WE MANAGE RELATIONSHIPS
Self-awareness Social awareness
An understanding of one’s emotions, one’s Empathy—The ability to understand the emo-
strengths & limitations, one’s values & motives tional reactions of others
Implies a propensity for self-reflection and Implies an awareness of one’s effect on others
thoughtfulness Includes emotional self-awareness, accurate
Includes emotional self-awareness, accurate self-assessment, and self-confidence
self-assessment, and self-confidence
Self-management Relationship management
The ability to control one’s emotions Proficiency in managing relationships and
Implies a propensity to suspend judgment and building networks
think before acting An ability to find common ground and build
Includes emotional self-control, transpar- rapport
ency, adaptability, achievement, initiative, and Includes inspirational leadership, influence,
optimism developing others, change catalyst, conflict
management, and teamwork and collaboration
Adapted from Daniel Goleman, Richard Boyatzis, and Annie McKee, Primal Leadership: Learning to
Lead with Emotional Intelligence (Boston: Harvard Business School, 2002), 39. Reproduced with per-
mission of Harvard Business School Press—All Rights Reserved. For a more in-depth discussion, see
Primal Leadership, appendix B.

10 4   L e a d in g a t t h e S t r a te g i c L eve l
In addition, Vice Admiral Rondeau explained that a sense of optimism enhances
emotional intelligence. She noted, “Pessimists don’t make great leaders. They may
make great analysts or quality control people. There is a role for the pessimist. How-
ever, the pessimist will not usually be your strategic leader. Your strategic leader needs
to know how to use a pessimist. There is something good about having one or two in
an organization, but they are not going to be your top leaders.”11

Resonant Leader
Annie McKee and consultant Dick Massimillian described a resonant leader as some-
one “in tune with the people around them.” They explained that resonant leaders have:
a high level of Emotional Intelligence . . . build strong, trusting relationships and
manage their own emotions productively. They know that emotions are conta-
gious, and create a can-do climate of hope and optimism around them. They
have empathy and can read people, and use that ability to inspire commitment
in the people around them. They are not simply great to work with; they produce
results by marshaling their financial, intellectual, human, environmental and
social resources to engage and mobilize the energy of the people around them.
For the resonant leader, personal and financial credibility are the byproducts
more than the objectives of achievement. Ultimately, the resonant leader is
more concerned with the performance of the organization than with his or her
individual advancement.12
Furthermore, they explained that “Empathy starts with curiosity about the people
around us. It includes a willingness to learn about people and to suspend, as much
as we can, our judgments about them. It means listening more than talking. It also
means suspending our agenda and being genuinely interested in others as an end unto
itself.”13 Ted Leonsis, owner of sport franchises (Washington Wizards, Washington
Mystics, Washington Capitals) and the Verizon Center offered the following illustra-
tion regarding empathy and its importance to business results.

Ted Leonsis—Empathy and Kobe Bryant’s Autograph—


Mini Case Study14
Leonsis was visiting with his Wizards VIP ticket holders—some of which spend $100,000
a year on their tickets—and he was talking to a man who was a season ticket holder for
25 years. This man is married and has kids and one of his kids collects autographs. The
Wizards played the Lakers a couple of years ago, and this man’s son wanted to get Kobe
Bryant’s autograph. A constraining factor was the Lakers only visit the Washington area
every 2 years. Leonsis noted that the Wizards open the gates at 6 p.m. and usually the
teams shoot around from 5:30 to 6:10 p.m. and they go in. By letting the fans who come

C h a pte r 3 b  10 5
early to the game enter when the gates open at 6, they run down, and they get a chance
to see their favorite players and get their autographs.
On this one day when the Lakers were in town, the gates did not open exactly
at 6 p.m.; rather they went up at 6:06. That night, just as they were running down to
get the autograph, Kobe walked off. This VIP ticket holder said this missed opportu-
nity ruined his and his son’s season. Leonsis is facing a fan that spends $100,000 on
tickets and has been a ticket holder for 25 years. This fan said, “You said you would
open the gates at 6:00 p.m. and they went up at 6:06 and I have held that against
you ever since.”
Leonsis said, “I really appreciate you sharing that with me. I have a son. I understand
how amped up my son would get before coming to a game. That would be a cloud over
him. Moreover, it’s really important to you. I have great empathy. You wait right here.
I am going to bring someone over. I want you to explain to this person who runs the
ushers why opening the gate at 6:00 p.m. and not at 6:06 was so important, so he can
empathize. And two, I will get your son a Kobe Bryant autograph.”
Leonsis stated, “You would have thought I threw a ticket-tape parade for this guy. I
listened; I showed empathy. I used it as a teachable moment with our head of the ush-
ers. This fan likely will pay us $100,000 for the rest of his life. And, his son will become
a season ticket holder. Highly respected leaders, those who get the most out of their
organizations, exhibit empathy.

Emotions
EI is the ability for people to manage themselves and their relationships with others. EI
is about making choices. Yet it is important to recognize that other people’s behaviors
can definitely influence one’s own feelings. Just think about the last time someone
cut you off on the highway, or cut in front of you at the checkout counter—feelings
could range from mild irritation to road rage. Or the feelings you had when someone
complimented you—resulting in positive feelings and mood. As Aristotle once said,
“Anybody can become angry, that is easy; but to be angry with the right person, and
to the right degree, and at the right time, and for the right purpose, and in the right
way, that is not within everybody’s power; that is not easy.”15
Boyatzis and McKee added, “In addition to knowing and managing themselves
well, emotionally intelligent leaders manage others’ emotions and build strong, trusting
relationships.” Furthermore, “They know that emotions are contagious, and that their
own emotions are powerful drivers of their people’s moods and, ultimately, performance.
They understand that while fear and anger may mobilize people in the short term, these
emotions backfire quickly, leaving people distracted, anxious, and ineffective.”16 There-
fore, emotions are strong feelings that demand attention and are likely to affect cognitive

10 6  L e a d in g a t t h e S t r a te g i c L eve l
processes and behaviors—examples: anger, fear, sadness, happiness, disgust, shame,
surprise, and love. Even after the intensity of an emotion fades, it is likely to linger on as
a positive or negative mood—which can affect leadership behavior.
Emotions typically interweave within the decisionmaking process. Many leaders
believe they make decisions based on an orderly, logical manner—keeping emotions
out of the process. However, that is not how the brain works. The brain’s first response
will always be emotional (flight or fight response), then the prefrontal cortex is acti-
vated to bring logical and rational thinking into the response. While the difference may
be milliseconds, the fact remains, the emotional component will be first. For example,
one gets angry with his boss and the first impulse may be to take a swing at him. Then
the rational part of the brain kicks in, interjecting the more rational response that the
boss could fire the subordinate and asserts control, leading the subordinate to resist
taking the swing. The key is to wait for the logical part of the brain to help manage the
response—rather than to react strictly in an emotional manner.
Relationship management ties emotions, feelings, and mood together. Frequently,
people ask senior leaders if it is better to be liked—or respected. Ask leaders at the
operational and tactical levels, they respond they prefer respected rather than liked.
Yet many senior leaders argue that in building ongoing relationships, they should not
only make serious efforts to establish respect among the people in the relationship, but
also (and equally important) is to like others and to have others liking them.
One of the strategic leaders interviewed for this book indicated that he really
disliked one of his peers, the chief financial officer (CFO). This CFO was bombastic,
heavy-handed, and at times rude. As a result, this strategic leader did not pay attention
to the CFO’s emails (had a staff member read and summarize) or briefings. In this
case, respect alone could not solve the interpersonal relationship. Without making
an effort to become friendly, to build a collaborative and enduring relationship, both
leaders’ jeopardized their abilities to maximize their personal and departmental per-
formance. Clearly, the ability to build rapport and to establish friendly, collaborative
relationships is crucial at the strategic level, especially with stakeholders and leaders
of other organizations (suppliers, alliances, partnerships, organizational leaders and
members, and customers).

Social Capacity: What Is It? Why Is It Important? How Do You


Build It?
[H]e projected a totally “in the moment” focus on each person he met. . . . He exuded
warmth; he seemed a man genuinely interested in liking you, and not concerned
with whether or not you liked him. How much of that was genetic and how much
developed I can only speculate. All I know is that I was, in that brief moment of
meeting, totally charmed by a person I neither agreed with nor even expected to like.

C h a pte r 3 b  10 7
Professional speaker Mark Sanborn related the preceding in commenting on
meeting President Bill Clinton.17
Persuasion, negotiation, and collaboration skills and abilities are essential for
strategic leaders if they expect to exercise personal power and gain effective support
and commitment from others—especially those outside of their authority. The ability
to use these skills and abilities enhances the leader’s efforts to build respect and mutual
trust. The catalyst for achieving adequate levels of trust and respect is the leader’s ability
to build relationships and rapport.

—Pause—Take a moment to reflect on the following questions. Make note of your


initial thoughts and insights.
1. If leaders are genuinely likeable and pleasant people, will others like them and
want to work with them?
2. Do you believe that how well you build and sustain rapport with other leaders—
both inside and outside your organization—enhances your ability to accomplish
your objectives?
3. Would you be as successful if you were not an engaging personality, listened well,
and expressed warmth and friendliness?
4. Think of some of the leaders you know personally. Are they leaders you respect
and like? If so, would you “go the extra mile for them”? If they were not friendly
or did not exhibit a warm and open manner, would you be as likely to respond to
their approaches, decisions, etc.—even if they provided a logical argument for their
position?
While most people recognize the importance of relationships and rapport to get-
ting things done, a much less well-known skill is how one builds rapport. Are there
specific techniques or behaviors that enhance a leader’s efforts to acquire and master
these skills and abilities? Will these same techniques be useful if the leader must deal
with a difficult leader? The answer is “Yes!”
The following discussion focuses on several useful techniques and exercises that
can assist leaders’ efforts to enhance their rapport building skills and abilities. In addi-
tion, table 3b-3 depicts a number of items for consideration that a leader can use for
self-awareness and personal evaluation.

10 8  L e a d in g a t t h e S t r a te g i c L eve l
Table 3b-3. Self-awareness and Personal Evaluation Insights
POSITIVE BEHAVIORS COMMON MISCOMMUNICATIONS
IF YOU DO THIS YOU MAY SEEM: IF YOU DO THIS YOU MAY THINK BUT YOU MAY
YOU SEEM: SEEM:
Have a positive Inviting, likable, Have a negative Focused, Impatient, bored,
attitude self-confident, attitude mission-oriented disrespectful,
warm, supportive angry, rude
Open and facing Trusting, inviting Closed body (e.g., Attentive, Resistance,
the person acceptance arms folded, not thoughtful, careful anxiety, bored,
facing person) impatience
Smile when Inviting, Fail to Smile Neutral, Uninterested or
meeting someone affirming, thoughtful, cool unattracted to the
likable, pleasant other, cold
Make eye contact Interested, Not looking at the Careful, thinking Not interested,
socially aware person about what to say not trustworthy
Adapt to the social Safe, comfort- Focus on your Interesting, Inaccessible, self-
situation and able, accepting, individuality eccentric involved, socially
appear similar to nonjudgmental rather than your awkward
others commonality with
others
Are well groomed, Healthy, Show little Interesting, Socially unaware,
stylish, and com- confident attention to your eccentric careless
fortable with your grooming and
appearance style
Introduce Engaged, Wait for an Neutral, Distant,
yourself to others socially skilled, introduction unobtrusive uncomfortable,
comfortable uninviting,
passive
Actively invite Safe, welcoming, Observe and judge Careful, Uninterested,
people to join you likable before interacting thoughtful difficult to
actively connect with,
aloof
Create a positive Affirming, Use prepared Charming, open, Shallow,
mood and draw entertaining, opening lines witty aggressive, calcu-
out others comfortable to be lating
around
Open a conversa- Safe, socially Open with a Straightforward Unlikable,
tion by being in the aware, easy to casual negative unpleasant
moment—talking engage opinion
about immediate
situation
Generate a variety Interesting, stimu- Deliver a lecture Passionate, smart, Bombastic,
of topics lating, knowledge- on something you interesting, infor- boring,
able know a lot about; mative self-absorbed,
focus only on lacking in
one topic curiosity, rude

C h a pte r 3 b  10 9
Table 3b-3. Self-awareness and Personal Evaluation Insights
POSITIVE BEHAVIORS COMMON MISCOMMUNICATIONS
IF YOU DO THIS YOU MAY SEEM: IF YOU DO THIS YOU MAY THINK BUT YOU MAY
YOU SEEM: SEEM:
Listen actively Not self-absorbed, Listen inactively Neutral Uninterested,
engaged, focused rejecting,
preoccupied
Data compiled from the following sources: Ann Demarais and Valerie White, First Impressions (New
York: Bantam Dell, 2004), 56–57, 81–82, 108–109; Nicholas Boothman, How to Connect in Business in
90 seconds or less (New York: Workman Publishing, 2002); and Brian Tracy and Ron Arden, The Power
of Charm (New York: AMACOM, 2006).

Techniques
Before Meeting Anyone
Elevator speech. Make up an elevator speech—a personal commercial that the leader
can state in 10 seconds; for example, what one does, who is it done for, and why it is
important. The desired outcome is to have the person with whom the leader is con-
versing want to “hear more.”
Attitude adjustment. Regardless how the leader feels, he or she needs to present a
positive and open attitude. Attitude is easily recognizable by others and is contagious.
The leader’s mannerism, posture and bearing, and facial expressions reflect their atti-
tude. Leaders will radiate either positive or negative energy to the people they meet.
Author Nicholas Boothman argues that enthusiasm, curiosity, and humility are key
positive attitudes that must be present when meeting someone: “In the right combina-
tion, these three attitudes create an irresistible presence.”18

Upon Meeting Someone


Be open. Face them (illustrates openness and being receptive to discussion).
Look them in the eye. Eye contact is one of the most important nonverbal com-
munication channels. Eye contact validates the person and engenders trust.19 Make a
note of the color of the person’s eyes.
Eye Color Exercise. Boothman recommends that leaders make a mental note of
the color of the eyes of every person they meet. He suggests that this “simple exercise
alone will massively increase self-confidence, eye contact, and rapport skills without
you doing anything intimidating.”20
Smile. Smiling makes the leader appear happy, enthusiastic, and confident. Author
Brian Tracy argues that “When you smile with happiness at seeing people, their self-
esteem jumps automatically. . . . They find you to be charming, even before you open
your month.”21

110  L e a d in g a t t h e S t r a te g i c L eve l
During Conversation
The leader knows what he or she wants. Leaders should always enter into a conversation
having some idea as to what they want. They should define what they want in positive
terms, that is, what the leader wants rather than what he or she does not want. This
enables leaders to stay focused and not be distracted by others around them or by top-
ics of conversation that are not relevant. This approach is significant if the leader must
deal with someone who is difficult. By staying focused on what the leader wants—not
who the person is, how they are dressed, or their policies or positions—the leader will
enhance his or her efforts to gain a positive result.
Names. Leaders should introduce themselves and mention their names—even if
they met the person previously. Attempt to mention the persons’ names they are meet-
ing a couple times during the conversation. Names make the person feel validated;
and stating their names will help the leader commit them to memory.
Tone. The tone of the leader’s words sets the mood of the conversation and influ-
ences emotions.

Tone Exercise. Say each phrase below with different tonality: anger, boredom, sur-
prise, and happiness. Notice how the body language, facial expression, and breathing
combine to alter the emotional state.
“It’s late.”
“I’ve had enough.”
“Look at me.”
Listening (actively). Leaders must demonstrate that they are truly interested in
the other person. Listening is different from hearing. Tracy suggested that one must
“Listen without interrupting. Listen . . . as if there is nothing in the world that is more
important to you at this moment than what the other person is saying.”22 Furthermore,
asking questions for clarification demonstrates attention. Throughout conversation,
the leader should maintain good eye contact and nod his or her head occasionally to
indicate they are listening and engaged.
Tracy questioned, “How do you know when someone is listening to you?” He
responds, “The first important signal is eye contact, pure and simple. If someone is
not looking at you, that person is not listening to you.”23

—Pause—Take a moment to reflect on the following questions regarding “first


impressions.” Make note of your initial thoughts and insights. Have you experienced
a time when you reflected on meeting someone for the first time (interagency, busi-
ness, social, personal) when you stated, “I liked him from the first time I met him”?
Why? What took place in the social exchange that left such a favorable impression?
Remember the importance of first impressions. Everyone makes snap judgments
of other people, especially when one first meets them. People notice how they are

C h a pte r 3 b  111
dressed and how they present themselves. They experience or feel the leader’s atti-
tude—mood. Are they attentive—or do they do most of the talking?
Likewise, they are making snap judgments about the leader! The key objective is to
develop the skills and techniques that can enhance the ability to influence their snap
judgments to be favorable of the leader, rather than unfavorable. The techniques noted
above can enhance a leader’s abilities to make a favorable first impression.

Najaf, Iraq, April 2003—A Mini Case Study


Lieutenant Colonel Christopher Hughes, USA, was leading his unit into the holy city of
Najaf to meet with the Grand Ayatollah Ali Hussein Sistani to seek his support to secure
the city on the road to Baghdad. Hughes was familiar with Muslim customs from his
previous work investigating the USS Cole bombing and serving on a joint antiterror-
ism task force. In addition, earlier that month, during the 54-hour drive out of Kuwait,
he listened to his Iraqi-American translator explain the importance of Grand Ayatollah
Sistani and how Shiites consider the city’s mosque a most holy site.
On this day, however, as they approached the mosque, hundreds of angry Iraqis
surrounded the soldiers, waving their hands and shouting that they were not going
to allow the Americans to continue. Dan Baum, in an article in The New Yorker, was
watching the event unfold on CNN. He described what he was about to observe was “a
disaster in the making.” He noted, “Fists waving, throats taut, they pressed in on the
Americans, who glanced at one another in terror. . . . The Iraqis were shrieking, frantic
with rage. . . . This is it, I thought. A shot will come from somewhere, the Americans
will open fire, and the world will witness the My Lai massacre of the Iraq war.” He then
reported that “At that moment, an American officer stepped through the crowd holding
his rifle high over his head with the barrel pointed to the ground. Against the backdrop
of the seething crowd, it was a striking gesture—almost Biblical. ‘Take a knee,’ the offi-
cer said, impassive behind surfer sunglasses. The soldiers looked at him as if he were
crazy. Then, one after another, swaying in their bulky body armor and gear, they knelt
before the boiling crowd and pointed their guns at the ground. The Iraqis fell silent, and
their anger subsided.”24
Hughes and his men were facing hundreds of Iraqis protecting the entrance to the
mosque, concerned that the Americans came to destroy it. As Baum reported in his
article, Hughes, thinking quickly, pointed his rifle to the ground and yelled to his troops
to take a knee. Some gave him a questioning glance, but obeyed without hesitation.
Many Iraqis in the crowd sat down as well. Hughes told his troops to relax and smile and
the Iraqis smiled back. The anger in the crowd subsided. Hughes then ordered his men
to back away slowly and to continue smiling. As they departed, Hughes put his right
hand on his chest in a traditional Islamic gesture, “Peace Be With You.” Grand Ayatollah
Sistani later issued the desired decree and unnecessary conflict was avoided.25

112  L e a d in g a t t h e S t r a te g i c L eve l
Hughes had to make split-second calculations and decisions. He had to gamble on
his ability to size up the situation, to read the people and their emotions, and determine
the right gesture or gestures that would diffuse a potentially catastrophic outcome.

—Pause—Take a moment to reflect on the following two questions. Make note of


your initial thoughts and insights.
1. Do you believe Hughes’ emotional intelligence, emotional fortitude, and cultural
awareness were critical to his success? Why or Why not?
2. Reflect on some of the difficult encounters you faced in the past five years. Were
your social, interpersonal, and emotional intelligence skills adequate or inadequate
considering the situation and context at the time? Would you have liked to do some-
thing different if you had the opportunity to do it over again? Why or Why not?
In summary, to be effective at the strategic level, leaders must have highly devel-
oped interpersonal and social skills. It is through the leader’s social capacity that the
leader can handle the social complexity inherent at the strategic level and maximize
the use of his or her cognitive and behavioral capacities.

Personal Dimensions: Personal Traits, Values, and Preferences


Personal traits, values, and preferences are formed early in a person’s life. This par-
ticular segment in the Personal Dimensions in figure 2-2 does show expansion as a
leader moves to the strategic level; growth, however, is not as extensive as the other
segments—it is more difficult for people to modify their traits, values, and preferences
to any great degree. Yet with strong self-awareness and with focused attention and
effort, a leader can modify his or her personal traits, values, and preferences.
Researchers identified numerous personal leadership traits, for example, honest,
inspiring, intelligent, authentic, courageous, fair-minded, and forward-looking are
but a few. Reflecting on these traits, each has observable characteristics and behaviors.
For example, if a leader were honest, he or she most likely would display integrity and
sincerity rather than deceptive behavior. Many suggest that the highly valued leader-
ship trait “character” represents the sum total of a person’s traits.
All people have fundamental or core values that influence and, some would argue,
drive personal behavior. Personal values are usually stable and evaluative beliefs that
guide a leader’s preferences for selecting courses of action. Values reflect a leader’s think-
ing and approach for dealing with ethical dilemmas and morality issues. Most people
consciously or subconsciously place their values in a priority system. Thus, when facing
an issue that reflects more than one personal value, the leader will usually take action
(behave) according to the higher-level value. In addition, values can be organizational, for
example, as reflected in the Army’s core values or Johnson and Johnson’s credo. However,
this sector focuses on the individual leader. For example, professional operational values

C h a pte r 3 b  113
assist guiding one’s thoughts, beliefs, decisions, and actions related to how one engages
and operates with leaders, peers, subordinates, stakeholders, and customers.
Preferences are “the logical result of a few, basic observable preferences in mental
functioning.” Preference may indicate whether an individual leader “may—repeat,
may—be more suited to, more accustomed, or more comfortable dealing with strategic
level issues.”26 Preferences are personal and reflect an individual’s preferred manner,
for example, how one focuses attention; collects, processes, and evaluates information;
and deals with the outside world.
Each leader has a well-defined belief system—a system made up of many views
about oneself. The leaders’ beliefs result from their perception of the truth about
themselves and their environment. It is through this belief system that the leader
makes decisions, takes actions, and behaves. Moreover, much of this belief system
resides in the subconscious part of the brain. It acts almost like an automatic pilot—
regulating the leader’s actions and behaviors within the boundaries of his or her
mental models. Therefore, it is important to understand that a leader’s belief system
has extraordinary power over individual decisions and actions—either enhancing
or limiting the leader’s ability to behave or perform appropriately. Provided in table
3b-4 are typical examples identified by researchers and practitioners as important
for strategic-leader success.

Table 3b-4. Examples of Elements Associated with Leadership Traits

values motivated to lead executive presence


ethics and morals perseverance self-efficacy
trustworthiness integrity (willing to take action)

resilience strong character aspiration level and motivation

drive self-disciplined authentic (genuine individual)

courage self-confident accountable

energy honest

The survey completed by the senior leaders interviewed for this book reflected on
the above listed traits. These leaders were asked to select only five (not in any priority)
of the listed items or identify others they deemed more important that those listed.
The top five included 1) integrity (66.6 percent), 2) inspiring (42 percent), 3) ethical
(40.5 percent), 4) decisive (35.7 percent), and 5) courage (33.3 percent). (See appendix
C.) What is clear from the survey is that other than integrity, these senior leaders did
provide a mutually agreed upon set of traits that they believed are critical for success
at the strategic level. Yet in the interview sessions, many of these leaders commented
they believe each of the traits, values, and preferences listed in table 3b-4 is essential
to be successful, but agreed some are more important than others.

114   L e a d in g a t t h e S t r a te g i c L eve l
Former NDU President Vice Admiral Rondeau, for example, commented on the
relationship of some of the listed characteristics and traits: “You have character, and
then you have integrity, honesty, ethics, and courage. I think they are all of one piece.
Character is the overarching meta-trait for these key traits. But under it comes integ-
rity, honesty, ethics and courage.” Furthermore, “Of course, being decisive is really
important. And, under all that, I think it is important to be authentic, to be who you
are. You can get a really cantankerous person, a toxic leader. Toxic leaders are usually
bad across the board.” She noted, “Toxic, to me, means that it is viral—running in the
rest of the organization. That is why a toxic leader is nearly always bad. You can have
an irascible, difficult leader. You can have an abusive leader, even. However, if a person
is authentic and they are honest about whom they are, people will put up with a lot. If
you are inauthentic, or if you are unpredictable, they can’t get their feet under them. So
you can have somebody who is difficult.”27 Some researchers and practitioners would
suggest that her description of an “irascible, difficult leader” is an apt description of
Steve Jobs in his leadership roles at Pixar and Apple Computer.
Ted Leonsis, in addition to his professional sports team holdings, is a former AOL
senior executive, filmmaker, philanthropist, and author. He relayed the story regarding
Google’s venture in China and how two of the top three identified traits influenced
personal and organizational behavior and strategic decisionmaking.

Google in China—A Mini Case Study


Google is one of the most successful companies in history. Its corporate motto is “Do
no evil.” It is not “Build a $150 billion company.” It is not “Be the world’s best search
engine.” It is “Do no evil.” They are one of the great growth companies of all time, and
they started doing a lot of business in China.28 China is the world’s second-biggest
economy, and it represents the world’s biggest Internet market. In 2010, Google lagged
behind the dominant Baidu search engine, which holds about 59 percent of the market in
China but censors its results. About 36 percent of searches went through Google, a posi-
tion that makes China a high growth market.29 Google was getting so big and important
in China that the Chinese government said, “If you are going to work in China, we need
to be able to look into your system to randomly see what people are searching on.” If
they were searching on something that the government did not like, the government
wanted the ability to find them.
Sergey Brin, a Google co-founder, emigrated from Russia at the age of 6 in 1979.
He stated that the compromises imposed on Google as requirements to do busi-
ness in China were becoming too great. On January 12, 2010, “Google announced it
would stop self-censoring its search engine in China, citing a major cyber attack that
appeared to target the email of human rights activists”30 and stole proprietary techni-
cal information from Google. Following the cyber attack, “a heated debate ensued in

C h a pte r 3 b  115
the company about whether to cease censoring.” Brin and other executives prevailed
over CEO Eric Schmidt and co-founder Larry Page who felt Google ought to stay the
course in China. Brin said by the end, there was “pretty good consensus.”31 Brin said, “I
won’t be able to sleep at night if the government ever arrests and imprisons a student
for searching on something the government doesn’t like. I am not going to play that
game with China.”32 In the interview with the Wall Street Journal, Brin emphasized, “I
think at some point it is appropriate to stand up for your principles, and if more com-
panies, governments, organizations, individuals did that, I do think the world would
be a better place.”33
“He tells China, and they say, ‘Well, then you can’t do business here.’ He responds,
‘Fine.’ And he pulls Google out of China. It’s very counterintuitive. But, the morale of
his company went through the roof. Their profits surged through the roof. He did the
right thing the right way, and his companies responded.”34 Where every expert, every
manager, probably said, “Well, this is the second-largest economy, the biggest Internet
market with hundreds of millions of users—if 10 students a year get imprisoned, that’s
just the way it’s done in China.” “No,” said Brin. “That’s not what I stand for. That is not
what we are doing. Go work at a company that says one student getting imprisoned
because of a search they do is OK, not me.”35
“Google is one of the most admired companies—admired brands—in the world.
It’s great business, and so I really do believe that companies and leaders who act that
way are the best business people.”36

—Pause—Take a moment to reflect on the following questions. Make a note of your


initial thoughts and insights.
1. What are your views regarding Google’s decision to leave China? Could Google’s
presence in China eventually influence China to change its policies and approach?
Was it worth the billions of dollars lost to stand on principle?
2. In your experience, how do your strategic leaders demonstrate integrity, char-
acter, trustworthiness, courage, and ethics in their decisionmaking? What are the
general traits, preferences, personalities, and characteristics demonstrated in your
leaders’ attitudes and behavior?

In summary, personal traits, values, and preferences serve as a basic founda-


tion for a leader’s behavior at the strategic level. While these personal traits, values,
and preferences are formed early in a person’s life, with strong self-awareness
and with focused attention and effort, a leader can modify his or her personal
characteristics.

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Personal Dimension: Technical Skills and Business Acumen
Technical skills are what an individual learns and adds to the organization. Business
acumen is the understanding of how the various skills and knowledge of organiza-
tional members fit within the organizational structure and supporting processes that
add strategic value to the entire functional area and, if responsible, for the entire enter-
prise. For government, the Office of Personnel Management defines business acumen
as the “ability to manage human, financial, and information resources strategically.”37
Senior leaders recognize junior-level leaders for their specific technical skills. For
example, the expectation for a naval aviator is to be a highly skilled pilot at the junior leader-
ship level. As that aviator moves up the organization, he or she will retain those skills while
learning to lead and manage a squadron. As he or she progresses up the hierarchy, flying
a “desk” will become the norm rather than an aircraft. At this level, the Navy’s focus for
this officer becomes more functional, for example, working on a major headquarters staff
analyzing, evaluating, and making recommendations as to how his or her aircraft type fits
within naval aviation. Once that pilot reaches senior level, for instance, captain or admiral,
he or she is expected to thoroughly understand not only the functional area of naval avia-
tion, but also how that functional area fits and functions within the Department of the
Navy. For example, this leader needs to be able to conceptualize and comprehend naval
aviation in comparison with SEALs, surface ships, submarines, space, the Marine Corps,
and so forth, and other vital components of the country’s military (Army and Air Force).
A similar example would be a skilled leader in marketing moving up to be the Vice
President of Marketing; then advancing to Chief Operating Officer—and, at that level
needing to demonstrate and apply knowledge of the entire business (for example, sales,
information technology (IT), finance, supply chain and logistics, human resources,
R&D, etc.). Consequently, as a leader moves up the organizational hierarchy, individual
technical skills (typically developed within a functional area) will lessen in importance.
Whereas new organizational skills and a clear understanding of the entire organizational
approach as a whole (the business model and how the various internal functions are inte-
grated and works) become increasingly important when the leader reaches the strategic
level—the need to manage and lead from a total business perspective when performing
strategic analysis, judgment, and decisionmaking. These two examples illustrate busi-
ness acumen. Table 3b-5 presents examples of competencies related to business acumen.

Table 3b-5. Business Acumen Examples

financial skills technical skills (usually associated with a func-


leadership bench-strength? tion, e.g.) IT, or marketing, etc.) or job skill

logistics (resource allocation) understanding organizational core competen-


cies and value propositions
ability to “see” what it takes to gain and sus-
tain competitive advantage.

C h a pte r 3 b  117
Business acumen is more than knowing just the technical applications in the
area(s) of the leader’s functional expertise. It includes knowing various behaviors,
organizational climate and culture, incentives, and processes. Moreover, knowing
these factors contribute significantly to achieving effective organizational results,
determining their alignment. For example, one may have financial literacy (that is,
knowing about cost of goods sold, profit, gross margins), but unless he also knows
how to make sense of the numbers, to put them in context within and applied to the
overall organizational strategy, such knowledge becomes “siloed” or myopic.
Furthermore, at the strategic level, not knowing the ins and outs of the business
can create confusion and unintended consequences. As Mark Gerencser, Executive
Vice President of Booz Allen Hamilton, argued, “You have to know your extended
enterprise and its interdependencies. One of the big mistakes new strategic leaders
might make is they do not quite understand the unintended consequences of their
decisions or actions. When a leader does not understand the whole enterprise, regard-
less of what that enterprise is, unintended consequences could be very crippling.”38
When Louis Gerstner took over as CEO of IBM in April 1993, he faced turning
around a struggling bureaucracy that at the time analysts were urging IBM to break
into a number of smaller companies. He decided to keep the company together and
to focus on providing integrated services—resulting in a phenomenal turnaround.
Yet Gerstner did not have any IT experience—his previous strategic leadership
positions were at American Express and as CEO of RJR Nabisco. He turned IBM
around not because he knew anything about IT or IBM, but because he knew how to
run an organization. He recognized that IBM had many smart people, but they were
in a culture where cross integration was not working. They were not making sales. His
knowledge of IT was less important than his business acumen of “How do you make a
business profitable and successful? How do you get sales, marketing, management, all
these interrelated functions and people working synergistically? How do you develop
strategy?” Combining his business acumen with cognitive, social, and behavioral
capacities—coupled with his personal attributes, personality, and drive—he success-
fully turned around the biggest IT company in the country.
Some leaders promoted to senior levels become responsible for functional areas
regarding which they have no knowledge of the processes, relationship, or expectations
for results. Too often, this leads the strategic leader to micromanage what he knows,
and learn only the surface issues of the other divisions. In doing so, the strategic leader
is jeopardizing his career and possibly the organization. The point here is not that
the new senior leader should become as knowledgeable as those who work for him or
her, but that they be able to ask the right, penetrating questions that create a learning
experience for him (as well as his organization), and prevent the proverbial “wool”
from being pulled over his or her eyes. In summary, strategic leaders must learn all
the areas of their business for which they are responsible and accountable.

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Personal Dimension: Behavioral Capacity
As noted in the previous segment, traits, values, and preferences can all heavily influ-
ence a leader’s behavior. A leader’s ability to exhibit flexible behavior that can adjust
to competing, confusing, and often uncertain situations, goals, and roles based on
the context of the moment is essential for exercising positive influences. As Zaccaro
cautioned, “Because organizational environments are complex and dynamic, a solution
that works in one problem scenario may be inappropriate or even counter-productive
in another. . . . Behavioral flexibility involves the ability to respond equally well to very
different situational demands.”39
In addition, the leader’s current habits will influence behavioral capacity. Habits,
similar to beliefs, are learned. Habits are useful—tying your shoes, combing your
hair, brushing your teeth, even how you perform specific tasks or processes at work.
They simplify an individual’s repetitive decisionmaking processes. For example,
learning to drive a car or a bike can be difficult in the beginning. Once one gets
into the “habit,” he or she can almost do it without even thinking. Therefore, habits
are useful in that they can allow a person to do a number of tasks at the same time.
Many people while driving to work with their mind preoccupied on something
else still arrived at work as planned. However, many people experienced driving to
some destination other than work and before realizing it, they were halfway to work
instead of their desired destination. This is an example of the power of habits—they
can very useful and they can be limiting. Consequently, a leader’s habits will reflect
specific, often unconscious behaviors that can either benefit or limit the leader’s
performance. Consequently, for the purpose of this book, behavioral capacity is the
ability of the leader to break habitual behavior patterns and embrace new behaviors,
as well as exhibit the behavioral flexibility needed to select and model appropriate
leadership behaviors that exercise positive influences on the strategic environment
(both externally and internally). Table 3b-6 illustrates a number of behavioral com-
petencies that can enhance strategic leadership performance.

C h a pte r 3 b  119
Table 3b-6. Examples of Behavioral Competencies

focus on both stability and balancing multiple work personality


innovation simultaneously combat and crisis leadership proactive more than reactive
inspire leadership with and conscientious relational competence
through others
decisive requirements and responding
make the tough calls well to significantly different
desire feedback
adaptable with a disposition situations
toward openness and flexibility emotional fortitude (taking a
stand) risk taker
balancing competing leader sense of humility and humanity
roles energetic
imaginative tactful vulnerability
locus of control
inspiring personal belief systems

manage conflict

Keep in mind that each of the listed competencies by themselves is not sufficient
for strategic leadership success. Each of these competencies, when integrated with
appropriate social and cognitive capacities, can establish the necessary synergy for
those actions necessary for successful strategic leadership: “Cognitive capacities
provide the rationale for organized executive leader action, whereas behavioral or
social capacities provide the means of implementing planned actions in complex
social domains.”40
Behavioral capacity, in concert with social capacity, offers the strategic leader “a
broad response repertoire and the cognitive capacity to adjust and match behaviors to
particular social demands.”41 The more successful strategic leaders are those who are
able to take their repertoires and apply specific, appropriate role behaviors to a specific
situation—in other words, the desired behavior matches the situational role require-
ment. Strategic leaders must operate in a variety of domains, each with different role
requirements—some of which may be in potential conflict. Examples of different role
requirements include leading, managing, integrating, and coordinating a number of
organizational companies, divisions, or units. Strategic leaders must work with and
exercise influence with a variety of strategic stakeholders (for example, partners, sup-
pliers, outsourcing organizations, alliances)—each with different perspectives and
expectations for the leader and his or her organization. Moreover, they have to deal
with the conflicting behaviors of maintaining stability, while continually seeking to
lead necessary organizational change initiatives that take advantage of new opportu-
nities, and thus, sustain the organization’s viability and vitality—while operating in
a VUCA environment.42
The behavioral repertoire provides the strategic leader with a portfolio of lead-
ership roles. The ability to perform effectively in a wide variety of different, situ-
ationally dependent roles defines the term behavioral differentiation. Even with the

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potential for many of the roles to be contradictory, “Research supports the idea that
managers who perform multiple and competing roles are more effective than those
who do not.”43 A key point to keep in mind is that this behavior repertoire and its
differentiation are significantly more complex than at the operational or tactical
levels. Consequently, as with cognitive and social capacities, a leader’s behavioral
capacity must expand and be able to handle the behavioral complexity inherent at
the strategic level.
Some of the examples previously listed stressed the influence of strategic leader
behaviors while fulfilling such essential responsibilities as scanning the environ-
ment, sense-making, risk-taking, having a positive or pessimistic attitude, formu-
lating strategy, and decisionmaking. A strong locus of control, for example, helps
enable the strategic leader to achieve the self-confidence to handle the volatile and
uncertain situations faced. An appropriate propensity for risk-taking behavior, for
example, could encourage creativity and the use of innovative approaches to for-
mulate strategy, allocate resources, and in decisionmaking. Such behaviors would
influence the strategic leaders’ abilities to negotiate, develop alternative solutions,
enable others to act, manage conflict, and enhance the ability to persuade and
influence others.

Dietrich Dorner’s Simulation Game—A Mini Case Study44


Dietrich Dorner developed a computer simulation game to study and evaluate manage-
ment decisionmaking. Participants in the game included the strategic leaders governing
the fictitious country “Tanaland.” The participants were able to take whatever measures
they deemed appropriate to ensure the well-being of Tanaland. They were essentially
unbounded on the range of available options, including building new or repairing old
infrastructures, enacting legislation, and introducing or expanding technologies. There
were six sessions in the game and they received any information needed and were
unrestricted in decisionmaking.
In the early stages of the simulation, the strategic leaders (participants) spent most
of their time ascertaining the country’s problems and assessing how to address them.
They formulated strategies, conducted significant planning, and allocated resources
while attempting to solve the country’s identified problems. As the game proceeded,
the leaders moved from the strategy and planning mode to the execution mode. They
focused on implementing their planning initiatives, while looking for immediate results.
Their behavior reflected confidence and decisiveness.
While generally enthusiastic regarding their strategies and planning, they showed
little interest in gathering feedback and reviewing what was working and what was
not—again their primary focus was taking the actions developed during the initial ses-
sions of the game. The result was that despite the availability of ample feedback, they

C h a pte r 3 b  121
were unable to evaluate the efficacy of their planning and decisionmaking—and failing
to make necessary adjustments due to the changing circumstances.
The majority of the “participants failed to consider the interrelated consequences
of their actions—for instance, that improving medical care and agricultural practices
would lead not only to a healthier, longer-lived population, but also to increased birth
rates and resource consumption levels. Most were surprised when famine set in a few
years after the improvements were implemented.”45
In the latter stages of the game, as the country’s problems became progressively
worse, participants suffered from “learned helplessness” and their behavior became
increasingly “apathetic in their responses.” As a result, “the consequences were
generally catastrophic. . . . These managers primarily displayed an orientation toward
immediate results and an inability to move beyond original plans. Dorner argued that
these behavioral flaws characterized real-world decision makers.”46

—Pause—Take a moment to reflect on the below questions. Note your initial thoughts
and insights.
1. Do you identify with the participants in the case study simulation? Do the lead-
ers within your organization make a point to demonstrate an inclusive behavior,
encouraging multiple perspectives and alternatives?
2. In your experience, do leaders want to be seen as decisive, regardless of the poten-
tial for being wrong? Do they jump to solving the problem prior to devoting the time
needed to identify clearly the many facets of the problem?
3. How did they behave when they faced wicked problems? Did their behavior (or
role modeling) enhance or detract from achieving the desired results?

Leadership Practice
As stated in chapter 2, the strategic leader through his or her leadership approach
facilitates, engages, and applies the knowledge, experience, and capacities embedded
within these five sets of personal dimensions. The perceptive leader may alter their
application based on his or her perspective regarding the context, urgency, magnitude
of risk, decisionmaking process and potential second- and third-order consequences,
and required immediate and long-term actions and implications.
Leadership scholar Henry Mintzberg suggested, “Style matters and context
matters, but mostly they matter together, in a symbiotic relationship.”47 Therefore,
to avoid confusion with the term leadership style, the term leadership approach
illustrates the strategic leader’s use of the other identified personal characteristics
(which includes his or her leadership style) based on the situation and context at the
moment these capacities, business acumen, and personal traits and characteristics
are applied.

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In addition to recognizing that each of the personal dimensions are interrelated
with the others, as a leader progresses to the strategic level, each of these personal
dimensions must become broader, more complex, and integrated—although “Per-
sonal Traits, Values, and Preferences” less so than the other four. By such a growth
and maturation process, the strategic leader enhances his or her ability to success-
fully lead and manage in a VUCA environment. As Harvard’s John Kotter reported
in his study of strategic leader careers, “The most effective GMs [had] careers char-
acterized by almost constant growth in their interpersonal and intellectual skills,
in their knowledge of the business and organization, and in their relationships with
relevant others.”48

Self-awareness and Personal Learning


Arguably, the most important ability and skill needed by a strategic leader is self-
awareness. It is the key for leaders needing to expand their personal dimensions
through fine-tuning and acquiring new personal skills, as well as effectively deploying
those abilities already possessed. As Larry Bossidy, former Chairman and CEO of both
AlliedSignal and Honeywell, stated, “Know thyself—it’s advice as old as the hills, and
it’s the core of authenticity. When you know yourself, you are comfortable with your
strengths and not crippled by your shortcomings. . . . Self-awareness gives you the
capacity to learn from your mistakes as well as your successes. It enables you to keep
growing.”49 Bossidy further explained that when “you know yourself, you can master
yourself.”50 Unfortunately, as Daniel Goleman cautioned, “the higher up the ladder a
leader climbs, the less accurate his self-assessment is likely to be.”51 He contended that
leaders who have reached the senior level have difficulty receiving candid feedback
from both subordinates and other senior-level employees.

Personality Assessment
One of the great opportunities for both professional and personal growth by strate-
gic leaders is to gain insights into their personality. There are a number of excellent
personality assessment instruments available as tools to gain important insights into
personality, identify their strengths and weaknesses, and support personal develop-
ment. For example, one of the more popular instruments is the Myers-Briggs Type
Indicator instrument. Some organizations will use the DISC basic personality types
model (dominance, influence, steadiness, compliance). Perhaps the most popular
model used by researchers and psychologists is “The Big Five”—a commonly used
term for the model describing the five fundamental factors of personality (surgency,
agreeableness, conscientiousness, emotional stability, and intellect).52 In the Dwight
D. Eisenhower School for National Security and Resource Strategy strategic leadership
program, the Executive Assessment and Development Program (EADP), provides a
comprehensive assessment.53

C h a pte r 3 b  12 3
Bill Knowlton and Mike McGee concluded:
•T  o endure as a leader, you must be clear about your strengths and weaknesses. A
leader must do continuous, candid self-examination to maintain clarity and balance.
•P  ower has a strong tendency to distort perception, especially of self. This is par-
ticularly true if the mix of one’s power motive is aimed at promoting self instead of
working for the organization.
• S uccess also makes self-examination difficult. Why change or develop if you’re being
successful, getting promoted, and getting ahead?
Much of how we deal with these dynamics—power and success—has to do with
our maturation level, especially how truthful we are with ourselves. We must be mature
enough to recognize and work constructively against our tendencies to filter or ignore
information, our preferences in decisionmaking, and the personal idiosyncrasies we
exhibit to the rest of the world.54
It is not possible to provide readers the opportunity to experience the EADP
process. However, a representative sample of a self-administered and self-scored Big
Five instrument is available online at the Web site <http://www.outofservice.com/
bigfive/>. (Note: Neither the author nor National Defense University is endorsing
this site or the use of any specific instrument; the information provided is for general
interest only.)

Comfort Zone
Through people’s beliefs, thoughts, assumptions, values, and habits, they develop
a comfort-zone mosaic—that is, an environment within which they can operate
comfortably. They create an image of how they believe things should be. They may
not necessarily like it, but this mosaic is comfortable for them. For example, have
you ever walked into the wrong bathroom? How did you feel? Most likely, you
immediately took action to get out of there. Why? It wasn’t right for you; you did
not feel comfortable in that environment. The fact that you had the potential to use
the facility was not at issue—instead, it was not right for you. This is an example of
where your comfort zone prevented you from using your potential, even when you
really had the desire.55

—Pause—Take some quality time to reflect on your assumptions, beliefs, habits,


and comfort zones to determine which ones add value to your life and which ones
limit you. Keep in mind that your beliefs, assumptions, and habits can also create
blinders or reduce your ability to perceive alternative strategies, ways of thinking,
making decisions, taking action, and growth.
1. As you reflect, examine your environmental comfort zones. How are they restrict-
ing you from taking advantage of your talents, skills, and potential? The key issue is

124   L e a d in g a t t h e S t r a te g i c L eve l
to determine strategies (for example, goal setting, visualizing yourself as successful
in the new environment) that will enable you to stretch your personal comfort zones.
2. The following are examples of self-limiting beliefs. Do any resonate with you?

SELF-LIMITING BELIEFS
I can’t do it because I don’t know enough I can’t afford to take the risk.
about it. My spouse won’t go along with the idea.
I’m too old. People will think my idea is nuts.
I’m not in good physical shape. I need more confidence.
I can’t learn it unless someone shows me. I can’t do it that fast, within a year, so why try.
I’m not good on the computer. I’m not motivated enough.
I don’t have enough money.

Passion—Loving the Work You Do


What are you passionate about? This is an interesting question. Richard Chang, a CEO
of performance improvement training, describes passion as an emotion that:
fills you with energy and excitement, that gets you up in the morning and keeps
you awake at night. When you experience it, you lose track of time and become
absorbed in the task at hand. This passion creates personal intensity, uplifts you,
and inspires you. It heightens your performance and enables you to achieve
things you may never have dreamed possible. Most important, it holds the key
to your happiness.56
Chang explains that “If you have a passion for something, it strikes a chord in you.
It heightens your awareness, engages your attention, and kindles your excitement.”57
Motivational speaker Zig Ziglar argued that in today’s world, life is tough and
people will not perform at their peak level without passion. He explained, “You’re
going to fail, be taken advantage of, be disappointed by people you trust, disappoint
yourself, run out of resources—almost every day you’re going to encounter a good,
solid, logical reason why you ought to give up. And without passion, you just might.
That’s why passion is the prerequisite for peak performance.”58
Being in a strategic-level position is very demanding and stressful; the work often
appears to be endless. Each of the senior leaders interviewed for this book expressed the
importance of “loving what you do” for precisely this reason. Most indicated they had
a passion for their work. Consequently, it is critically important that strategic leaders
really know who they are and what makes them tick. What is important to them? What
are their assumptions, beliefs, self-images, and operating values? Are these elements
in alignment with the work they currently perform? Why or why not? What are their
personal strengths and weaknesses? Do they know how to utilize their strengths and
manage their weaknesses? Are they aware of potential derailers? They must be keenly

C h a pte r 3 b  12 5
aware of what is important to them, and what assumptions, beliefs, operating values,
and self-images they are bringing with them.

—Pause—Take a moment to reflect on the below questions. Note your initial thoughts
and insights. As you progress through this reflection process, it is important to chal-
lenge your assumptions. For example, an Army colonel stated that he loved being in
the Army. The question asked is, “Why?” He responded by saying, “I love helping the
young men and women to be more than they ever thought they could be.” In response,
“You don’t have to be in the Army to do that. You could do that in any organization.”
This is an example of challenging his basic assumption. Make sure the assumptions
on which you are basing your major life decisions are valid.
1. What do I have a passion for?
2. What is my purpose in life?

Personal Vision
A key factor for senior-leader success is to have an inspiring vision of where one is
going. An inspiring vision can accomplish a number of things. For example, visions
create meaning, commitment, and energy; establish a standard of excellence; bridge
the present and the future; clarify purpose and direction; and establish a picture of the
ideal future.59 Ken Blanchard argued the importance of vision is that it gives a destina-
tion or end result. Smarter choices and decisions result when the leader has a vision in
mind: “Vision takes into account a larger picture than the immediate goal.”60 Though
Blanchard refers to an organizational vision, the three elements that he believes con-
stitute a compelling vision can apply to individual leaders are:
• S ignificant Purpose—Why is the leader doing what he or she is doing?
•P  icture of the Future—What is the desired end result?
•C  lear Values—How will the leader behave as he or she works to their purpose and
picture of the future?
Referring to personal visions, author Richard Bolles emphasized:
It is the vision, the picture of the life you really want, that you need to be con-
centrating on. It has the power to bring about the very change you desire. And
the more detailed the picture, the more it is fleshed out, the more power it has.
You make it more detailed by asking yourself such questions as: What is it that
I most want to be doing with my life? What are my unfulfilled dreams? What
hunches, what yearnings, do I have about why I was put here, on Earth? What
have I always put off for the future, that I ought to actually go after, now? 61
In creating a personal vision, the leader needs to keep in mind that the vision
must be emotionally more appealing than his or her current reality (comfort zone).

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Otherwise, the current reality will overpower one’s desire to accomplish the vision. To
do this effectively, leaders need to visualize the endstate with them in the picture. This
will build a compelling image in their mind that will help motivate them not only to
start the journey, but also to complete it.
Also important to achieving a personal vision is the strength of one’s passion.
Passion helps provide the emotional energy to pursue the vision. Without passion or
desire, Judith Sills argued that “Your vision would be only static imagery, absent the
magnetic pull that coaxes you to take risks and face fear. Without that concrete vision,
though, your desire may be reduced to a restless, unfocused yearning. . . . Think of the
vision you create as a concrete expression of your heart’s desire.”62 Thus, visions are
general and give energy and inspiration. Goals, however, are specific and give people
the means to achieve the vision.

—Pause—Take a moment to reflect on the below questions. Note your initial thoughts
and insights. Take a few minutes and reflect on what your vision for the future looks like.
1. Do you have a vision? Is it inspiring? Is it clear or fuzzy? Is it achievable? For
example, you may have the vision to be the center for the Los Angeles Lakers profes-
sional basketball team. However, even though you may be able to play basketball,
if you are only five feet 10 inches tall, it is not realistic to expect success in achieving
this specific vision. So reflect and jot down what a desirable realistic future would
be for you.
2. What do you see yourself doing? Why is this important to you? How does this
vision add value to others? Is it strong enough that when you run into obstacles and
setbacks, it provides sufficient commitment, resilience, drive, and perseverance to
work your way through the setbacks and keep going to your desired destination?

Learning and Personal Growth


In addition to self-awareness, to grow or gain wisdom in any of the personal dimen-
sions discussed in this chapter requires personal learning and reflection. While some
people may consider experience the best teacher, experience without reflection and
discovering how to perform better result in little or no actual learning taking place.
Consider driving a car. One could suggest that a person driving a car for more than 30
years will, most likely, not be a better driver than he or she was after driving 10 years.
Noted earlier in the cognitive capacity segment of this chapter (part I), reflective
thinking is a valuable skill that can enhance the quality of a strategic leader’s thinking
processes, problem-solving, and decisionmaking. It is essential for a strategic leader
to learn and grow, and reflection is essential for that growth, as is gaining wisdom. As
General Chuck Krulak, former commandant of the U.S. Marine Corps, explained,
“You must take the time to reflect. You need to ask yourself, ‘What am I doing and
why? What are the measures of effectiveness for my organization?’ This will enable
leaders to create an environment for personal growth.”63 Some examples identified

C h a pte r 3 b  12 7
by the leaders interviewed for this book included creating a personal environment of
constant learning; reading and writing; and taking advantage of all available opportu-
nities. These leaders said that they reflect while sitting in traffic, driving during a long
road trip, running, listening to music, or while seeking counsel. Continuous learning
and reflecting help to create fresh ideas and stimulate new insights.
Creating an environment of constant learning is essential for personal growth
and development. While creating a learning organization is important, the strategic
leader must also create a personal environment that supports constant learning. Renee
Acosta explained, “You must categorize yourself as a lifelong learner. You do this by
constantly incorporating and inculcating what you hear.”64 This requires the strategic
leader to seek collaboration from individuals both inside and outside of their organi-
zation. Acosta refers to these individuals as “corporation friends.” She tells them her
thoughts and strategies, and they give her objective advice on how to grow. By doing
this, Acosta is creating an environment that allows her to learn constantly about both
her internal and external environment.
Reading was the overwhelming consensus best method for personal growth. A
number of the leaders made a point to mention that most of their reading away from
work had nothing to do with their organization or industry. Bob Stone explained,
“Reading about things out of your purview will give you a wider understanding of
your surroundings.”65 Similarly, General Casey noted, “I read every night before I went
to sleep and found that it had the added benefit of slowing a mind that was spinning
with the events of the day down to the point I could get to sleep. I read a wide variety
of books, from T.E. Lawrence’s Seven Pillars of Wisdom to David McCullough’s 1776
to Stanley Karnow’s Vietnam: A History. All stimulated useful insights.”66 This cre-
ates opportunities to see how other people think, improves understanding of unique
circumstances, and predicts what is on the horizon. Strategic leaders need to have a
healthy intellectual curiosity in order to be successful. Reading outside of their typi-
cal expertise area helps to stimulate their synthesis abilities, while also encouraging
innovation and novel thought patterns.
Bob McDonald summarized, “It is important to read and constantly challenge
yourself. Challenge yourself with reading and dialectic. When you read, you shouldn’t
just read to read. You should read to reflect.”67 Another tactic fostering personal growth
is taking advantage of opportunities. Jay Sloan, President of JJ Sloan & Associates,
explained that he makes an effort to get involved with everything that presents itself as
a task worthy of his attention and understanding. He explained, “I go where I am called
and do not say ‘no’ to opportunities.”68 This thirst for seeking opportunities allows
leaders to experience new and challenging endeavors that reveal their strengths, and
most importantly, their weaknesses. Having a high-level of self-awareness and being
able to identify and work on one’s weaknesses are important catalysts for personal
growth both in life and in business.

12 8   L e a d in g a t t h e S t r a te g i c L eve l
Research suggests that for learning to take place, four key processes are required:
•P
 aying attention to cues
•E
 motional learning—experiencing new or different emotions related to the cue
•R
 eflection or sense-making—reflection is looking back and reinterpreting past
events, whereas sense-making is constructing, deconstructing, and reconstructing
meaning associated with the cues
•B
 ehavioral change resulting from the first three processes.
While behavioral change does not necessarily have to take place in a learning situa-
tion, behavioral change will not happen without the three other steps taking place.
As a fictitious example, Marty, a college faculty member, receives two end-of-
course student critiques suggesting he uses too many PowerPoint slides and cuts off
student discussion. If Marty believes the two students were outliers and discounts their
feedback, no learning takes place, as his behavior in the classroom will not change. If
Marty received similar critiques from other students the preceding 5 years, then it is
safe to say that Marty has a blind spot. However, if Marty pays attention, manages his
initial negative reaction to the critiques, evaluates and makes sense of what the two
students are saying, and changes how he handles the classroom accordingly, he learned
from this feedback experience and modified his behavior appropriately.
In the first example, Marty simply processed information based on his belief system,
mental models, emotional orientation, and behaviors—or his living knowledge.69 Living
knowledge is a term representing what we currently know and do—our comfort zone.
Almost anything taking place within our comfort zone is known, and most people
desire to remain in their comfort zone rather than going outside of it to learn something
knew—and run the risk of becoming uncomfortable. Therefore, based on his knowledge,
Marty makes sense of the feedback and dismisses the feedback. In the second case, Marty
stepped out of his comfort zone and started to learn: “Learning involves making sense
of cues in a way that generates expanded living knowledge and is more difficult, slow
and energy-absorbing.”70 In view of the preceding, the definition of a learning process is
“Paying attention, processing emotions, making sense and taking action so that new or
changed constructs, beliefs, emotional orientations and/or behaviors are generated.”71
Learning something new that adds to an individual’s living knowledge is often
pleasurable, for example, reading a new book about an area with which one is unfa-
miliar, or an interesting biography. However, research indicates that real learning,
involving a change in personal beliefs, values, assumptions, and comfortable feelings,
even in those times of optimism and excitement can be distressing, even painful.
Leaving one’s comfort zone and giving up old beliefs, feelings, and assumptions often
produces anxiety and discomfort.72 This is an example of why individuals often resist
organizational change.

C h a pte r 3 b  12 9
Based on research, there are four main drivers of people’s attention and learning:
• S elf-esteem—preserving, protecting, and enhancing one’s self-esteem.
•P  sychological comfort—the drive to achieve emotional well-being and psychologi-
cal comfort. This also includes the drive to meet one’s underlying “needs” such as
“being liked,” “gaining influence,” “developing my expertise,” and “helping others.”
It is when we are . . . [fulfilling] our underlying needs that we feel most [secure and]
comfortable.
•G  oals—achieving my goals, often by understanding “what works” in the world.
•V  alues—affirming and protecting my values in the world.73

Understanding how one learns and what motivates learning is important for
strategic leaders. The higher one goes in the organization, the greater the complexity
and uncertainty the leader will face, thus requiring the ability to learn.
Operating at the strategic level requires the strategic leader to engage shared learn-
ing. Author Karen Blakely explained that “Learning matters—everyone should take
responsibility for what they learn and how they learn. But the learning of leaders is
particularly important—the lives and well-being of thousands of people are affected
by the judgments and decisions of leaders.”74
Two additional areas of self-awareness and focus required of strategic leaders are
exercise and sleep. For example, General Casey points out that as leaders, “We tend
to push ourselves too hard and think that we can get by on less sleep than we really
need. In long operations, leaders have to force themselves to get the rest that they need
to be most effective.”
General Casey posits, “One of the toughest challenges for senior leaders is to sus-
tain their physical, mental and emotional fitness at levels that allow them to deal with
the hugely complex challenges confronting them.” Using the acronym REST (read,
exercise, sleep, and think), he summarizes, “Preserving your physical, mental, and
emotional strength is critical to the ability to lead at the strategic level.”75

Organizational Efforts to Develop Strategic Leaders


Nearly 40 percent of the leaders interviewed for this book stated that it is possible to
teach someone to be a good strategic leader. The remaining 60 percent emphasized
that while education and training can set the stage, the leader development process
must include experience and informed intuition. For example, General Richard Myers,
USAF (Ret.), former Chairman of the Joint Chiefs of Staff, explained:
You can teach strategic leadership up to a certain point. It is the combining of
education and training with experience that enhances leaders’ success at the
strategic level. If they understand the basic precepts, it gives them a much bet-
ter chance of being a strategic leader at some point in the future. If you provide

13 0   L e a d in g a t t h e S t r a te g i c L eve l
them with an understanding of the world they are walking into and make them
aware of it, they can succeed.76
Regarding experience, Vice Admiral Norm Ray, USN (Ret.), a senior executive
at the Spectrum Group and former President of Raytheon Europe, espoused, “The
background someone has can go a great way toward helping or hurting their chances
to succeed at the strategic level. These experiences will determine their familiarity
with the culture or bound them from advancing.”77
Another key factor identified by these interviewed leaders is developing informed
intuition (see part I of this chapter). These leaders suggested three approaches to
improving informed intuition. First, provide the leader with new roles. Often, remov-
ing someone from his comfort zone and placing him in a field with which he is unfa-
miliar can accelerate personal growth. Second, provide high potential individuals with
mentors, or advise them to find them. Make up for their initial lack of experience by
providing them with someone who has been in their shoes. Lastly, one must grant
those with high potential a high degree of autonomy. Dr. Kaplan, business consul-
tant and former Defense Information Systems Agency director, explained, “To grow
leaders, you must allow them to develop and to implement their ideas. This, however,
cannot be done uncritically, or their failure rate will be too high. So initially, when
they brief you, you ask them the hard questions forcing them to think through all
aspects of their initiatives—then you give permission to proceed. After a few successes,
they know how to analyze their own ideas, and they walk into your office with the
confidence that their new ideas are sound and will be productive. Now what have you
done? You have grown leaders.”78
General Michael Hayden, USAF (Ret.), now a Principal at the Chertoff Group,
described how he went about identifying, preparing, and developing strategic leaders
during his time as the Director of the National Security Agency: “We identified two
high potentials within the agency. We thought, ‘OK, they’ve proven themselves but
they are burning out.’ We brought them up early and we didn’t want to lose them before
their time had come. So we decided to send them overseas.” Expressing the importance
of international experience when developing government leaders, he continued:
We sent them both overseas. Those were good jobs. They were very important
jobs. They were growth jobs. They learned a lot more about themselves and a lot
more about a global signals intelligence system that works only with allies. We
then sent one of them down to Central Command and left him there for about
a year or two—always with the plan that they would then come back and be
the senior leadership; the next generation.79
Regardless of how busy strategic leaders may be, another learning approach is to
consider serving in some capacity within an organization very different from their

C h a pte r 3 b  131
own. For example, Kevin Cox, Executive Vice President for Human Resources for
American Express, encouraged his senior leaders to serve on boards of other compa-
nies and nonprofits. He explained the advantage he gained from sitting on Cornell’s
Board: “Now there’s eight or nine wise-heads sitting around, and you’re learning about
a different business, or you’re having breaks talking to other CEOs and whatnot.” He
noted that Ken Chenault, Chairman and CEO of American Express, who does not
have a COO, served as a board member for Procter & Gamble and IBM: “I mean, this
is a leader who’s really busy, and those are two big, complicated boards!”80 Not only
do these experiences build leaders’ awareness and familiarity with other industries,
but they also develop relationships and connections between executive leaders that
enhance growth potential.
With the increasing requirement in the VUCA environment for organizational
partnerships and alliances, the networking of organizations with common interests
and objectives requires the strategic leaders to understand clearly the value proposi-
tions and organizational cultures, workings, and capabilities of their partners. Con-
sequently, in developing leadership approaches that enhance an aspiring or current
strategic leader’s ability to perform at the senior level, leaders should study, analyze,
and evaluate what it takes to be successful in these different organizational entities,
and create the leadership model(s) that will be most effective in their specific strategic
leadership role. For example, government and military leaders will learn from leaders
in business and nonprofits, but also business and nonprofit leaders will learn from
leaders in government and the military. The result of this learning will be leadership
that is more aware, capable, confident, and deft at navigating an increasingly interde-
pendent and complex milieu.

Learning from Failure


Mark Gerencser explained that failure is how individuals grow in their job and develop
intuition. He stated, “The strategic leader must create an environment where initia-
tives are rewarded and failures accepted, because there will always be failure.”81 In a
2012 speech, General Martin Dempsey, Chairman of the Joint Chiefs of Staff, stated:
As we look at how we develop [leaders], I think it’s extraordinarily important that
we give them the opportunity to see what failure looks like so they can come to
the conclusion that it’s not something they like, and also come to the conclusion
that with the right attitude and the right work they can actually overcome it.82
Dempsey continued, “I think ultimately we continue to grow and develop mostly
through adversity.” British reviews following the 1982 Falklands War suggested that
those leaders who experienced adversity and remained successful in their careers per-
formed better than those who did not experience adversity and received outstanding
evaluations throughout their career prior to the Falklands campaign.83

13 2   L e a d in g a t t h e S t r a te g i c L eve l
Strategic leaders cannot expect people within their organization to develop an
informed intuition unless these leaders give them the autonomy to take initiative
without the fear of negative consequences for their potential mistakes. However, as
noted by a number of the interviewed senior leaders, failure is only acceptable in cer-
tain scenarios. Dave Zuercher, Executive Vice President of Wells Fargo, differentiates
two types of failure—one that is acceptable and one that is not. He stated, “There are
two types of mistakes. First, are the mistakes made with the right intention and proper
diligence? Second, are the mistakes made with the right intentions but without the
proper diligence? They are rewarded if the mistake is made with the right intentions
and the proper diligence.”84

Lack of Knowledge and Expertise


It is easy for novice strategic leaders to spend significant time in a functional area in
which they have a lot of experience—that is their comfort zone. However, unlike the
operational leader, the strategic leader needs to understand all the functions of the
organization, including those that are unfamiliar. If the strategic leader once devalued
an organizational function in the past, for example, human resources, but now “owns”
it, the strategic leader could undervalue its importance and limit its effectiveness.
Understanding the organization’s business takes work; it means asking many ques-
tions, admitting ignorance, and finding trusted advisors who can fill in the blanks.
It is tempting for some to bluff their way through rather than invest the effort and
perhaps sacrifice some of their ego in order to understand the core processes needed
to be effective.
For example, when General Chuck Krulak retired as Commandant of the U.S.
Marine Corps, he became Chairman and CEO of MBNA Europe. He knew leader-
ship and management, but he was unfamiliar with the financial industry. At his first
meeting with the leadership team, he walked in and said, “Look, let me start with this
premise: Everyone around this table has forgotten more about finances than I know.
What I am going to ask you to do is give me your best advice, unfettered, honest, with
absolute integrity at every turn. Don’t worry about hurting my feelings; don’t worry
about hurting your career. That’s not going to happen. I didn’t come here to screw it
up. I came here to make right decisions, and you’re going to be very helpful in that.”
He made the point that if he hadn’t had the first meeting, his efforts, most likely, would
be worthless. He states, “If I hadn’t gone in there and just bared my soul, if I had gone
in there and tried to fake it like I knew something, I think I would have gotten in
trouble, not because they would want me to get in trouble, but they would have said,
‘He knows that.’ As a result of my going in and saying, ‘You’ve forgotten more than I
learned,’ they were very, very supportive. When they came in, it was Finance 101 for
the first 6 months on all the decisions.” He made it clear that to be successful, “You’ve
got to know the business of the business. You have to know it. You don’t have to be

C h a pte r 3 b  13 3
smarter than everybody in every particular area, but you better know the business of
the business.”85

Evaluating and Selecting Strategic Leaders’ Performance


Most people rotated into senior, challenging positions are in these positions for
approximately 2 years. It is difficult to evaluate performance of these leaders, as the
results for most of their decisions will be unknown until one or more years later. In
evaluating performance for possible selection to the strategic level at Procter and
Gamble, Bob McDonald noted that when looking at people who are going to be on
the executive team, he looks at their performance during a 5-year period. He looked at
whether or not the performance fell off after the leader left the position. He explained
that a specific leader may successfully ride the coattails of the person before him rather
than make a significant contribution; or maybe he did contribute, but did not set up
a system of work that was sustainable by the next person coming into the position.86

Summary
In the first segment of this chapter regarding the strategic leaders’ need for complex
mental models and frames of reference, it is important to recognize that to build
these complex mental models requires learning. Without a complex mental model,
when faced with a complex problem or set of problems, one will not have a strong
enough mental model to interpret the information or even “see” what is occurring.
Consequently, the more mental models the leader learns, the broader and better the
capability to “see around corners,” to visualize where to take the organization, and
the more varied the interpretations available—thereby developing a richer cogni-
tive capacity.
This chapter, parts I and II, provided an examination of the five personal dimen-
sions that any strategic leader “brings to the table” in his or her leadership role. The
comprehensiveness, depth, and quality embedded in each of these five domains, as
well as how well the strategic leader is able to integrate and apply them in the VUCA
environment, will go a long way to determine the relative success experienced dur-
ing his or her tenure. However, to take full advantage of what the leader brings to the
organization requires the leader to have a high degree of objective self-awareness and
understanding. The latter discussion in this chapter provides insights and techniques
that may prove useful for a strategic leader desiring to improve his or her abilities in
each of the five domains. Therefore, it is critical to restate the value of strategic leaders
having a strong sense of self. These leaders need to understand what is important and
meaningful to them and to take actions that support their passion while doing what
they love to do.

13 4   L e a d in g a t t h e S t r a te g i c L eve l
Notes
Personal communications with Linda Washington, Assistant Secretary for Administration, Depart-
1

ment of Transportation, 2008.


2
David Day and Charles Lance, “Understanding the Development of Leadership Complexity Through
Latent Growth Modeling,” in Leader Development for Transforming Organizations, ed. David Day,
Stephen Zaccaro, and Stanley Halpin, 46 (Mahwah, NJ: Lawrence Erlbaum Associates, 2004).
3
Michael Lombardo and Robert Eichinger, FYI: For Your Improvement, 5th ed. (Minneapolis: Lominger
International, 2009), iv.
Personal interview with VADM Ann Rondeau, former President of NDU; former Deputy Com-
4

mander, U.S. Transportation Command.


5
Gary Yukl, Leadership in Organizations, 7th ed. (Upper Saddle River, NJ: Pearson Education, 2010),
211.
6
Ibid.
7
Ibid., 214.
8
Manuel London and Todd Maurer, “Leadership Development: A Diagnostic Model for Continuous
Learning in Dynamic Organizations,” in The Nature of Leadership, ed. John Antonakis, Anna Cianciolo,
and Robert Sternberg, 228 (Thousands Oaks, CA: Sage, 2004).
9
Michael Lamb and Scott Spreier, “Emotional Intelligence—Leadership prescription for tough
times,” HayGroup, 2008, available at <https://www.haygroup.com/downloads/be/Emotional_Intel-
ligence_Leadership_prescription_for_tough_times_FINAL.pdf>.
Richard Boyatzis and Annie McKee, Resonant Leadership (Boston: Harvard Business Press, 2005),
10

28.
11
Personal interview with Rondeau.
Annie McKee and Dick Massimilian, “Resonant leadership: a new kind of leadership for the digital
12

age,” Journal of Business Strategy, 27, no. 5 (2006), 45.


13
Ibid., 48.
Personal interview with Ted Leonsis, Chairman and CEO of Monumental Sports & Entertainment—
14

owns and operates the Washington Capitals (NHL), Washington Wizards (NBA), Washington Mystics
(WNBA), and Verizon Center; former AOL senior executive; venture capital investor; filmmaker and
digital entrepreneur; philanthropist; and author of The Business of Happiness.
See <http://academic.evergreen.edu/curricular/goodevil/Hurst,Percent20LecturePercent20onPerc
15

ent20Baumeister.doc>.
16
Boyatzis and McKee, 4.
17
Brian Tracy and Ron Arden, The Power of Charm (New York: AMACOM, 2006), 3.
Nicholas Boothman, How to Connect in Business in 90 seconds or less (New York: Workman Publish-
18

ing, 2002), 57.


19
Ibid., 16.
20
Ibid.
21
Tracy and Arden, 12.
22
Ibid., 17.
23
Ibid., 38.
Dan Baum, “Battle Lessons: What the generals don’t know,” The New Yorker, January 17, 2005, avail-
24

able at <www.newyorker.com/archive/2005/01/17/050117fa_fact?currentPage=all>. To see a partial

C h a pte r 3 b  13 5
video of this incident, see <www.cbsnews.com/video/watch/?id=1409048n&tag=related;photovideo>.
“LTC Christopher Hughes in Iraq: No Slack Soldiers Take a Knee,” available at <http://usacac.army.
25

mil/CAC2/CAL/lessons_in_leadership/No_slack_Soldiers_take_a_knee.doc>.
Bill Knowlton and Mike McGee, Strategic Leadership and Personality: Making the MBTI Relevant
26

(Washington, DC: National Defense University, 1994), 4.


27
Personal interview with Rondeau.
Unless otherwise noted, the information regarding this case study was derived from the author’s
28

personal interview with Ted Leonsis, who was a major investor in Google pre-IPO.
Clifford Coonan, “Google set to pull out of China over censorship,” The Independent Asia, March
29

22, 2010, available at <www.independent.co.uk/news/world/asia/google-set-to-pull-out-of-china-over-


censorship-1925052.html>.
Jessica Vascellaro, “Brin Drove Google to Pull Back in China,” Wall Street Journal, March 24, 2010,
30

available at <http://online.wsj.com/article/SB10001424052748704266504575141064259998090.html>.
Ibid.
31

32
Personal interview with Leonsis.
33
Vascellaro.
34
Personal interview with Leonsis.
35
Ibid.
36
Ibid.
37
OPM, “Executive Core Qualifications (ECQs),” available at <www.opm.gov/ses/recruitment/ecq.asp>.
Personal interview with Mark Gerencser, Executive Vice President, Booz Allen Hamilton, co-author
38

of Megacommunities.
Steve Zaccaro, The Nature of Executive Leadership (Washington, DC: American Psychological Asso-
39

ciation, 2001), 293.


40
Ibid., 147.
41
Ibid., 140.
42
Ibid., 151.
Abraham Carmeli and Meyrav Yitzack Halevi, “How top management team behavioral integration
43

and behavioral complexity enable organizational ambidexterity: The moderating role of contextual
ambidexterity,” The Leadership Quarterly, vol. 20 (2009), 210.
For more in-depth description and discussion regarding Dorner’s simulation game, see Dietrich
44

Dorner, The logic of failure: recognizing and avoiding error in complex situations (New York: Metropolitan
Books, 1996).
Dawn Gilpin and Priscilla Murphy, Crisis Management in a Complex World (New York: Oxford
45

University, 2008), 130.


46
Ibid.
47
Henry Mintzberg, Managing (San Francisco: Berrett-Koehler, 2009), 130.
48
John Kotter, The General Managers (New York: Simon and Schuster, 1986), 135.
49
Larry Bossidy and Ram Charan, Execution (New York: Crown Business, 2002), 81.
50
Ibid.
Daniel Goleman, Richard Boyatzis, and Annie McKee, Primal Leadership (Boston: Harvard Business
51

School Press, 2002), 92.

13 6  L e a d in g a t t h e S t r a te g i c L eve l
There are a number of Big Five instruments, some with different terms. The Big Five was originally
52

derived in the 1970s by two independent research teams—Paul Costa and Robert McCrae at the
National Institutes of Health, and Warren Norman at the University of Michigan/Lewis Goldberg at
the University of Oregon. Represented here are factors and terminology used by Goldberg. The terms
and factors used by Costa and McCrae are extraversion, agreeableness, conscientiousness, neuroticism,
and openness.
For additional information regarding ESNSRS’s EADP process and battery of instruments, see
53

appendix D.
54
Knowlton and McGee, 5.
Lou Tice, Imagine 21 ~ Fast Track to Change, training program offered at the Library of Congress,
55

2002.
Richard Chang, The Passion Plan: A Step-by-Step Guide to Discovering, Developing, and Living Your
56

Passion (San Francisco: Jossey-Bass, 2000), xxvii.


57
Ibid., 16.
58
Zig Ziglar, Better Than Good: Creating a Life You Can’t Wait to Live (Brentwood, TN: Integrity Pub-
lishers, 2006), 3.
T. Owen Jacobs, Strategic Leadership: The Competitive Edge (Washington, DC: National Defense
59

University, 2005), 205–219.


Ken Blanchard and Jesse Stoner, “The Vision Thing: Without It You’ll Never Be a World-Class Orga-
60

nization,” Leader to Leader (Winter 2004), 21–28.


Richard Bolles, The 2006 What Color Is Your Parachute? (Berkeley, CA: Ten Speed Press, 2006), 89.
61

62
Judith Sills, Comfort Trap (New York: Penguin Group, 2004), 87.
Personal interview with General Chuck Krulak, USMC (Ret.), President, Birmingham-Southern
63

College; Board of Directors for Union Pacific and non-executive director for Aston Villa British Soccer
Club; former USMC Commandant; former Vice Chairman of MBNA and Chairman & CEO for MBNA
Europe Bank.
64
Personal interview with Renee Acosta, President & CEO, Global Impact.
65
Personal interview with Bob Stone, author and speaker. Former Director for Reinventing Government
for Al Gore; former Deputy Assistant Secretary of Defense for Installations; co-author of the book The
Ethics Challenge: Strengthening Your Integrity in a Greedy World and author of Confessions of a Civil
Servant: Lessons in Changing America’s Government and Military.
66
Personal interview with General George Casey, former Chief of Staff of the United States Army (2007
to 2011), and Commanding General, Multi-National Force–Iraq (2004 to 2007).
67
Personal interview with Bob McDonald, Chairman, President & CEO, Procter & Gamble.
Personal interview with Jay Sloan, President of JJ Sloan & Associates; former SES leader at Defense
68

Intelligence Agency: Director of Policy Support; Defense Intelligence Officer for East Asia and the
Pacific; Director of Estimates.
Much of this thinking is taken from Karen Blakeley, Leadership Blind Spots and What to Do about
69

Them (San Francisco: Jossey-Bass, 2007), 27–31.


70
Ibid., 31.
71
Ibid.
72
Ibid., 31–32.
73
Ibid., 34.

C h a pte r 3 b  13 7
Ibid., 61.
74

75
Personal interview with Casey.
Personal interview with General Richard Myers, USAF (Ret.), Holder of the Colin Powell Chair of
76

Leadership, Ethics, and Character, NDU; former Chairman, Joint Chiefs of Staff.
Personal interview with VADM Norm Ray, USN (Ret.), Spectrum Group Executive; former President,
77

Raytheon International, Europe; NATO Assistant Secretary-General for Defense Support.


Personal interview with Dr. Jeremy Kaplan, business consultant; former Director of Technical Inte-
78

gration Services at the Defense Information Systems Agency (DISA) and the DISA Chair for ICAF.
Personal interview with General Michael Hayden, USAF (Ret.), Principal, the Chertoff Group; former
79

Director of the Central Intelligence Agency; Principal Deputy Director of National Intelligence; Director
National Security Agency.
80
Personal interview with Kevin Cox, Executive VP for HR, American Express.
81
Personal interview with Gerencser.
Martin E. Dempsey, “Chairman of Joint Chiefs Praises New Defense Strategy,” Speech at Duke Uni-
82

versity, January 12, 2012, available at <http://today.duke.edu/2012/01/dempseytalk>.


83
Author attended briefing by British review team in 1990 noting this insight (presenter unknown).
Personal interview with Dave Zuercher, Executive Vice President, International and Insurance Ser-
84

vices, Wells Fargo & Company.


85
Personal interview with Krulak.
86
Personal interview with McDonald.

13 8   L e a d in g a t t h e S t r a te g i c L eve l
CHAPTER 4 | Environmental Dynamics1

The Strategic Leadership Model (figure 2-1) depicts the strategic leader at the
interface between the external and internal environments. This represents the
critical strategic leader’s responsibility to scan, analyze, and make sense of the
turbulent VUCA external environment as described in chapter 1. It is the external
environment that contains the “wicked problems,” paradigm shifts, black swans,
and conundrums that will ultimately challenge the leader at the strategic level.
In meeting this responsibility, the leader must evaluate threats—and opportuni-
ties—then formulate the appropriate organizational vision that takes advantage of
the opportunities and mitigates the threats. Concurrently, the successful strategic
leader scans and evaluates the internal organization to validate and adapt its pur-
pose, identify and put into place critical core competencies, and identify sustaining
resources, actions, and activities that contribute significantly to the organization’s
agility and adaptive capabilities.
The previous chapter examined the strategic leader’s personal dimensions that
influence his ability to perform successfully at the strategic level. Now our examination
turns to the work of strategic leaders. Since strategic leaders typically build and lead
strategic leadership teams to assist in performing the work examined in this chapter,
chapter 6 examines the building and roles of strategic teams.
Examples abound in both government and business/industry where leaders
either failed to grasp the implications of events taking place in the external envi-
ronment that affect decisionmaking or have done so with limited success. No one
leader has a perfect record—not Churchill, not Lincoln, not even Washington. As
leadership scholar T. Owen Jacobs cautioned, “While the strategic mandate is to
see, understand, interpret, and master [the VUCA environment], fulfilling that
mandate is anything but easy.” Moreover, the leader and his or her team must
assess and attempt to manage risk under such circumstances, which by definition
will be uncertain.2
This chapter examines strategic issues driven by external events faced by both
government and business/industry. It also addresses strategic analysis and leadership
competencies, including foresight, anticipation, pattern recognition, and development
of big ideas. It is beyond the scope of this chapter to suggest methods or approaches
that address the entire range of issues and challenges facing strategic leaders.

C h a pte r 4  13 9
This chapter examines the following:
•H
 ow does the strategic leader go about scanning the external environment?
•H
 ow does the strategic leader make sense of it?
•W
 hat obstacles impede the strategic leader from conducting effective strategic
analysis?
•W
 hat is vision and how does the strategic leader formulate organizational strategy?
The effective strategic leader must satisfactorily answer these questions for the
organization to survive and thrive. The most severe tests for strategic leaders occur in
circumstances where conditions change in so many areas that they are now face-to-face
with a potential game-changing problem. Some examples of strategic problems that
emerged during the first decade of the 21st century include 9/11, Hurricane Katrina,
and the Wall Street financial meltdown. Some authors describe these major unex-
pected shocks in the external environment as black swans. Black swans, as described
by author Nassim Taleb, have three main components. They are unpredictable, they
have massive impacts, and once they occur, individuals develop ways to make the
event appear less random and more predictable.3 In other words, these are situations
that are catastrophic to the stakeholders, seemingly appear with no warning, and,
most importantly, ultimately result in a new ball game—a “paradigm shift” in less
vernacular terms.
Potential problems originating from the external environment can swiftly and
powerfully change a business/industry’s or a government’s landscape. Strategic lead-
ers must not only navigate the external environment successfully, but also as they
formulate an organizational vision and strategy, they must be ever mindful of the
risks and cost-benefit tradeoffs.

Engaging VUCA with Agility


As mentioned throughout this book, the VUCA environment is one of the most
difficult issues that a strategic leader faces. One way to counter or at least mitigate
its effects is to create an agile organization. Strategic leaders must not only be agile
personally, but also build and sustain an agile organization to survive and thrive in
such an environment.
To be personally and organizationally agile requires effective environmental
scanning and sense-making, foresight, and risk analysis. These are the precursors to
formulating a vision, establishing priorities, formulating strategies to guide action,
and allocating resources; making the tough calls that translate strategy into action,
shape an appropriate and supporting organizational climate and culture, and ensure
organizational alignment and accountability; and, analyzing and revising as necessary.
Business analysts at McKinsey defined agility as an organization’s “ability to
change tactics or direction quickly—that is, to anticipate, adapt to, and react deci-

14 0  L e a d in g a t t h e S t r a te g i c L eve l
sively to events in the business environment.” Based on their 2006 survey, published
by the McKinsey Quarterly, the same analysts reported, “managers across all main
regions and industry sectors acknowledge the increasing significance of agility and
speed.” Furthermore, “Almost nine in ten respondents [89 percent] say agility is either
‘extremely’ or ‘very’ important to business performance, and 86 percent say the same
about speed.” Yet a significant number of executives (31 percent) acknowledged that
their organizations were less nimble than they should be.4
Based on research of business organizations that thrived in turbulent times, Don-
ald Sull, Professor at the London Business School and global expert on managing in
turbulent markets, identified three different types of agility. Specifically:
• Operational agility [reflects] a company’s capacity, within a focused business model,
to find and seize opportunities to improve operations and processes.
• Portfolio agility is the capacity to quickly and effectively shift resources, including
cash, talent, and managerial attention, out of less promising units [or initiatives and
into those having greater potential].
• Strategic agility is an organization’s capacity to spot and seize major opportunities
when they arise. Such opportunities include scaling a new business [or initiative],
aggressively entering a new market, betting heavily on a new technology, or making
significant investments in capacity. The agility to make a big bet quickly does not, of
course guarantee that the gamble will pay off. . . . But companies that avoid big bets
altogether risk falling behind more aggressive competitors.5
Sull described what he terms the Agility Loop. This loop emphasizes four steps
for a strategic leader to “advance into an unknowable future.” The four steps include:
•M
 ake Sense: Develop a shared mental map of a turbulent situation.
•M
 ake Choices: Agree on clear priorities to guide action and resource allocation.
•M
 ake It Happen: Ensure people make good on promises and deliver on their com-
mitments.
•M
 ake Revisions: Compare initial assumptions with experience, explore gaps, and
make midcourse corrections.6
Whether in business/industry or government, the process always begins with
effective scanning, interpreting, and sense-making. By scanning and making sense
of the available data, the strategic leader is better prepared to exercise foresight—nec-
essary for envisioning, developing a range of options, prioritizing, strategizing, and
decisionmaking. When operating in a government or multiagency environment,
however, even a good vision without the agility to reorganize toward greater efficiency
might not be good enough.
The government’s response to Hurricane Katrina is a case in point. With respect
to the environment, the “knowns” were troublesome; the approaching hurricane was
very large—and expected to grow as it approached the U.S. coastline. The design of

C h a pte r 4  141
the levees built to prevent the city of New Orleans (below sea level) from flooding were
for threats below category 5 hurricanes. The Federal Emergency Management Agency
(FEMA) and the Department of Homeland Security (DHS) did not hold the state and
local responders in high regard and were certainly not equipped to deal with a signifi-
cant break in the levees. Former Governor Tom Ridge, in his new role as Secretary of
DHS, tried in vain during his tenure to “regionalize” the DHS organizational structure
to better plan for and coordinate Federal, state, and local disaster response. By far his
most vocal opponent was the President’s appointed head of FEMA, Michael Brown.7

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. Have you run into situations within your organization where leaders refuse to
adjust contingency planning for the worst-case scenario?
2. What could these leaders have done better to prepare for this event?

Scanning the External Environment


The task of scanning the external environment is one of the most crucial responsibili-
ties of a strategic leader. Chairman and CEO of Procter and Gamble Bob McDonald
noted, “You have to look externally no matter what you do. The higher you go, the more
externally focused you have to be.”8 Some of the leaders interviewed stated they took
on this responsibility individually while others said that they built strategic leader-
ship teams to scan the external environment with them. Furthermore, General James
Cartwright, USMC, then–Vice Chairman of the Joint Chiefs of Staff and former Com-
mander of U.S. Strategic Command, emphasized, “You have to start looking external
to your organization if you are going to lead. Otherwise, you will be leading blindly.
Even when you are looking internally, it is for an external purpose.”9 Moreover, Cyn-
thia Valles, an Executive Vice President at American Express, noted, “The operational
side of leadership is really about making sure the daily operations are done according
to plan and on schedule. The strategic leader is not as focused on daily operations, but
on the big picture and making sure that the resources are provided for the next steps
of the organization’s future.”10
Dave Zuercher, Executive Vice President of Wells Fargo, noted that when his stra-
tegic leadership team is working on strategy, it is always looking outward. He stated,
“You can’t be complacent. You have to scan the external environment to be able to
understand what is going on out there. . . . But you also have to know what the forces
are that drive competitive organizations.”11 This can be a daunting and often multi-
faceted task. A number of the leaders interviewed indicated they delegated internal
scanning to subordinates while focusing solely on what is occurring outside of their
organizations. Bob Stevens, Chairman and CEO of Lockheed Martin, stated that “As
a strategic leader you spend more time looking externally. You must lift yourself up

14 2  L e a d in g a t t h e S t r a te g i c L eve l
and outside of your organization. It is your job to go outside of your enterprise and
look back in if you desire to operate successfully.”12 Consequently, in order to identify
the big picture and provide his or her organization with a powerful vision, the leader
must understand what is occurring outside of the organization.
As indicated by the senior leaders above, in such a volatile environment, the stra-
tegic leader’s ability to anticipate the future, to have that “sixth” sense that enables a
leader to “see around corners” or have “peripheral vision” is crucial to his ability to
have the organization survive and thrive. “Yet the periphery, by its nature, lacks clar-
ity,” Wharton Professors George Day and Paul Schoemaker noted. “It is uncertain
and capricious. The key is to quickly spot those signals that are relevant and explore
them further, filter out the noise, and pursue opportunities ahead of the competition
or recognize the early signs of trouble before they escalate into major problems.”13
Professor Chun Wei Choo defined environmental scanning as “the acquisition
and use of information about events, trends, and relationships in an organization’s
external environment, the knowledge of which would assist management in planning
the organization’s future course of action.”14 Scanning the environment should include
multiple methods and all levels of the organization, as well as stakeholders. Delegat-
ing environmental scanning and sense-making exclusively to a few people can lead to
missed environmental cues and misconstrued interpretations. Through the collabora-
tion, collection, and analysis of a variety of people and approaches, the strategic leader
reduces the chances of similar results depicted in the parable of the Three Blind Men
and the Elephant. Perhaps, if these blind men had collaborated, they would recognize
the elephant.
As with any unscientific approach, there are no certainties in environmental
scanning. Professor Brian Huffman, referring to Henry Mintzberg, noted, “Mintzberg
pointed out that a major problem with environmental scanning systems is that they
cannot predict one-time events (such as 9/11) because there are no patterns or causal
relationships from which to construct a model. We can predict the weather (however
imperfectly) because the same sort of weather happens over and over again. We have
learned that a falling barometer generally precedes precipitation.”15
Professor Huffman recommended that the entire organization be involved in the
scanning and sense-making process to be able to sense possible strategic inflection points.
Moreover, he suggested that “Line managers need to be brought together to use their col-
lective intuitions to synthesize a picture of future threats.” He also suggested, “Firms need
to have ‘broad and intensive debates’ or ‘think weeks.’” In addition, “More power needs
to be given to lower level managers who are the first ones to see the writing on the wall.”16
In short, strategic leaders must have lots of help in properly scanning their exter-
nal environment; and those doing the scanning share what they discover with others.
This will facilitate early identifiable opportunities and threats that can have massive
impacts on their organizations and constituencies.

C h a pte r 4  14 3
Seeing Around Corners
Scanning the external environment encompasses five major capabilities: seeing
around corners, sense-making, identifying risk, foresight, and pattern recognition.
The majority of the interviewed senior leaders revealed that they spend more than 50
percent of their time evaluating and dealing with the external environment. Much of
this time and effort directed to making sense is to anticipate, as Jack Welch, former
CEO of General Electric, stressed, “What’s around the corner.”17 In addition, these
leaders attempt to manage risk by looking for weak and unexpected cues or signals.
This requires almost perpetual vigilance, which is essential to maximizing opportu-
nities and mitigating threats before they become severe. The capacity to see around
corners—to anticipate changes in the external environment—is a critical strategic
leader competency. How well leaders and their teams see the reality of the strategic
environment will depend on the sophistication and complexity of their mental models
and frames of reference (examined previously in chapter 3, part I). It is through these
mental models that leaders and their teams are able to make sense of the environment.
While conducting strategic analysis, including identifying strengths and weak-
nesses in the internal environment and evaluating potential opportunities and threats
in the external environment, the strategic leader develops his or her construed strategic
reality. Based on this strategic reality, leaders are better prepared to generate the big
ideas, evaluate alternative strategies, and then adapt the organization’s vision, purpose,
mission, and strategic objectives, as appropriate.
Strategic leaders must realize they are often far removed from the day-to-day
line operations of their organizations—where, significantly, interaction with and
appreciation for the external environment can be the greatest. Unfortunately, lower
level leaders and their organizational members often work in a compartmentalized
environment. Thus, they typically do not have access to the information outside of their
“silos” that is essential for them to synthesize a complete picture of the environment or
any emerging strategic inflection points (a point of massive change). The response to
the threat of direct attacks on the U.S. homeland by international terrorists illustrates
this point. In the 9/11 Commission Report, both the Central Intelligence Agency and
Federal Bureau of Investigation had pieces of critical information, but the National
Security apparatus failed to create the necessary full picture to enable the President
to take preventive action.

Influencing What the Leader Sees


A leader’s beliefs, assumptions, biases, frames of reference, and blind spots will influ-
ence both what the leader “sees” (or does not see) and its interpreted meaning. Since
changes in the strategic environment are often new, attempting to connect the dots in
a changing environment can be difficult. In some cases, two or three of the dots may

14 4  L e a d in g a t t h e S t r a te g i c L eve l
work in one mental model, but are really part of a more complex mental model. In such
cases, the leader may be tempted to make a snap judgment based on an inappropriate
mental model, resulting in seeing a totally different picture.18

Sense-making
It is intuitively obvious that making sense of disparate data in the external environ-
ment requires that the leader doing the scanning actually “notice” something that
piques interest for further exploration. If those leaders performing the scanning func-
tion do not notice, they will be unable to make sense of what is going on relative to
those elements. Therefore, sense-making is taking notice of specific, relevant elements
resident in the external environment. Gaining the “cue” from the external environment
alerts the observer that something is amiss, is surprising, or is something to explore,
and through that cue, attempts to interpret what is going on. Is this something new?
Is this an anomaly? The observer will attempts to reconcile what he or she sees with
existing frames of reference and mental models. By connecting the cue to the appro-
priate frame of reference, meaning is constructed.19
Strategic leaders, therefore, must recognize that strategic environmental sense-
making results are most likely suggestive rather than prescriptive. Scanning the envi-
ronment and sense-making are essential to efforts that inform strategic leaders to
issues while these still have minimal impact on the organization. Doing so allows the
strategic leader sufficient time to take advantage of possible opportunities, as well as
to develop strategies that can mitigate possible threats. (For the U.S. Government, this
clearly was not the case prior to 9/11.)
Yet as was observed in 9/11, the fall of the Berlin Wall, and other “game-changing”
developments, a key challenge is to find the dots in the first place. Strategic leaders need
to develop approaches and efforts to identify weak signals and the ability to ascertain
those requiring attention: “Weak signals are weak because they are easily obfuscated
by other factors, including current mind-sets, attitudes, and biases of those involved
in the search for the future.” Moreover, “Weak signals are deemed weak not because
of lack of importance,” authors Harris and Zeisler noted, “but because they are so
small as to be obscured by other irrelevant factors or dismissed as inconsequential by
quantitative extrapolations. They are . . . very important, because recognizing them
may make the difference between success and failure of an enterprise.”20

Identifying Risk
Effective sense-making is also crucial to identifying and evaluating risk. First, one
must perceive some inherent risk during the scanning and interpreting process. Fail-
ing initially to identify a risk may curtail additional scrutiny and analysis. In other
words, the initial phase of risk management involves identifying what to pay attention
to, what to ignore, what to take for granted, and what requires further questioning.

C h a pte r 4  14 5
Perhaps the quintessential example of the failure of whole governments to identify
accumulating risk is the financial collapse of Wall Street.

Wall Street—An Example21


Prior to the 1929 collapse of Wall Street, there was an imbalance between democracy
and capitalism. Capitalism got out ahead of public accountability and generated the
greatest financial meltdown in the history of the country. The government’s response in
creating new institutional mechanisms—followed by the need to prepare the economy
for World War II—produced a new balance and stability to this relationship. Government
planning became the rule.
The decades following World War II included a series of events—globalization,
deregulation, changes in the mortgage lending rules—that eventually led, once again,
to markets getting out of control. The financial crisis that followed became both a
government and business/industry crisis. The meltdown revealed two strategic flaws
in the system: First, there was a failure to recognize the perfect storm that was about
to hit, and consequently its ramifications. Second was the enormous difficulty facing
government leaders in both understanding and explaining to the public what happened
and what to do about it.
The meltdown was a “wicked problem” that did not just affect the financial industry,
but an entire economic system. The pieces that lead to failure were all there. Yet with
only a few prior failures at the time, there was no sense of urgency because leaders did
not foresee the potential for a systemic collapse. The packaging of mortgage securities
based on both high- and low-risk components, but labeling the instrument as low risk—
compounded by the willingness of insurance companies to provide coverage based on
trust in the investment banks—provided the fuel for this collapse. Bad mortgages pro-
liferated, the banks began to collapse, and the meltdown unfolded. Given that overseas
investors (for example, China, European nations, and Japan) owned a significant amount
of U.S. Treasury notes, the approaching storm arguably had the most stakeholders of
any financial crisis in history.22 Inadequate scanning by leadership teams, coupled with
out-of-date models of what investment banks were doing, created a massive blind
spot in the regulatory system by both Congress and the executive branch. While the
world changed, policymakers did not recognize the magnitude or inherent threats in the
changes or criticality of adapting their policies. Given the global impact, the “we should
have seen it coming” mentality was of little comfort.

14 6   L e a d in g a t t h e S t r a te g i c L eve l
Foresight
In previous discussions regarding scanning and sense-making, the lessons included
the recognition that the ultimate task is to translate judgment into foresight. It is
through foresight that the strategic leader correctly anticipates what will happen in
the future. Leon Fuerth, former National Security Advisor to Vice President Gore,
defined foresight as “the capacity to anticipate alternative futures, based on sensitivity
to weak signals, and an ability to visualize their consequences, in the form of multiple
possible outcomes. It is a means to visualize, rehearse and then refine in the mind,
actions that would otherwise have to be tested against reality, where the consequences
of error are irrevocable.”23
Some people confuse forecasting with foresight. Forecasting approaches involve
a much more linear process. Forecasting includes predicting the future based on past
events (for example, product sales). Whereas foresight focuses on the organization being
able to continually perform effectively in the future (more of a coping ability). Some
people also confuse vision with foresight. Vision is a picture of the desired future for the
organization, including its contributions to the marketplace and society (vision is exam-
ined later in this chapter). Foresight is an informing process (outcome) that enhances
decisionmaking to achieve the desired vision or to modify the vision as appropriate.
Foresight Systems. While the U.S. Government has a number of different intel-
ligence agencies, much of their work focuses on meeting traditional national security
challenges—resulting in the need for a broader, inclusive, and integrative institutional
focus. In 2011, National Defense University and the U.S. State Department sponsored
workshops on “actionable foresight.” These involved more than 200 participants from
more than 50 different U.S. Government agencies, the private sector, academia, and
10 countries. The effort considered a variety of approaches to bridge the “consumer/
producer” divide in foresight production and delivery. Leaders at this conference
defined actionable foresight as the disciplined analysis of alternative futures that pro-
vide decisionmakers with the understanding needed to better influence the future
environment. The primary focus was to address the question, “How to incorporate
foresight into the national security process so that it is considered seriously—and
acted upon—in planning and decisionmaking?” Some of the key findings from these
workshops included:
•u  sing foresight to identify alternative possibilities in an increasingly complex, inter-
connected global security environment
• r ecognition by consumers and producers regarding the speculative nature of foresight
as opposed to evidence-based recommendations
• t he importance of regular interface between foresight and policy and its linkage to
ongoing decisionmaking processes
• i ncluding informal, persistent, and diverse networks representing the whole of gov-
ernment and society

C h a pte r 4  147
• linkage of foresight to current events to gain the attention of policymakers
• c reating a central hub to facilitate and coordinate foresight
•u  sing foresight to identify opportunities (preventive and responsive) to inform poli-
cymakers of actions that would help achieve specific goals.24
Some governments are implementing foresight systems. For example, the British
government supports the development of a foresight Web site to help its government
think systematically about the future. The intent is to combine the latest scientific and
other evidence with futures analysis to tackle complex issues and help policymakers
make decisions affecting their future. In addition, the European Commission launched
the iKNOW project to conduct blue-sky research and horizon-scanning whose goal
is to advance knowledge and develop tools related to events and developments (weak
signals) with the potential to shape and shake the future of science, technology, and
innovation.25
Whether a business/industry, government agency, or nonprofit, Fuerth’s suggested
system of systems to employ foresight may be useful to “sense and execute changes
ahead of the cusp of major events . . . [to] better . . . blunt threats and harvest oppor-
tunities.” He proposed four basic components to his systems of systems, including a:
• f oresight system
•n  etworked system for integrating foresight and the policy process
• f eedback system to gauge performance and also to manage “institutional” knowledge
• a n open-minded institutional culture.26
Furthermore, Fuerth argued that foresight requires an environment that offers
the following conditions, including:
• r eadiness to listen to foresight and to consider action
• a bility to maintain a “protected space” within which analysts feel empowered to
present their views
• r ich exchanges between producers and consumers of foresight. The quality of the
information one gets is a function of the quality of the questions one asks.
The difference between foresight as an organized discipline and as an individual
talent is that at the larger scale, it will have access to socially organized research (for
example, forecasting, futuring, scenarios, modeling, horizon-scanning systems for
detecting weak signals, Delphi surveys, issue matrixes, and so forth). The rapidly
growing impact of computers and the Internet on the speed and scope of human col-
laboration amplifies the power of these foresight tools.27

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.

14 8   L e a d in g a t t h e S t r a te g i c L eve l
1. How does your organization scan and make sense of the external environment?
2. How well does the organization connect the dots and exercise foresight? How do
you know?
3. Does your current or previous organization have a collaborative, open-minded
institutional culture? If yes, how do you know? What systems or behaviors lead you
to believe this to be true? If not, how would you as the strategic leader approach
implementing such a culture?

Foresight and Scenario-planning


Scenario-planning is an approach frequently used by most major business organiza-
tions to help inform strategic leaders of alternative futures, as well as how the orga-
nization might perform in those futures. Unfortunately, some organizations do not
recognize their use in learning and exploring the future. For example, Doug Randal,
Managing Partner of Monitor 360, argued, “By systematically incorporating plausible
but challenging future scenarios into their learning processes, decision makers can
both mitigate risk and decrease the likelihood of not being prepared for discontinui-
ties. This approach overcomes the paralysis that sometimes happens when people see
all the uncertainty their organization faces, as well as the denial that happens when
they don’t.”28 Randal offered a five-step toolkit to enhance managing uncertainty.
Randal’s five steps are:
•C
 reate scenarios—unleash your imagination. Scenarios are plausible narratives
about futures that are distinctly different from the present. . . . Scenarios are written
as plausible stories—not probable ones . . . [that] are intended to provoke the imagi-
nation and provide a more comprehensive view of risk, so that the results can shed
light on critical strategic decisions. It is important to note that scenario developers
create multiple futures, rather than just one. . . . [I]t also grounds decision-makers
in the reality that, in most circumstances, they cannot accurately predict the future.
Rather than falsely assuming one outcome will happen, leaders learn that they must
make decisions in light of the true uncertainty they face.
•D
 etermine required capabilities for each scenario—give your creativity free
rein. . . . What would a high-performing organization look like in each of these worlds?
That is, what would an organization need to do in order to be successful if it were dealt
the cards of one scenario? To answer this question, planners need to make a list of key
success factors and capabilities. Key capabilities for militaries or intelligence agencies
might be the ability to project force rapidly abroad or the ability to collect and process
open-source information. . . . It is often a wrenching experience for leaders to look
simply for the absolutely best strategic posture for their organization in each scenario.
This is one measure of how hard it is for them to imagine doing business in any future
that has totally different success factors from the current environment.
•A
 ssess current capabilities—be painfully realistic. . . . What are we good at right now? The
answers could be human capital, relationships, or operational efficiency. . . . Organizations

C h a pte r 4  14 9
can’t just say, “We’ll invest $100 million next month, and then we’ll have that ability” or
“We want to do that.” They have to build the capability over time.
• I dentify gaps—provide honest analysis. Next, an organization should compare
its own capabilities with the capabilities needed to succeed in the scenarios. Such
capability maps will not only highlight what capabilities it needs to develop—the
capability gaps—but also what capabilities it has already invested in that may become
redundant.
•M  ake choices—consider your options. Once organizations have analyzed the gap
between their strengths and the capabilities needed in each scenario, they face some
big decisions. . . . As a first step, an organization might safely develop . . . “no-regrets
moves.” Other moves are . . . call[ed] “big bets.” These are capabilities needed in a
particular scenario or a small number of scenarios, but not in others. Organiza-
tions . . . [can then make conscious, studied decisions] after systematically thinking
through the types of capabilities, their relationship to the environment around them,
or the futures that they feel are likely to occur.29
A critical ingredient of a comprehensive systems approach is the effective use of
the organization’s human resources. To do so, the strategic leader must ensure that the
organization’s climate and culture embraces the necessary creative, collaborative, and
learning networks and processes—including rewarding behaviors that positively contrib-
ute to the effort—a success factor that may require adjusting the reward and recognition
system. For example, Vice Admiral Conrad Lautenbacher, Vice President for Science
at Computer Sciences Corporation, emphasized, “It is the role of the strategic leader to
understand what is happening around him or her by constantly involving others. You
must collaborate within your organization for accurate assessment of your organization’s
preparedness.”30 Likewise, Renee Acosta, President and CEO of Global Impact, explained
that “you must encourage the big idea by setting up an environment where people bring
you these ideas. You need to recognize people’s differences and pull on their strengths.”31
The strategic leader needs to communicate this cultural message and institutionalize a
culture that encourages collaboration and the generation of the big ideas.
Regarding the use of organizational members, Jay Sloan, President of JJ Sloan
& Associates, and a former senior executive at the Defense Intelligence Agency,
offered:
With regard to seeing around the corners, the key here was finding the best
minds, finding the best in the community, and certainly the best in our agency,
the ones who were absolutely committed and who really knew their stuff. Those
folks knew their stuff so well that they could see things I couldn’t see, or that
someone who didn’t have as much knowledge as they did could see. Oftentimes,
even intuitively they would be able to see what others could not see.
In using a formalized system and foresight, Sloan commented that many of his
top people were the mavericks in the organization:

15 0  L e a d in g a t t h e S t r a te g i c L eve l
Maybe our situation was a little bit different from an ordinary situation, but
I found that some of the analysts who had, indeed, the best research and ana-
lytical capabilities—they were world-class in their knowledge and ability to see
around those corners and write it up. Those people, when the chips were down
and the stakes were high, would save the Agency’s and/or intelligence commu-
nity’s bacon all the time. Yet, some of them were the most difficult people to man-
age, because they were super-sharp intellectually and saw through the many
“process only” (no value added) steps imposed by those within the overall orga-
nizational structure who had no concept of or stake in the analytical process.
Moreover, they maybe even had a slight quirk in their personality that enabled
them to see around the corners. They would drive some of their local managers
crazy. They were not following the rules and regulations that a bureaucracy
has, some of which were impeding the flourishing of intellectual creativity and
expression. Furthermore, I really respected them. I needed them. I saw them as
the gems within the organization. I would rather have 100 of them than 1,000 of
ordinary performers, because 100 of these professionals would always be really
looking around all the corners. Therefore, I had to protect them, sometimes,
and I did my best to smooth over things that occurred between them and their
local managers, often times by affirming who they were and explaining how
their work style was okay.32
By taking a comprehensive systems approach to scanning, analyzing, making
sense of the external environment, and exercising foresight, strategic leaders enhance
their ability to see around corners—to make sense of what is happening and to exercise
foresight as to what may happen in the future. Important to these processes is creat-
ing an organizational climate and culture that supports and nurtures these processes,
coupled with a strategic leader’s own sophisticated and complex mental models.

Strategic Analysis: Identifying Patterns, Connecting the Dots


As discovered following 9/11, the pieces of the puzzle were there, but those charged
with preventing an attack were unable to identify a pattern. That is not to say that
these individuals were not suited for their positions. It simply suggests that identify-
ing patterns and connecting the dots is an extremely difficult task to accomplish, and
as seen, the costs of not making the connection can be devastating. The job of the
strategic leader is to stay ahead of the curve, ensuring that the organization maintains
a competitive advantage and positioned to be successful in the future. Management
author Ram Charan discussed the importance of connecting the dots by pinpointing
and taking action on emerging patterns of external change. He explained, “It is this
know-how of pinpointing external change that allows you to make a sound judgment
about where the world is going and put your [organization] on the offensive.”33

C h a pte r 4  151
To do this, he suggested not by looking in the past for a precedent to follow, but by
looking forward. Charan pointed out, “Many people continue to look backward for a
reference point they can understand, but matches with previous patterns and cycles
are nearly impossible to find.”34 The new world of rapidly expanding technologies,
emerging nonstate actors, and the rising economies of China, India, and Brazil create
an ever-evolving external operating environment in which unprecedented problems
are the norm: “Sorting through the complexities of the external world does not simply
mean engaging in traditional competitive analysis . . . nor does it mean leaning heavily
on experts for advice about the future.”35
The strategic leader must find an effective medium between lethargic decisionmak-
ing and unwarranted aggressive action. Charan states, “Some people are so cautious that
they won’t make a move until a pattern is well defined and validated by others who have
already moved into the space. And some, on the other hand, will make daring moves even
when the externals are completely foggy.”36 Both of these moves can have devastating con-
sequences for the strategic leader and his or her organization. In order to conduct proper
strategic analysis, and avoid those missteps, leaders can often benefit from stepping outside
of their organization and looking back in—in other words, changing their perspective.
The leader must spread a wide net and then analyze what he or she finds in order
to identify the underlying patterns.37 By doing this, leaders will be better able to iden-
tify how their organization affects the external environment, and more importantly,
how the external environment is affecting and shaping their organization or industry.
Essentially, “Only by looking far out over the horizon and taking into account devel-
oping trends that may not seem directly relevant now can you really do the kind of
analysis necessary to prepare for rapid change and new opportunities.”38
Charan revealed seven characteristics of leaders who successfully connect the
dots, including:
•H  ave a methodology for anticipating and detecting breaks in the continuity of the
external landscape.
• I magine one or more pictures of the future and pinpoint the gaps that make the
picture incomplete.
•H  ave a reliable, diverse social network—both inside and outside the business—people
with different perspectives that help them see their business through a new lens.
•T  alk to their network for ideas about how to close gaps that they identify.
•H  ave the personal imagination to construct patterns from emerging disparate trends,
always searching for the missing links and missing ingredients.
•R  emain psychologically self-aware of potential bias on their part or that of people
they associate with to be overly optimistic or pessimistic, thereby distorting a realistic
perception of external trends.
•C  onnect patterns of change with the question of whether the positioning of the busi-
ness could become irrelevant or obsolete.39

15 2  L e a d in g a t t h e S t r a te g i c L eve l
He concluded, “The fruits . . . will belong to the realists, to those who can pick out
key variables amid complexity, seeing how they might combine and getting a view-
point about where the external landscape is going.”40

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. Looking back at your current or past organizations, were there situations where
your organization failed to recognize a pattern that resulted in a crisis or was unable
to take advantage of an opportunity?
2. Can you recall actionable situations in your organizations where there was inad-
equate information-sharing between divisions or units of the organization? If so,
how could the organization benefit from sharing this information?

Is There a Need for Change?


Following the external scan, making sense of the data and patterns and exercising fore-
sight, the strategic leader (and his or her strategic leadership team) evaluates whether
change is required (for example, is the organizational purpose and the vision valid?
are the current strategies sufficient?). In essence, are the vision and strategies valid, or
do they need to be reconceptualized in order to maintain the organization’s (adapted)
purpose, short-term credibility and legitimacy, and long-term vitality, competitive
advantage, and sustainable viability?
Lieutenant General Claude Christianson, USA (Ret.), Director of the Center for Joint
and Strategic Logistics at NDU, argued, “When the environments change, plans need to be
altered accordingly.”41 While all of the interviewed senior leaders concur that they serve as
the “change agents” for their organizations, a number noted that leaders should not initiate
change just for change sake. For example, Mark Foulon, former Acting Under Secretary of
Commerce for Industry and Security, cautioned, “Before any change you need to find the
time to play out all of the different permutations in your mind.”42 Furthermore, Lieutenant
General Ron Iverson, USAF (Ret.), suggested, “Change may be an illusion of progress. If
you go after change for change’s sake, you will tear the organization apart.”43
It is the responsibility of the strategic leader to decide whether the organization
needs to change. If the strategic leader decides change is necessary, he or she may need
to reevaluate the organization’s purpose. For example, should the organization be in
the buggy whip business with horseless carriages gaining popularity? Does the change
require modification of the vision for the organization’s desired future state? What are
the most fruitful strategies to pursue, and are there big ideas that offer opportunities
for long-term growth and viability?
While there are a number of approaches the strategic leader may take to for-
mulate a new direction for the organization, this chapter examines three specific

C h a pte r 4  15 3
questions. First, if the strategic leader needs to modify the organization’s vision, what
does the leader consider while developing this guiding vision? Second, what are the
strategies necessary to fulfill the vision and mission? Third, if the vision, strategies,
and strategic objectives are appropriate and essential, how does this affect, if at all,
the organization’s need to change? If so, what are the factors the strategic leader and
his leadership team should consider in leading and managing necessary change?
For example, is the organization capable of making the necessary changes—and at
what costs?

Vision
Once the strategic leader assesses the external environment and determines there is
a need to adapt or reconceptualize the vision, strategies, and organization, he or she
should define and articulate a new vision encapsulating the desired future state of
the organization. Formulating, communicating, and inculcating a refocused vision
provide organizational purpose, scope, and direction. In comparing vision with other
terms, leadership scholar John Kotter explained:
A vision shows an end state where all the plans and strategies will eventually
take you. A vision can usually fit on a page and be described in an elevator ride.
A strategy shows how to achieve a vision. A strategy might take ten pages and
require a discussion over a meal. A plan specifies step by step how to implement
a strategy. Plans could fit into a notebook and require examination in a series
of meetings. A budget is the financial piece of the plan. Budgets could require a
large notebook and demand even more meetings.44
He continued:
Without a good budget, you can run out of money. Without a sensible plan,
you can run out of time. Without a good strategy, you can find yourself painted
into a corner. Without a good vision, you can choose a bad direction and never
realize that you’ve done so. You will have difficulty coordinating large numbers
of people without using endless directives. You’ll never get the energy needed to
accomplish something very difficult. Strategic plans motivate few people, but a
compelling vision can appeal to the heart and motivate anyone.45
As Kotter’s comments suggest, vision enables strategic leaders to accomplish four
important leadership tasks. First, vision clarifies the direction that the organization
should take. Second, it helps motivate people to take coordinated action in support of
the organizational direction. Third, in today’s distributed or shared leadership orga-
nizational environment (in which leaders and employees throughout the organization
are empowered to exercise discretion and make decisions at the lowest possible level),
a clear vision helps guide their actions and decisions—aligning them with strategic

15 4  L e a d in g a t t h e S t r a te g i c L eve l
initiatives and mission fulfillment. Fourth, it helps to unify the actions and efforts of
different people in a powerful way.
Essentially, a vision serves as a signpost or beacon pointing the way for all who
need to understand what the organization is and where it intends to go—“and it is
next to impossible to lead strategically without vision.”46 Hence, while a strategic leader
will most likely involve as many people as possible during the envisioning process,
the ultimate responsibility for shaping and communicating the vision rests with the
strategic leader. This is what strategic leadership is all about.
General Casey argues, “One of the toughest challenges for any strategic leader is to
clearly articulate to his or her subordinates what it is they want them to accomplish.”
He suggests, “A fuzzy idea coming out of the four-star headquarters does not get clearer
as it is transmitted through the chain of command. As such, we spent a lot of time and
intellectual effort sharpening our views of what we wanted to accomplish.” He posits
that “One of the hardest things for a leader to do in complex and uncertain environ-
ments is to get clarity in his or her mind on what it is they want their subordinates to
accomplish to achieve success. Because it is so hard, it takes the full involvement and
commitment of the senior leader to accomplish successfully.”47 As Burt Nanus, Profes-
sor Emeritus of Management at the University of Southern California, emphasizes,
selecting and articulating the right vision is the toughest task and the truest test of
great leadership.48

Vision Key Elements


How does one begin to select or articulate such a vision? Leadership scholar Gary Yukl
once posited, “A vision should be simple and idealistic; a picture of a desirable future,
not a complex plan with quantitative objectives and detailed action steps. The vision
should appeal to the values, hopes, and ideals of organizational members and other
stakeholders whose support is needed. . . . The vision should be challenging but real-
istic. To be meaningful and credible, it should not be a wishful fantasy, but rather an
attainable future grounded in the present reality. . . . Finally, a successful vision should
be simple enough to be communicated clearly in 5 minutes or less.”49 In formulating
a vision, he suggested:
• I nvolve key stakeholders.
• I dentify shared values and ideals.
• I dentify strategic objectives with wide appeal.
• I dentify relevant elements in the old ideology.
•L  ink the vision to core competencies.
•E  valuate the credibility of the vision.
•C  ontinually assess and refine the vision.50

C h a pte r 4  15 5
In constructing and implementing a strong vision, Kotter suggested:
•T  rying to see—literally—possible futures.
•V  isions clear enough to be articulated in one minute or written up on one page.
•V  isions that are emotionally moving—such as a commitment to serving people.
• S trategies that are bold enough to make bold visions a reality.
•C  onstant attention to the strategic question of how quickly to introduce change.51
A key aspect for all visions is that they need to be compelling—appealing to
followers both intellectually and emotionally. In developing a compelling vision,
management authors Ken Blanchard and Jesse Stoner suggested that three elements
constitute a compelling vision, including significant purpose, a picture of the future,
and clear values. Specifically:

1. Significant purpose: What business is the organization in—what is its reason


for existence? It answers the question “Why?” rather than just explaining what it does.
Blanchard and Stoner offer Walt Disney as an example:
Walt Disney was a genius at creating a compelling vision. When he started his
theme parks, he was clear on their purpose. He said, “We’re in the happiness
business.” That is very different from being in the theme park business. Clear
purpose drives everything that the cast members (employees) do with their guests
(customers). Great organizations have a deep and noble sense of purpose—a
significant purpose—that inspires excitement and commitment. When work
is meaningful and connected to what we truly desire, we are able to unleash a
productive and creative power never imagined.52
2. A picture of the future: What will the future look like if you are living accord-
ing to your purpose? Focus on the end-result, not the process for getting there. For
example, Blanchard argued that “Walt Disney’s picture of the future was expressed
in the charge he gave every cast member: ‘Keep the same smile on people’s faces when
they leave the park as when they enter.’ They were in the happiness business.”53
3. Clear values: How do you want people to behave when they are working accord-
ing to your purpose and on your picture of the future? Values answer the questions,
“What do I want to live by?” and “How?” Unless consistently acted on, they are only
good intentions. Blanchard suggested that the number of values should be limited and
be rank ordered. Again, using Disney as an example, Blanchard stated:
When these conflicts arise, people need to know which value they should focus
on. Walt Disney intuitively knew this when he ranked safety ahead of other
values—courtesy, the show, and efficiency. Why did he do that? Because he
knew that if a guest left the park on a stretcher, that guest would not have the

15 6  L e a d in g a t t h e S t r a te g i c L eve l
same smile on her face that was present when she entered the park. So, if a cast
member hears a scream while being courteous to a guest, he excuses himself
immediately and focuses on the number one value—safety.54
Nanus concluded that if a strong vision is constructed, communicated, and shared,
the following forces are unleashed:
• Th
 e right vision attracts commitment and energizes people.
• Th
 e right vision creates meaning in workers’ lives.
• Th
 e right vision establishes a standard of excellence.
• Th
 e right vision bridges the present and future—it provides the all-important link
between what is now taking place and what the organization aspires to build in the
future.
The Envisioning Process. Based on their knowledge, skill, expertise, sense-making
of the external environment, and the internal environment’s capability to respond,
the strategic leader and the leadership team create the image of what the organization
will look like in the desired future state and the expected benefits of reaching that
futuristic environment.
Many people have experience in the envisioning (creating the vision) process.
Sometimes the organization’s leaders plan for an offsite (away from the organization)
to go through the process. People participating in a visioning process often remark
that the process was messy, frustrating, difficult, and time-consuming. As author
Mark Lipton explained:
Conceptualizing a vision is rarely spiritual and pleasant, and those who have
struggled through the required stages find that the process itself can be more
enlightening and revealing about the organization’s strategic future than the
well-crafted verbiage they commit to writing. Be forewarned: The process is a
creative and often chaotic one, requiring a series of iterations. It defies linear
thinking and requires a mental capacity for synthesis and imagination, some-
thing that is unfortunately underdeveloped in too many managers. Anyone who
claims to have sailed easily through the vision development process is either lying
or has taken the wrong approach.55
While it is important to know the organization’s past and its current reality, fore-
casting the future requires insight and often is much more intuitive and subjective
than logical or rational. Nanus suggested that a vision “occurs to a well-informed open
mind, a mind prepared by a lifetime of learning and experience, one sharply attuned
to emerging trends and developments in the world outside of the organization.”56
Leadership scholars James Kouzes and Barry Posner pointed out that “To be able to
have a vision of the future, you have to be able to see the big picture—to see trends and
patterns and not just one-off or one-time occurrences.”57 Furthermore, the envisioning

C h a pte r 4  15 7
process is not scenario-building or attempting to predict the future; rather, it is a step
in constructing the future desired. In developing the vision, not only does it need to
reflect an ambitious and desirable future, but also people must view it as feasible to be
credible. It cannot be perceived as wishful thinking.
Gaining Buy-in. While many people may be involved in the envisioning process
and a vision is eventually developed and agreed to by the strategic leader, the key to
success is for the end result to be a shared vision—one shared by stakeholders and
members of the organization. It is essential that the strategic leader present a vision
embraced by the organizational members or it will soon become “road-kill.” For
example, Lipton notes, “the statement gets printed, laminated, and bolted to confer-
ence room walls; it gets boiled down to a short paragraph and printed on the back of
everyone’s business card; it may even have its own link on the company’s Web site. . . . 
Even worse, the bunch of words may have no meaning to others in the organization.”58
While making the vision public is a critical step in generating buy-in, no organization’s
efforts can stop with a simple presentation or image.
Kouzes and Posner suggested that “The most important role of visions in orga-
nizational life is to give focus to human energy. To enable everyone concerned with
an enterprise to see more clearly what’s ahead of them, leaders must have and convey
an exciting and ennobling vision of the future.”59 Strongly shared visions lead to sus-
tained commitment. Moreover, “When visions are shared they attract more people,
sustain higher levels of motivation, and withstand more challenges than those that are
singular.”60 In addition, the majority of authors and researchers suggest that a strong
vision needs to present a powerful future, one that can resonate with all members of
the organization.
Many suggest that stories and metaphors are very potent ways to communicate
the essence of a vision. A number of books and articles point to Martin Luther King’s
“I Have a Dream” speech as an example of a compelling and inspiring vision. King’s
vision of a world where people live together in mutual respect, where his children “will
not be judged by the color of their skin, but by the content of their character” continues
to resonate long after his death. Kouzes and Posner emphasized that in developing a
shared vision, the elements of the vision need to resonate with an individual’s “deep
desire within each of us to make a difference. . . . Work has become a place where
people pursue meaning and identity. . . . When leaders clearly communicate a shared
vision of an organization, they ennoble those who work on its behalf. They elevate the
human spirit.”61
Communicating the Vision. A major strategy to gain buy-in requires a well
thought out communications effort. As Nanus argued, the visioning task is not com-
plete until everyone in the organization and all the major external stakeholders clearly
understand the direction of the organization and have a high degree of shared com-
mitment and sense of urgency for the vision.62 General Gordon Sullivan emphasized

15 8  L e a d in g a t t h e S t r a te g i c L eve l
that the vision must be communicated “in a way that the organization can understand,
calming its fears and boosting its confidence.”63 Moreover, Jack Welch, former CEO
of General Electric, stressed that communicating the vision is a daily process—not
a periodic task. Welch argued, “You have to talk about vision constantly—basically,
to the point of gagging. There were times I talked about the company’s direction so
many times in one day that I was completely sick of hearing it myself. But I realized the
message was always new to someone. And so, you keep on repeating it.” Furthermore,
“you talk to everyone.”64
In communicating the vision, the strategic leader must continually make the
vision compelling and memorable. In this regard, Kouzes and Posner emphasized
the following:
Leaders must breathe life into visions, they must animate them so that others
can experience what it would be like to live and work in that ideal and unique
future. They use a variety of modes of expression to make their abstract visions
concrete. Through skillful use of metaphors, symbols, pictures, positive language,
and personal energy leaders generate enthusiasm and excitement for the com-
mon vision. But above all, leaders must be convinced of the value of the shared
vision and share that genuine belief with others. They must believe in what they
are saying. Authenticity is the true test of conviction, and constituents will only
follow willingly if they sense that the vision is genuine.65
Possible Roadblocks. As mentioned earlier, the visioning process is most often
a messy and lengthy one. It takes concerted effort on behalf of the strategic leader
to “stay the course.” In addition, in some organizations, unfortunately, “vision”
degenerated into “the vision thing.” Thus, many within the organization, especially
those who observed previous visioning efforts fail or build up expectations that were
not met, will be cynical about any future visioning efforts and ultimately reluctant
to participate fully in the process. For example, in the early 1990s the Library of
Congress went through a major 1-week visioning training and envisioning process
that involved most of the leaders and employees. Following significant effort and the
development of a vision statement, the leaders posted the vision in a few places in
the buildings, but nothing changed. The envisioning process built up expectations
that there would be a new leadership approach to daily and future work. After some
initial enthusiasm, people began to realize that the vision—now just a placard on
the wall—was meaningless. Consequently, cynicism resulted and the envisioning
process left a bad taste in the peoples’ mouths to the point they did not want to hear
the term vision. Intellectual buy-in by some of the leaders occurred, but without the
emotional commitment and a vision that was meaningful, the envisioning process
failed to meet expectations: “Should there be a desire to implement the vision later
on, this cynicism makes it increasingly more difficult to do so and, more important,

C h a pte r 4  15 9
management can lose credibility since articulating and implementing a vision is seen
as their number-one job.”66
The Library of Congress example illustrates that the strategic leader must recog-
nize the need to be fully committed to the vision and to model the vision through his
or her behavior in a visible and consistent manner. If the leader is not committed to
the rigors of modeling the vision through his or her actions and attitudes, the process
of transforming the organization will end before taking the first step. Furthermore,
a leader’s enthusiasm for the vision is contagious and often is responsible for arous-
ing interest in and convincing others of the rightness of the vision, thereby obtaining
commitment. If the leader does not “walk-the-talk” or does not follow through with
the necessary actions to bring the vision into reality and monitor its progress, other
leaders will do the same: “Followers are not going to have faith in a vision unless the
leader demonstrates self-confidence and conviction.”67 A leader cannot command
commitment; he or she can only inspire it. This commitment was missing at the
Library of Congress.
Much of the resistance to embracing a vision is the perceived inability to achieve
it. If subordinate leaders and the workforce are not confident about their ability to
achieve it, they will become anxious and lack motivation. This reemphasizes the point
that it must be a shared vision and must meet the organizational member’s intellectual
and emotional needs. The benefits warrant their individual and collective effort—and
they can do it. They must feel that the future organizational state represented by the
vision is in their view a desirable destination and the journey to that destination as
exciting and ennobling. This journey must be aligned with their personal aspirations
and values and worthy of their learning, sacrifice, energy, and effort.
Not All Organizations Have a Vision. Based on the preceding discussion, one
might infer that all organizations have visions, or that all strategic leaders believe
visions are essential to their long-term viability and prosperity. Recently, a few
researchers and scholars suggested that the emphasis on creating a vision may be
overblown. The continuing failure to establish and deploy effective and inspiring
visions might underpin this hypothesis. Some strategic leaders not using a vision to
drive organizational performance may be using other means, for example, organiza-
tional purpose, mission, or strategic goals.
There are a number of viable, well-led organizations without visions. For example,
since the 1940s, Johnson & Johnson (J&J) uses a credo. In fact, J&J executives point to
their credo as their guiding principle in the successful handling of the Tylenol poison-
ing crisis. Other companies and government agencies prefer to strive for something
big and audacious with a specific end-point. For example, based on their research,
Jim Collins and Jerry Porras stated, “visionary companies often use bold missions or
what we prefer to call BHAGs (pronounced BEE-hags and shorthand for Big, Hairy,
Audacious Goals)—as a powerful way to stimulate progress . . . a huge, daunting chal-

16 0  L e a d in g a t t h e S t r a te g i c L eve l
lenge—such as climbing Mount Everest.” They argued that “A true BHAG is clear and
compelling, serves as a unifying focal point of effort, and acts as a catalyst for team
spirit. It has a clear finish line, so the organization can know when it has achieved the
goal; people like to shoot for finish lines. A BHAG engages people—it reaches out and
grabs them. It is tangible, energizing, highly focused. People get it right away; it takes
little or no explanation.”68
Many books and articles point to President Kennedy’s special address to a joint
session of Congress as an inspiring and compelling vision. On May 25, 1961, Kennedy
stated, “I believe that this nation should commit itself to achieving the goal, before this
decade is out, of landing a man on the Moon and returning him safely to the Earth.”
Collins and Porras, however, suggested that this statement was a BHAG. They note,
“NASA’s 1960s moon mission didn’t need a committee of wordsmiths to spend endless
hours turning the goal into a verbose, impossible-to-remember mission statement.
The goal itself was so easy to grasp—so compelling in its own right—that it could be
said 100 different ways yet be easily understood by everyone.” In reviewing corporate
mission statements, they reported, “Most corporate statements we’ve seen do little to
spur forward movement because they do not contain the powerful mechanism of a
BHAG.”69 Yet whether a vision or a BHAG, NASA suffered when the Apollo program
ended. Without an overarching vision or another BHAG, NASA’s drive, relevance,
funding, and support waned considerably. Guided only by performance targets, for
example “quicker and cheaper” driving motivation and behavior, NASA suffered the
loss of two space shuttles and their crews.
There are times when circumstances require one to either deviate from or aban-
don a current organizational vision—often without a replacement. For example, in
June 2000, under the direction of General Henry Shelton, then Chairman of the Joint
Chiefs of Staff, Joint Vision 2020 was published. This document stated the vision of
“Dedicated individuals and innovative organizations transforming the joint force for
the 21st Century to achieve full spectrum dominance: Persuasive in Peace; Decisive in
War; Preeminent in Any Form of Conflict.”70 Yet despite the initial fanfare regarding
Joint Vision 2020, in subsequent years, it received very little attention. For example, in
Secretary of Defense Robert Gates’s 2010 Quadrennial Defense Review, Secretary Gates
presents the Defense Department’s “key priority objectives . . . [and] the Secretary’s
intent for the next several years of the Department’s work.”71 This document did not
provide any reference to the joint vision. Likewise, the U.S. Joint Forces Command
publication The Joint Operating Environment (JOE) for 2010 did not address Joint
Vision 2020.72 Addressing vision, General James Cartwright, then Vice Chairman of
the Joint Chiefs of Staff, stated:
The vision that was probably the most dominant here, outside of the area of
conflict, has been making sure that the institution focused on the war and

C h a pte r 4  161
not something else. And so, we killed a lot of programs that were about future
conflict. However, at some point, you transition from focus on the war you
are currently fighting to addressing both the war you are in and provisioning
for that war in the future. Most people believe we are about at that point now
in which we consider the existential threats to the United States. Do we have
in place the right things in place to keep that in check? Are the future kinds of
conflicts the small wars we have been dealing with? Are they nuclear exchanges?
Are they something else? And what do you believe are going to be the attributes
of capability that you want to have for the next 20 years?73
General Cartwright explained that while all senior military and Department of
Defense leaders are involved in the envisioning process, it is his job to orchestrate that
effort. As he stated, “That is the Vice Chairman’s role . . . ‘future need, future force,
future capability.’”

—Pause—Take a moment and reflect on the following questions. Note your initial
thoughts and insights.
1. Does your organization have a vision? If so, do you know what it is? Is it inspiring?
Does it motivate you? Why or why not? If it were not motivating, what recommenda-
tions would you offer to make it more attractive and inspiring?
2. Have you participated in an envisioning process? Did you find it a smooth or
messy process?
3. What motivates and fully engages you to be a major contributor to your organi-
zation? What are your thoughts regarding creating and communicating a shared
vision? Does the concept of BHAG appeal to you?

Strategy
Clearly, the strategic leader must formulate strategies in order to plan for the future,
meet near-term objectives, and ensure the continued viability of the organization.
Simply stated, a strategy is a plan of action that guides an organization or nation as it
employs the means available to achieve goals successfully. Strategic leadership scholar
Henry Mintzberg and his colleagues suggest that strategy can be both a plan and a
pattern, but they draw a strong distinction between these two words. They explained,
“Managers differentiate between strategy and planning by defining strategy as a ‘pat-
tern,’ or a repetition of actions previously undertaken and adapted to new situations.
Strategy as a pattern is therefore retrospective; strategy as a plan is forward looking. A
combination of these two, with the critical analysis of internal and external processes,
can be broadly defined as strategy.”74
Andrew Krepinevich, President of the Center for Strategic and Budgetary Assess-
ments (CSBA), and CSBA Senior Fellow Barry Watts suggest, “If strategy is necessary,
possible, and important, it is nonetheless difficult. Evidence of ill-conceived, inadequately

16 2  L e a d in g a t t h e S t r a te g i c L eve l
thought-through, poor, or counterproductive strategies abounds. Building on the list of
‘common strategy sins,’ Richard Rumelt, a leader in the field of strategy, has culled from
his long experience with business strategy . . . ten recurring pitfalls that can undermine
competent strategic performance”:
1. Failure to recognize or take seriously the scarcity of resources.
2. Mistaking strategic goals for strategy.
3. Failure to recognize or state the strategic problem.
4. Choosing poor or unattainable strategic goals.
5. Not defining the strategic challenge competitively.
6. Making false presumptions about one’s own competence or the likely causal linkages
between one’s strategy and one’s goals.
7. Insufficient focus on strategy due to such things as trying to satisfy too many dif-
ferent stakeholders or bureaucratic processes.
8. Inaccurately determining one’s areas of comparative advantage relative to the
opposition.
9. Failure to realize that few individuals possess the cognitive skills and mindset to be
competent strategists.
10. Failure to understand the adversary.75

Krepinevich and Watts explained:


The persistent recurrence of these strategy pitfalls argues that deciding in whose
hands to place U.S. strategy in the twenty-first century is a critical issue. The
fact is, however, that few individuals—regardless of intelligence, education,
credentials or experience—possess the necessary cognitive skills and insight to
be competent strategists. The insight to see more deeply than one’s opponents
into the possibilities and probabilities of a competitive situation is rare. Strategy
may be a game anyone can play, but the evidence is strong that very few can
play it well. Thus, identifying individuals with the mindset and talents to craft
strategy competently is one step the United States will need to take to regain
strategic competence.76
Krepinevich and Watts stress that strategies must be developed by the right people.
They stated:
Individuals with the cognitive skills to do strategy well—particularly the req-
uisite insight into competitive situations—tend to be rare, even among bright
people with long experience in national security affairs or the military profes-
sion. . . . Too often we have put strategy in the wrong hands, or left it to large
staffs and bureaucracies rather than talented individuals or small teams. . . .
Given the complex security challenges the United States now faces, the U.S.

C h a pte r 4  16 3
government will surely need to do better in choosing the individuals in whose
hands the crafting of strategy is to be entrusted.77
Sun Tzu, an ancient Chinese military general and strategist, is often regarded
as the forefather of military strategy and formulation. In his The Art of War, he dove
deep into military strategy and tactics. Sun Tzu wrote, “Strategy without tactics is the
slowest route to victory. Tactics without strategy is the noise before defeat.”78 His view
on strategy is rooted in the leader’s ability to understand every aspect of the environ-
ment. Leaders must know not only the inner workings of their organization, but also
the inner workings of other organizations and how the external environment will
affect the future. He wrote, “Know the enemy and know yourself, in a hundred battles
you will never be in peril.”79 In essence, according to Sun Tzu, the art of scanning the
external environment and making sense of the information gathered by the strategic
leader is the foundation on which strategic leader formulates effective strategy.

Strategy Formulation
Developing effective strategy at the strategic level is no easy task. Formulating strategy
in an uncertain environment is one of the most important, challenging, and difficult
responsibilities of strategic leaders and their teams. As noted earlier, the external
environment reveals wicked problems that make it especially difficult for leaders to
formulate strategy. It is up to the strategic leader (and his or her team) to identify these
challenges, seek out opportunity, and formulate strategy to tackle, or at least manage,
the wicked problem that emerges.
Strategic leaders must understand the severity of uncertainty in their environ-
ment. Courtney, Kirkland, and Viguerie stressed that “underestimating uncertainty
can lead to strategies that neither defend the company against threats nor take advan-
tage of the opportunities that higher levels of uncertainty provide.”80 It is important
that leaders not only understand that uncertainty exists, but also know the severity of
uncertainty as it pertains to their organizations.

Development of Strategy from Pre-9/11 to Post-9/11: Mini


Case Study81
The terrorist attacks on September 11, 2001, fundamentally changed the face of domestic
security in the United States, the way of sharing information within the government,
and, for at least a time, the way the United States conducts military operations around
the world. Prior to these attacks, the government treated terrorists as international
criminals—subject to paramilitary operations only in the face of insufficient alternatives,
and the rules of engagement of previous administrations for military operations were
restrictive. This event took the U.S. Government, the Nation, and the world by surprise.

16 4  L e a d in g a t t h e S t r a te g i c L eve l
Its consequences were strategic in nature. The attacks not only impacted New York
City, Washington, DC, and Shanksville, Pennsylvania, but also reverberated through
the military, financial, legislative, and foreign policy communities.
Although some analysts connected many so-called dots prior to 9/11, for example,
Richard Clarke’s memo to Condoleezza Rice,82 the most critical piece of information
(hijacking domestic airliners and using them as bombs) was not evident to the strategic
decisionmaker. This attack fits the definition of Taleb’s black swan, including the pro-
pensity for hindsight, and resulted in the National Security Council (NSC) assessment
that the United States once again was experiencing a paradigm shift. This example will
follow strategy development from 1998 to September 30, 2001, as evidenced through
two primary source U.S. Government documents supported by the account of post-9/11
NSC meetings by senior U.S. Government officials.
The story begins with a memo from Clarke to Rice dated January 25, 2001 (5
days after George W. Bush took office). This memo responded to her request for a
list of the highest national security priorities. The memo, which included an attached
analysis by Clarke dating from 1998, urged the Bush administration to conduct a “Prin-
cipal’s Level Review on the al-Qaeda Network (a.k.a. al-Qaida, al-Qida, al-Qa’ida).”83
It identified al Qaeda as an “active, organized, major force that is using a distorted
view of Islam as its vehicle to achieve two goals.”84 Clarke mentioned that their goals
included driving the United States out of the Muslim world and replacing moderate
Western regimes in Muslim countries with theocracies similar to that of the Taliban.
This pre-9/11 memo warned that “We would make a major error if we underestimated
the challenge al-Qaeda poses, or overestimated the stability of the moderate, friendly
regimes al-Qaeda threatens.”85
After scanning the international security environment in the wake of al Qaeda’s
attack on U.S. Embassies in Nairobi, Kenya, and Dar es Salaam, Tanzania, the “Strategy
for Eliminating the Threat from the Jihadist Networks of al-Qaeda: Status and Prospects”
was developed and it was attached to the Clarke memo.86 It concluded that al Qaeda
was a well-financed network comprised of well-trained jihadists operating in over 40
countries around the world. Clarke recommended the U.S. goal should be to “roll back
the al-Qaeda network to the point where it will no longer pose a serious threat to the U.S.
or its interests.”87 In this regard, the importance of intelligence-gathering, terrorist fund
interruption, and other support to organizations fighting Taliban and al Qaeda networks
(including anti-Taliban factions in Afghanistan) should be national security priorities.
Well before 2001, the United States knew that al Qaeda was a well-funded network
with the stated goal of inflicting major damage to U.S. national interests and citizens.
In the days following 9/11, and although the President asked the Director of Central
Intelligence in April to begin a plan for a more comprehensive response to the threat,
it was clear that the Nation needed a new national strategy to properly deal with such
a catastrophe.88

C h a pte r 4  16 5
Former Under Secretary of Defense Douglas Feith in his book War and Decision89
illuminated the thought processes and critical decisions subsequent to 9/11. The NSC
convened on September 13, 2001, to conduct a strategic scan. Feith stated that the Cen-
tral Intelligence Agency believed that al Qaeda planned and executed the 9/11 attacks
and that there may be additional terrorist cells elsewhere, which could also be planning
attacks. Unlike most previous terrorist attacks, these appeared to maximize casualties.
The participants of the NSC meeting concluded that the United States faced a completely
ruthless transnational terrorist network. In order for this network to succeed, it needed
bases for training and sanctuaries from outside intervention. The U.S. approach prior
to 9/11 treated terrorists as criminals; however, the members of the NSC decided that
this approach was no longer valid. Feith outlined five “big ideas” that President Bush
and his advisors developed to shape their strategy:

1. Revenge should not drive the U.S. response, but the goal of preventing the next attack.
2. Because Osama bin Laden could not be deterred in the traditional sense, the United
States would hold both state and nonstate sponsors of terrorist networks account-
able.
3. “Our attackers were bent not on political theater but on mass destruction,” for
example, nuclear weapons. Terrorists might be looking to obtain chemical, biologi-
cal, or nuclear weapons.
4. If more terrorist attacks similar to 9/11 were to occur, they would fundamentally
change the nature of our country. The administration did not want Americans forced
to give up their way of life—no Fortress America—instead . . .
5. The United States must take an offensive approach to defeating terrorism. A defensive
strategy was not sufficient; the United States must take the fight overseas.90

The overall strategic theme that began to emerge was that the United States must
deal not only with the terrorist networks themselves, but also with the states that sup-
ported or harbored these organizations. They argued for establishment of the precedent
that the United States and its allies would not tolerate support to these organizations.
These were not ordinary criminals but mass murderers who did not fit the definition of
soldiers. This was a drastic change from the stance of the United States in early 2001.
In a followup memorandum to President Bush on September 30, 2001, Sec-
retary of Defense Donald Rumsfeld developed a list of strategic thoughts that he
maintained should serve as a guide for U.S. foreign policy and security operations
during the war on terror. 91 Rumsfeld mentioned five strategic items that the United
States should consider:

1. Garner actionable intelligence on lucrative targets, which we do not now have.


2. Reduce emphasis on images of the United States killing Moslems from the air.
3. Signal that we intend to fight smart, rather than simply use direct force.

16 6  L e a d in g a t t h e S t r a te g i c L eve l
4. Signal that our goal is not merely to damage terrorist-supporting regimes, but to
threaten their regimes by becoming partners with their opponents.
5. Capitalize on our strong suit, which is not finding a few hundred terrorists in the caves
of Afghanistan, but in the vastness of our military and humanitarian resources, which
can strengthen enormously the opposition forces in terrorist-supporting States.92

The strategy dealing with terrorism transformed the view of al Qaeda from a law
enforcement issue pursued through an intelligence operations framework to that of
using offensive military and economic capabilities to pursue and destroy terrorist
organizations—and the individuals and states that support them. Presidential decisions
made over a few days in September 2001 continue to influence policy and decisionmak-
ing (for example, the PATRIOT Act, military tribunals, U.S. Treasury pursuit of terrorist
financing, and so forth).

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. What steps did these individuals take to scan their external environment prior to
9/11? How did that change afterward?
2. Did Bush identify a vision or BHAG? If so, or if not, why do you believe this is so?
3. What were the decisions regarding the development of strategy during this 1-year
period?
4. Would you define this as a collaborative or competitive effort by the strategic
leaders?
5. What events in your organizations can you recall where the formulation of strategy
began with initial scanning and progressed all the way through strategic formulation
and implementation?

Big Ideas
The examples mentioned throughout this chapter bring up the importance of develop-
ing “big ideas.” Chapter 3 examined the need and approaches to developing big ideas.
Big ideas often lead to visions or BHAGs. In a video presentation made as an introduc-
tion to the Strategic Leadership core course taught to ESNSRS students, General David
Petraeus, drawing primarily on lessons learned since 9/11, discussed the importance
of identifying the first-order issues in challenging situations and developing big ideas.
He explained, as an example, from the Iraq War, the big idea was the need to protect
the Iraqi population above all else. This shifted the focus from the previous emphasis
on hunting down the insurgents. Petraeus then identified several important tasks
involved in acting on these big ideas.93
First is getting the big ideas right. The strategic leader must think both critically
and creatively while scanning the external environment in order to generate the

C h a pte r 4  16 7
intellectual capacity it takes to develop these ideas. Creative thinking is important
because sometimes the best ideas are initially counterintuitive. Critical thinking is
important because strategic leaders must often challenge their big ideas and strate-
gies as situations in the external environment change.
Second is communicating the big ideas effectively. This involves communicat-
ing in multiple directions—up to superiors, down to subordinates, and outward to
stakeholders and press. This communication helps establish the transparency and
gain necessary.
Third is to observe the conduct of operations themselves. The strategic leader
should periodically remove himself from his externally focused organizational frame
of mind and look inward. This will better enable the leader to identify obstacles
and remove potential barriers, thus allowing the strategies and big ideas to unfold
efficiently. Long-term effectiveness depends on the ability to implement adaptations
that prove effective during operations. While strategic leaders are scanning their
environment, it will be important to identify the flaws and lessons learned from their
experiences and make the necessary changes to their big ideas.

Change Is Necessary
Lieutenant General Claude Christianson, USA (Ret.), currently Director of the Center
for Joint and Strategic Logistics at NDU, argued, “When environments change, plans
need to be altered accordingly.”94 While all of the interviewed senior leaders concur
that they serve as the “change agents” for their organizations, as noted previously, a
number noted that change cannot be initiated just for change’s sake. For example,
Mark Foulon, former Acting Under Secretary of Commerce for Industry and Security,
cautioned, “Before any change you need to find the time to play out all of the different
permutations in your mind.”95
Recognizing the intrinsically transient nature of the external environment influ-
ences success, the strategic leader must be prepared to create an organization that is
adaptive and responsive to continual fluctuations and permutations. Consequently,
leading and managing organizational change is a critical and ongoing responsibility
of a strategic leader. This responsibility is of key importance for both short- and long-
term organizational viability and success—manifested in the requirement to align the
organization with the external environment (either proactively or reactively).
The effective strategic leaders scans the external environment and through sense-
making and keen judgment constantly identifies and articulates the appropriate
changes in organizational vision, direction, strategies, and organizational work pro-
cesses essential to sustain relevance, legitimacy, and competitive advantage within
that environment. Similarly, strategic and organizational leaders should continually
assess and validate internal organizational efficiency and effectiveness efforts needed
to meet short-term product and services requirements.

16 8  L e a d in g a t t h e S t r a te g i c L eve l
Examples of internally or externally driven organizational changes include:
• I nternally driven organizational change occurring as a result of continuous process
improvement efforts, such as Lean Six Sigma. Such changes typically originate during
the introduction of new informational or operational technologies used to facilitate
the integration of organizational work. At times, leaders will institute functional
realignments to implement best practices, establish information-sharing, or enhance
workforce engagement. In most cases, these internal organizational changes occur
at the operational level.
•E  xternally driven organizational changes can result due to a number of factors
(many noted in the “strategic challenges” section in chapter 1), including changes
in competitors’ status, changing markets, disruptive technologies, changes in the
global environment (demographics, political and economic instability, and worker
skills), changes in availability of critical resources, and civil unrest or conflict. Such
changes occur with increasing rapidity and at times can be overwhelming. In some
cases, they may result in an organizational crisis. Dealing with these changes is the
direct responsibility of the strategic leader.
Two examples illustrate some of the factors the strategic leader must consider
when making a decision regarding changes to his or her organization. The first is the
Xerox’s need for transformational change in the mid-1990s.
Xerox was in serious trouble and needed transformational change. The Xerox board
of directors hired Rick Thoman as CEO, a key leader in assisting CEO Lou Gerstner’s
fundamental and dramatic transformation of IBM in the early 1990s, to turnaround
Xerox. IBM’s strategy and organizational structure changed from selling large computer
systems to providing customers solutions to their organizational and market challenges.
In a sense, IBM shifted from transaction sales (selling a specific IBM item) to solution
sales (resolving the problems the customer faces by suggesting relevant IBM products).
Thoman presented a similar vision and approach to Xerox. Instead of selling copiers, cus-
tomers needed document solutions. He changed the existing sales approach from specific
territories (a sales representative may be responsible for the state of Texas) to serving a
specific industry (banking). This change fundamentally changed the structure, system,
incentives, and culture of Xerox. The transformed company now required salespeople
well connected with their geographical customers to expand their knowledge to both
new customers within a specific industry and to that industry to help their customers
identify solutions to current and potential problems, something with which they had
little or no knowledge or expertise. Yet despite the continuing freefall of Xerox stock
prices and the reality that the old way of doing things was not working, people through-
out the organization did not embrace the needed change. As a result, Thoman failed to
turn Xerox around, and the Xerox board fired him within the first 2 years of his tenure.
Another example is the following mini case study on the Secretary of the Navy’s
efforts in the early 1990s to transform the Navy’s and the Marine Corps’s approach to
doing business using a quality approach to management.

C h a pte r 4  16 9
Total Quality Management, Total Quality Leadership:
A Mini Case Study
A major contributing factor to embracing approaches to reducing costs and expendi-
tures was the collapse of the Soviet Union and the subsequent catastrophic reduction
in the defense budget. Based on research in the 1980s by the Navy Personnel Research
and Development Center (NPRDC), Linda Doherty, the senior project research scientist,
reported that using the quality approach and philosophy of W. Edwards Deming would
be feasible for the Navy. Following a series of tests at the North Island Naval Aviation
Depot (repair of Navy aircraft), the approach was extended to other aviation depots,
supply centers, and shipyards. The depots as a whole were losing $100 million per year.
With the support of the NPRDC team, the Navy earned a profit of $2.3 million in 1985
and $125 million in 1986. In 1985, NPRDC coined the label for this effort Total Quality
Management (TQM).
In the late 1980s, being superb researchers and not leaders of major organizational
programs, the Secretary of the Navy (SECNAV) asked Linda Doherty and her team to
establish and lead the TQM office in the SECNAV’s office. The initial focus was to help
coordinate the implementation of TQM throughout the Navy and Marine Corps logis-
tics, maintenance, and rework facilities. In 1989, the Secretary of the Navy, H. Lawrence
Garrett, formed the Department of the Navy (DON) Executive Steering Group (ESG)
to lead and guide the transformation efforts within the Navy and Marine Corps. This
all-civilian group developed a vision, guiding principles, and strategic goals, and then
established working groups to develop training and education programs to support the
transformation efforts.
During this period, Admiral Frank Kelso, then Chief of Naval Operations (CNO), took
the lead for the Navy and made the decision to apply the TQM effort not only within
such facilities as shipyards and depots, but also to institute it Navy-wide—including
the operating forces. This migration to the total fleet created confusion, since the fleet
viewed TQM as a management program run by civilians. Moreover, because Active-
duty naval officers viewed themselves as leaders—not managers—they believed TQM
did not necessarily pertain to them.
Attempting to make TQM acceptable as a philosophy and improvement process
for all naval organizations—military and civilian—Admiral Kelso authorized changing
the acronym from TQM to TQL (Total Quality Leadership). While this name change
accomplished the objective of making the program Navy-wide, it also created addi-
tional confusion. At the same time, the Navy had an ongoing, very successful officer
and enlisted leadership program (NAVLEAD). The TQM to TQL name change resulted
in many organizations becoming confused as to which leadership program had prior-
ity. Moreover, two different Navy organizations were developing NAVLEAD and TQL
courses and learning activities—leading to further confusion and redundancy.

170   L e a d in g a t t h e S t r a te g i c L eve l
In June 1992, J. Daniel Howard, acting SECNAV, issued directives requiring all Navy
and Marine Corps personnel to learn and embrace TQL as the way forward into the
21st century. Significant efforts were made to have all flag officers attend training and
education, and for the education and training push to be top down. The CNO’s office
prepared and distributed videos and other marketing materials describing success
stories demonstrating the benefits TQL.
Despite all these efforts, the Navy, especially the operating forces, did not fully
embrace or support TQL. There were a number of issues not addressed by the Navy’s
senior leadership regarding the implementation of a transformational change. While
there was top-level buy-in, this buy-in was intellectual, not emotional. There was no
sense of real urgency other than what Harvard Professor John Kotter calls “false
urgency.”96 Indeed, there were messages from senior Navy and Marine Corps leaders
outlining a logical, analytically sound rationale for implementing TQL. Nonetheless, it
was difficult for individual Sailors and Marines to be convinced regarding the compel-
ling need for change. They did not “feel” driven to change. With more than 200 years
of tradition, culture, and experience in accomplishing the Navy’s mission successfully,
many officers and enlisted personnel did not agree with statements asserting that
they needed to change how things were done or that today’s world required different
approaches and techniques regarding how they performed their jobs. Unfortunately,
there was not an equally important strategy to make the required change “exciting,
meaningful, and uplifting—creating a deeply felt determination to move, make it hap-
pen.”97 In other words, their hearts were not in it.
Furthermore, senior Navy leaders assured operational commanders that imple-
menting TQL would allow military personal to “work smarter rather than harder.”
However, to learn to use TQL techniques and methodologies required significantly
more time and effort. This additional learning effort was to be accomplished while they
simultaneously met ongoing, and demanding, operational requirements—resulting in
working much longer and harder. The payoff for the extra time and work was unclear.
In addition, reorganization of the CNO’s major staff took place shortly following
implementation, yet the reorganization did not follow any of the TQL principles or guide-
lines. Navy senior people began to think that if the senior leaders were not going to “walk
the talk,” why should they. In addition, the Navy leadership did not promote those senior
leaders following TQL, whereas they did promote those that did not follow TQL. Clearly,
the leadership was not practicing what they were preaching. A contributing factor was
the view that commanding officers of operational units began to sense that TQL was a
ruse for management techniques and process improvement efforts—not leadership.
They quickly sensed TQL was an abdication of leadership and began to downplay its
significance. Today, training in TQL is no longer a requirement for Navy officers or part
of officer’s evaluations. The supporting facilities, for example, shipyards and so forth,
migrated to Lean Six Sigma approaches to improve quality.98

C h a pte r 4  171
—Pause—Take a minute and reflect on the following questions. Note your initial
thoughts and insights.
1. Where do you see organizational culture either supporting or impeding this
transformational change?
2. Have you planned or participated in a major change initiative? If so, was it suc-
cessful? Why or why not? If successful or not, what do you attribute as being the most
important factor that led to success or to failure?
3. Assume you are in a strategic leader’s position and knew that a transformational
change of your organization is required. To ensure institutionalizing the change,
what steps would you take prior, during, and following the transformational process?

As noted by the above examples, the most comprehensive organizational change


approach occurs when the strategic leader recognizes that the organization must transform
the way it does business (or operates). Because transformational change is both the most
important and most difficult undertaking faced by the strategic leader and the organiza-
tion, it requires the best of both strategic leadership and management. The high rate of
failure for these programs to meet desired expectations exemplifies the difficulty in leading
and managing transformational change. The McKinsey Quarterly, for example, reported,
“It’s relatively rare for transformation programs to succeed; many surveys, including our
own, put the success rate at less than 40 percent.”99 Because transformational change is
exceedingly difficult and increasingly necessary, chapter 11 is devoted to it.
The question arises, “Why, despite numerous books and articles providing guide-
lines, advice, and specific steps for planning and implementing major change initia-
tives, do strategic leaders continue to have less than satisfactory results in leading and
managing change?” There are many reasons for inadequate results. Based on research
and the insights gleaned from the senior-leader interviews, as well as personal expe-
rience in leading and managing change initiatives, there are two broad categories as
to why major organizational change initiatives are not fully successful: inadequate
strategic leadership; and persistent organizational and individual resistance.
As reported by Forbes magazine in 2006, “The pace of change is accelerating . . . 
There is no mystery here, no conspiracy, no abstract villain. Globalization is not the
problem. Change—that’s our challenge.”100 Consequently, if the strategic leader, exter-
nal stakeholders, and/or internal organizational members believe formulating a new
vision, strategy, and strategic objectives is necessary for short- and long-term organi-
zational performance, vitality, and viability, that leader must determine the amount
of—and implications resulting from—the intended organizational change. For any
chance of success during extensive organizational change, the strategic leader must
be both cognizant and fully prepared to deal with these two challenging categories.

17 2   L e a d in g a t t h e S t r a te g i c L eve l
Table 4-1—a comprehensive listing of many of the recognized shortfalls in designing
and implementing change—illustrates the reality that organizational change is difficult
and indicates no simple formula will work. Any strategic leader attempting to make
change quickly or use a simple formula without comprehensive preparation and defined
execution processes and feedback is setting himself or herself up for failure. While some
strategic leaders are unable to exercise the necessary scanning and sense-making to suf-
ficiently identify the need for organizational change, those that do recognize the change
imperative often may not choose the appropriate response or approach.

Table 4-1. Examples as to Why Organizational Change Efforts Are Unsuccessful

INADEQUATE STRATEGIC ORGANIZATIONAL INDIVIDUAL RESISTANCE


LEADERSHIP RESISTANCE
• F ailed initial assessment, e.g., • S
 ignificant investment in • F ear of the unknown; don’t
did not rigorously or correctly legacy systems that encour- understand why the change
assess the organization’s age status quo rather than is taking place and its impact
current vulnerability, prob- disbanding system and invest on the individual; fear of loss
lems, capabilities, situation, in new system(s). of power, influence, job, effec-
or consider the impact of tiveness, money, status and
organizational culture (either self-esteem; fear of personal
support or resist change); did failure; threat to values and
not identify current affected ideals, confused, and do not
key stakeholders, organiza- understand process.
tional managers, or workforce
mindsets.
• F ailed to determine correct  rganization is large and
•O  een through so many change
•B
change initiative or the timing; bureaucratic with too many initiatives, the “flavor of the
did not consider a systems rule sets, policies and pro- month” leading to apathy,
approach to avoid negative cedures—change requires indifference, fatigue, and
second- or third-order effects, fighting institutional inertia. cynicism.
as well as, fully explore and
evaluate alternatives that
might enhance the chance for
transformational success.
• F ailed to provide a sense  rganization is currently
•O • L oss of control and personal
of urgency, a clear and successful—to transform vulnerability.
compelling vision, strategic to doing something different
objectives, or organizational not considered relevant or
purpose as to why change appropriate at present.
was necessary and what
the desired end-state would
look like; did not give specific
and clearly defined change
initiatives, stretch objectives
and targets, or establish
relative priorities, or guidance
on where to start; or provide
sufficient resources.
C h a pte r 4  17 3
Table 4-1. Examples as to Why Organizational Change Efforts Are Unsuccessful

INADEQUATE STRATEGIC ORGANIZATIONAL INDIVIDUAL RESISTANCE


LEADERSHIP RESISTANCE
• F ailed to provide clear roles • T ransformation may change  rocess and outcomes do not
•P
and responsibilities, and organizational power bases, seem fair.
establish accountability for status, influence, allocation of
delivering results; including resources, and control.
unambiguous metrics and
milestones to track progress
and impact; as well as, estab-
lish process and procedures
to provide senior leadership
timely feedback allowing
intervention to remove barri-
ers, change or correct strate-
gies and tactics, or reallocate
appropriate resources.
• F ailed to exercise strong  takeholders familiar with
•S  on’t see need to change—
•D
leadership or management current organizational struc- competent at current work—
skills, or role model–desired ture do not support changes do not want to go from com-
changes and behaviors; or to that result in different report- petent to incompetent; don’t
establish a guiding team and ing or informal relationships. believe I can learn the skills
deploy organization’s best tal- required of the new position.
ent to implement the essential
elements of the transforma-
tion efforts.
• F ailed to provide operational  trategic leader and/or execu- • C urrent organizational
•S
and tactical leaders sufficient tive team not viewed as cred- relationships and friendship
leeway for making decision ible; or the proposed change disrupted
and adjustments, as well as initiative not viewed as ethical
ensure first-line supervisors or feasible.
and workforce were engaged
and embraced ownership for
change initiatives.
• F ailed to engage workforce  orporate culture discour-
•C  eer pressure to not sup-
•P
early in the planning for the ages innovation, creativity, port the initiative; conflict,
transformational change prudent risk-taking, change, disagreement, and cognitive
initiatives, as well as con- and information and knowl- dissonance.
tinuously communicate and edge sharing; yet does allow
energize the organization. Did criticism, decision-creep,
not plan pilot programs or look not-invented-here syndrome,
for quick wins to demonstrate scapegoating, and blame.
validity of change.

174  L e a d in g a t t h e S t r a te g i c L eve l
Table 4-1. Examples as to Why Organizational Change Efforts Are Unsuccessful

INADEQUATE STRATEGIC ORGANIZATIONAL INDIVIDUAL RESISTANCE


LEADERSHIP RESISTANCE
• F ailed to establish opportuni-  rganizational change may
•O • Insufficient time to learn new
ties to share information and lead to downsizing, outsourc- position.
knowledge, or provide neces- ing or off-shoring.
sary training and education
enabling the organization to
succeed following the trans-
formational efforts, as well
as plan to institutionalize the
required changes (e.g., per-
sonnel and reward systems).
• F ailed to have people affected  hange does not energize or
•C
by the change included in the excite—it doesn’t feel right;
decisionmaking process. expect increased workload.
• J ob insecurity—potential
career stopper.

Reflecting on table 4-1, “Inadequate Strategic Leadership” and “Organizational Resis-


tance,” leads to several questions or themes that require strategic leaders’ direct attention:
• I s change actually required, and if so, how extensively, and where within the orga-
nization and its systems?
•D  oes the organization have the capacity to change?
•W  ill stakeholders support the change?
• I s the strategic leadership strong enough to lead and manage the transformational
change effort?
•D  oes the strategic leader have an actionable transformational agenda and plan?
Three fundamental themes capture the key elements regarding “Individual Resistance”:
•V  alues, belief systems, and mindsets.
•A  n inability to see or understand a personally desirable outcome—difficulty seeing
value or a personal pathway to success and subsequent rewards.
• I nadequate (or perceived) individual and organizational learning.
Inadequate Strategic Leadership and Organizational Resistance
When planning a major organizational change initiative, the strategic leader should
consider the following five themes or questions (and sub-questions) regarding inad-
equate strategic leadership and organizational resistance:

Is Change Required? Assess and evaluate the requirement for transformational


change. Does the change initiative make sense?

C h a pte r 4  17 5
Is the Organization Capable? If the organization requires transformational
change, does the organization have the capacity to perform the desired change?
•D  oes viewing and evaluating the organization as a system of systems identify poten-
tial minefields?
• I s the timing, situation, and context right, for example, is there a legitimate sense of
urgency?
• I s the organizational culture a barrier to success or an advantage?
•C  an the leadership and organization manage a number of overlapping change and
productivity requirements, as are often confronted during a transformational change
process?
•A  re there sufficient resources available to execute a transformation without jeopar-
dizing the future of the organization?
• I s there sufficient understanding of risk and its implications?
• I s there sufficient senior-level leadership experience, expertise, and capability to lead
and manage a transformational change effort?
• I s the strategic leader using a relevant transformation planning solution?
For example, Rick Thoman attempted to use the same successful approach used by
IBM’s CEO Lou Gerstner to transform Xerox—and failed. As David Herold and Don-
ald Fedor noted in their 2008 book Change The Way You Lead Change, “Just because a
compelling case can be made for change doesn’t mean the particular change is worth
doing, that it will be embraced, or that it will be successful.”101

Does Change Garner the Stakeholders’ Support?


•W
 ill key external stakeholders and valued constituencies support a transformational
change proposal, for example, for government (Congress, the President, and other
executive-agency leaders, special interest groups and associations, and possibly the
media), for nongovernmental (business/industry: board members, shareholders,
partners, customers, Wall Street analysts; nonprofit: board members, donors, people
receiving services—clients and citizens, and auditors)?
•D
 id they conduct a stakeholder analysis?
Does the Effort Have Strong Strategic Leadership?
•D  oes the strategic leader have sufficient skills to lead and manage the change effort?
• I s the necessary expertise available to develop a change agenda and make the neces-
sary management decisions to do the change initiative effectively?
•D  oes the strategic leader have the self-confidence to lead and manage the change
effort and be able to gain buy-in from all interested parties—including, when neces-
sary, changing individual and group mindsets?
• I s the vision clear enough to provide goals, while also allowing enough flexibility for
alterations of directions and strategies?

176   L e a d in g a t t h e S t r a te g i c L eve l
•W  ill the strategic leader (and his or her team) serve as appropriate role models and
demonstrate desired behaviors and mindsets?
• I s the strategic leader capable of ensuring an appropriate balance between sustaining
the organization’s short-term strategic objectives while initiating and overseeing the
organizational transformation effort?
Is There an Executable Organizational Change Agenda/Plan? Once the strategic
leader determines to proceed with the change effort, a change agenda is required.
•A  re alternative strategies available?
•D  oes the strategic leader strive for consensus as to best approach to select?
•D  id the strategic leader take the necessary steps to minimize the impact of personal
(and SLT members) bias, blind spots, and groupthink?
•D  id the leader rigorously consider and evaluate possible second- and third-order
consequences and risks?
• I s a supporting strategic agenda/plan (along with a communications strategies and
planning) with defined strategic goals and objectives developed?
•D  id the leader identify systematic changes with specific targets in the planning pro-
cess (including a cost-benefit analysis)?
•D  oes the strategic leader (supported by his or her team) have a compelling reason
and “story” to tell for the needed change?
• I s it framed in such a manner that gains buy-in and encourages stakeholders’ and
organizational members’ enthusiastic support?
• I s there a vision or purpose that provides a portrait of the desired future—a clear
picture of what success looks like leading to organizational energy and engagement?
•D  oes the vision entail attainable goals?
• I s there a sense of urgency that helps to break the bonds of organizational inertia?
•A  re strategic objectives and stretch targets aligned with the leader’s and organiza-
tion’s purpose, values, ethics, and guiding principles?
•T  o illustrate the credibility of the change initiative(s), did the strategic leader identify
dramatic symbolic changes?
•A  re there clear roles and responsibilities that provide ongoing accountability for the
actions required to execute the transformational change?
•A  re there key organizational leaders who can serve as catalysts and role models for
the new required behaviors?
•D  id the strategic leader identify processes and procedures to share knowledge and
lessons learned throughout the process to enable organizational creativity, innova-
tion, and learning during the transformational process?
•A  re there measures of effectiveness (metrics) that enhance performance feedback
and possible revisiting strategies and execution objectives, targets, resourcing, and
desired outcomes?

C h a pte r 4  17 7
For example, in considering if the strategic leader is choosing the correct strategy
and courses of actions, review the efforts of James McNerney, one of the three leaders
considered to replace Jack Welch at General Electric. When Welch selected Jeff Immelt
in December 2000, 3M selected McNerney to be the new CEO (the first outsider to lead
the company in its 100-year history). He cut 11 percent of the workforce and surmised
3M needed to adopt the GE Six Sigma quality program to instill discipline into their
processes. Leaving after more than 4 years to take the Boeing CEO’s position, McNer-
ney’s successor George Buckley questioned if “the highly structured quality system,
applied to every phase of the business, caused 3M to lose some of the innovative spirit
for which it was famous and which has been largely credited with its success.”102 Since
taking over in 2005, Buckley dismantled a number of McNerney’s efficiency programs.
Buckley states, “Invention is by its very nature a disorderly process. . . . You can’t put a
Six Sigma process into that area and say, well, I’m getting behind on invention, so I’m
going to schedule myself for three good ideas on Wednesday and two on Friday. That’s
not how creativity works.”103 Indeed, as with Thoman at Xerox, just because a specific
system worked in the previous organizational system does not necessarily mean it is
the most promising course of action for a different organizational system. A strategic
leader in choosing inappropriate strategies or courses of action that encounters existing
culture and individual and group mindsets can have severe impact on the organiza-
tion’s viability, credibility, reputation and competitive advantage.
Reflecting on the above five themes and questions, one can better understand what
strategic leaders think about and plan for to enhance the success of any organizational
change. However, even if the strategic leader accomplishes everything addressed in
the above five themes, there is no guarantee the change initiative(s) will be successful.
It is the second general construct, “Individual Resistance,” that will determine
any organizational change success. In fact, many of the items in the previous section
could be performed inadequately, and still achieve success—only if the issues regarding
individual resistance are addressed successfully. As Kotter emphasized:
Our main finding, put simply, is that the central issue is never strategy, struc-
ture, culture, or systems. All those elements and others are important. But
the core of the matter is always about changing the behavior of people, and
behavior change happens in highly successful situations mostly by speaking
to people’s feelings. . . . In highly successful change efforts, people find ways to
help others see the problems or solutions in ways that influence emotions, not
just thought. Feelings then alter behavior sufficiently to overcome all the many
barriers to sensible large-scale change. Conversely, in less successful cases, this
seeing-feeling-changing pattern is found less often, if at all.104
Furthermore, Kotter explains, “People change what they do less because they are
given analysis that shifts their thinking than because they are shown a truth that

17 8   L e a d in g a t t h e S t r a te g i c L eve l
influences their feelings. This is especially so in large-scale organizational change. . . .
In an age of turbulence, when you handle this reality well, you win. Handle it poorly,
and it can drive you crazy, cost a great deal of money, and cause a lot of pain.”105

Individual Resistance
With the above in mind, as noted previously, the three themes related to individual
resistance are 1) values, belief systems, and mindsets; 2) an inability to see or under-
stand a personally desirable outcome—difficult to see value or a personal pathway
to success and subsequent rewards; and 3) inadequate (or perceived) individual and
organizational learning. Overarching these three themes is the recognition that orga-
nizations do not change; individuals within the organization do. As people change,
organizations will change. “Quite simply,” professors and executive consultants Stew-
art Black and Hal Gregersen explain, “new transformation strategies do not make a
difference until people think and act differently.”106
Values, Belief Systems, and Mindsets. Chapter 3 presented elements of personal
dimensions for strategic leaders. Of these, four are key factors strategic leaders need
to think about when planning transformational change. These include in the “self-
awareness” section—know and clearly understand one’s own values and belief systems;
in the “cognitive capacity” section—self-awareness of one’s biases, frames of reference,
mental models and their relevance to discerning judgment and decisionmaking; in
the “social capacity” section—understand and have empathy for others, as well as the
organization’s socializing process; and, in the “behavioral capacity” section—role-
model for the desired behavioral change and to practice what is preached. Without
reiterating the discussions from the previous sections, the key point is that all four of
the aforementioned factors (along with others) will have a major impact on an indi-
vidual’s willingness to consider some levels of personal change.
Regarding the first three factors, the strategic leader must apply these factors
to the individuals and groups within the organization. In other words, what are
the mindsets, values, biases, mental models, and social implications associated
with individual subordinate leaders and members of the workforce? How does
the strategic leader influence these factors in a manner to implement successfully
a perceived much-needed organizational transformational change? The fourth
factor is the need for stakeholders, subordinate leaders, and employees to see the
strategic leader model the desired values and mental constructs, as well as dem-
onstrate empathy and social awareness regarding the challenges faced by both
individuals and colleagues implementing the major change.
Concerning their values, what is the potential for the change initiative to affect
an individual’s value system? Organizational change expert Annabel Beerel argues
that major changes create what she terms as “value tensions.” She suggests that any
major change can affect one’s values and priorities, and challenge one’s sense of self.

C h a pte r 4  17 9
For example, will the major organizational change require the individual to work at a
different place or hours? Going to a different place will certainly take someone out of
his or her office “comfort zone.” Perhaps traveling further to a new worksite may result
in tradeoffs with family members (less time at home); or, if focused on the family, not
be as available for special projects at the office. This could result in such questions as,
“How will the boss view me should I have to reduce my time to do special projects?”
“How will an employee feel if the change calls into question the person’s credibility
and being recognized as the ‘go-to’ person by colleagues?” Beerel surmised that “Value
tensions cut to the chase. They challenge who we are and the world of self-perceptions
we have created around us.”107
As noted previously, values develop over time and through experience. Ingrained,
they are an individual’s way of thinking and acting (belief systems, mindsets, mental
models, and ultimately behaviors). Beerel suggested, “New realities may require us to
change our ideas; our belief systems; our loyalties; our concepts; our habits; and our
skill sets.”108 In making transformational change, many employees are likely to either
consciously or subconsciously call into question their current values and elements
of their belief systems. Doing so will create tension and can lead to resistance, stress,
and confusion.
Another issue is the impact of mindsets and organizational culture. For example,
do subordinate leaders and employees have a prevailing mindset that embraces change
or do they cling to the existing business model? If the prevailing mindset is one of
consistency and well-recognized policies and procedures for doing work, changing
such business models and ways of doing work will most likely go against the prevailing
culture, as well as ask people to change their specific behaviors significantly. Moreover,
possible organizational structure changes will realign people’s social and working
relationships. Without a culture and mindsets that embrace change, strategic leaders
must recognize that to implement transformational change in this setting will be dif-
ficult and they must plan to overcome both individual and group resistance.
People may fail to change because their current mindsets blind them to the need
for change. As noted scientist Thomas Kuhn discovered, mental models or paradigms
can act as filters. When scientists and researchers receive data that align with their
paradigms, they can see it clearly. However, when such data are not aligned with their
paradigms, they reject it or do not even see it.109 Business author Alan Deutschman
concurs. He explains that it is because of the individual’s mental models or paradigms
that “simply providing information doesn’t sway how people think and feel.” More-
over, he notes, “We take the facts and fit them into the frames we already have. If the
facts don’t fit, we’re likely to challenge whether they’re really facts or to dismiss the
information and persist somehow in believing what we want to believe.”110 Clearly,
if a person’s values, belief systems, and mindsets are set in concrete and unalterable,
change for these individuals will not happen.

18 0  L e a d in g a t t h e S t r a te g i c L eve l
An Inability to See or Understand a Personally Desirable Outcome—Difficult
to See Value or a Pathway to Personal Success and Subsequent Rewards. With the
continuing freefall of Xerox stock prices and the reality that the old way of doing things
was not working, why did people in Xerox not embrace the needed change? After all,
Thoman repeatedly presented the new vision, strategy, and supporting structure to Xerox
employees. As you remember, the previous business model had salespeople focus on
knowing their customers within a specific geographical area, but whereas using the new
approach, salespeople would group customers by industry, which would have similar
needs and potentially similar solutions. Black and Gregersen argued that their resistance
was the result of Xerox employees not adjusting their mindsets for the new way of doing
business and the fear of being incompetent at the new approach. They stated:
The clearer the vision about solutions and [industry solution units], the easier it
was for sales people to see how bad they were going to be. After all, what did they
know about delivering solutions? Nothing. What did they know about working
in industry-focused teams? Nothing. Consequently, how good at it were they
likely to be? Terrible. Because they were smart, not dumb, they did not want
to look or feel stupid. Add to this mix a culture in which mistakes were often
punished and learning was rarely rewarded, and you must wonder who would
want to venture off into the land of certain incompetence and probably punish-
ment when they could stay in the one country of demonstrated capabilities and
peer respect? No one.111
Furthermore, Black and Gregersen suggested that “People often stick to what they
are good at, even when they see that it has become irrelevant.” They argued that “Not
only do people need to see the new direction or destination, they must see and—more
importantly—believe in a path to take them from doing the right thing poorly to doing
it well. Without this prospect, many people prefer competence at the wrong thing to
incompetence at the right thing.”112
Consequently, when leading and managing transformational change, it is criti-
cally important to appreciate that people within the organization often feel confident
and competent in doing their current work—even if it is not meeting the organiza-
tion’s, stakeholders,’ or customers’ new requirements and desired outputs. Typically,
the existing reward system reinforces their current way of doing work. The anxiety
of feeling incompetent (even if it is only temporary) makes most people worry about
how they are perceived by their bosses, colleagues, and coworkers. They may perceive
(even if subconsciously) that their self-confidence and self-esteem may be in jeopardy.
This specific issue can breed a fear of failure, along with its derivatives of fear of loss of
power, influence, job (insufficient skills), effectiveness, money, status, and self-esteem.
Inadequate (or Perceived) Individual and Organizational Learning. As noted
earlier, even if they agree to the change, the ability to adapt to the new personal and

C h a pte r 4  181
organizational changes requires changes in mental models and frames of reference,
as well as adopting different ways of doing business and resultant behaviors. This
requires significant learning—both at the individual and organizational levels. Learn-
ing and adapting to the new change requirements is not the same as coping with the
change. Learning and adapting occurs at two levels. The first is at the organizational
level. This involves providing a climate and culture supporting creativity, energy, and
learning strategies. The second is at the individual level. Here, the individual strives
to learn, is willing to receive constructive feedback and mentoring, and focuses on
self-development to achieve a new competence and self-confidence. Beerel argued
for an individual to be adaptive and focused on learning required “being creative
and active, not passive and submissive, in the face of change.”113 Coping, on the other
hand, is making do without the needed sense of urgency to learn. As Beerel explained:
Coping strategies are less assertive, energetic and creative than adaptive strate-
gies. Coping strategies imply a certain resignation to the inevitability of change
whereas adaptive strategies are active, outgoing strategies that do the best they
can to meet change on their own terms. Consciously developing our adaptive
capacity is what makes us more competent at responding to change. It builds
our resilience and our self-confidence. Developing our adaptive capacity also
takes us out of the realm of simple survival to greater autonomy and personal
moral agency.114
Part of the learning process may also require unlearning. It is common for old
ways of doing business to creep into the new ways of doing business. These habits can
often undermine change or diminish its benefits. Clearly, as with the explosion and
destruction of NASA’s space shuttle Columbia, some senior leaders did not learn or
unlearn the key leadership and cultural aspects that led to the earlier explosion of the
space shuttle Challenger. Strategic leaders and their subordinate leaders must be acutely
aware of what cultural aspects and mental models need to be unlearned to advance
progress to a desirable change result.

—Pause—Take a moment and reflect on the following questions. Note your initial
thoughts and insights.
1. Think back to a major change that occurred in your life, for example, changing
jobs, going back to school, getting married, having a child, and so forth. How did
you feel about these changes? How did these changes affect your values, mindsets,
and behaviors? Were you creative and innovative in dealing with the challenges of
these personal changes?
2. Now think back to a major change that occurred within your organization, for
example, promotion, leadership making changes to your work routine, personal
appearance (uniforms), and the nature and outcomes of your work (especially those
that required a change in skill sets and behaviors). How did you feel about these

18 2  L e a d in g a t t h e S t r a te g i c L eve l
changes? How did these changes affect your values, mindsets, and behaviors? Were
you adaptive to these changes? Were you creative and innovative in dealing with
these personal challenges? If successful, what do you attribute as being the most
important factor that led to your success? If not, what do you attribute as being the
most important factor that led to failure?

Models for Individual and Organizational Change


There are a number of models developed and fully researched that address both
individual and organizational change.115 Many of these theories look at change from
different perspectives, yet they often are quite similar despite their use of different
terminology in describing a specific model.
Personal or Individual Change. The Four Phases of Change constitute one of
the most recognized individual change models: 1) denial and disbelief, 2) resistance
and anger, 3) reluctant acceptance and exploration, and 4) commitment as reflected
in figure 4-1.

Figure 4-1. THE FOUR PHASES OF CHANGE

• The Denial and Disbelief phase occurs when introducing a change initiative. Most
often, individuals not embracing the change will avoid thinking about the change
and will focus on work processes they know well. They deflect attention away from
the change hoping that the change initiative, if ignored, will go away.
• The Resistance and Possible Anger phase begins when the individual recognizes that
the change initiative is not going away. This is when feelings of loss begin, for example,
loss of status, power, influence, and ultimately the job, leading to insecurity, anxiety,
and fear. Most often individual and group productivity and morale will suffer dur-
ing this phase.
• The Reluctant Acceptance and Exploration phase begins when leaders, colleagues,

C h a pte r 4  18 3
and other people viewed as credible by the individual begin to support and give cre-
dence to the change initiative. Initially, although they may not have truly accepted
the proposed change initiative, individuals will shift their focus from resisting and
attempting to undermine the change efforts to looking for possible positive solutions.
As they become more accepting of the change, individuals begin to think and act in
ways that support the change.
• Th
 e final phase, Commitment, occurs when the individual is onboard with the change
and is taking an active role in managing the change effort and modeling the desired
change behaviors.
In 1995, James Prochaska, John Norcross, and Carlo DiClemente presented their
renowned personal change model—the six-stage model. The six stages include pre-
contemplation, contemplation, determination, action, maintenance, and termination.
• Precontemplation: Individuals are not thinking about change for a variety of reasons;
for example, the individual is not truly cognizant of a need for change, or he views
the identified change as too difficult to undertake or manage.
• Contemplation: Individuals are now willing to consider change, but are not com-
mitted to making a change. They are thinking about it, but often do not make the
decision to take action to initiate change.
• Determination (Committing to Action): Individuals are willing to make a com-
mitment to change and are willing to plan for the change. They consider various
potential obstacles to the plan and develop strategies to get around them. This is
similar to goal-setting.
• Action (Implementing the Plan): Individuals now put their plan into action, often
including making public their commitment to follow through. This is similar to
executing a goal-setting strategy to achieve identified goals, celebrating quick-wins,
and making adjustments along the way—but not losing focus or commitment to
achieving the desired change.
• Maintenance, Relapse, and Recycling: Individuals performing personal change must
modify their mindsets, belief systems, and behaviors. This stage reflects the need to
maintain focus, drive, and commit until the personal changes become new mindsets,
behaviors, and habits. Relapse and recycling often occur during the implementation
stage, in which individuals revert to old behaviors and habits but must instead stay
the course toward the desired change.
• Termination: Individuals have achieved their ultimate change objective and have
complete confidence that they will stay the course of the new mindset and desired
behavior.116
In comparing the six-stage model (and similar individual change models) to the
individual resistant factors, one could argue that stages one and two are where many
individuals—within the organization contemplating transformational change—may
be in denial or attempting to cope with the change. The real issue with the model and
the respective needs of the individuals within the organization is the lack of hope—the

18 4  L e a d in g a t t h e S t r a te g i c L eve l
recognition that they may be unable to make the necessary changes, or be unsuccess-
ful following the transformation efforts. In the six-stage model, the authors believe
the initial approach (stage one) is to become aware of the self-defeating reasons or
defenses that are inhibiting the individual from making change. In the attempt to
change individual mindsets and be willing to take a risk in changing their behav-
iors, organizational members need to be inspired to believe they can be successful in
accomplishing the desired change. They must be able to see a pathway to the desired
destination, believe they can actually walk the pathway, and that the destination is of
personal value to them.117
The point is most people know others who were advised by doctors to stop smok-
ing, change their diets, or change their lifestyles—or they might not expect to live
much longer. Yet research shows that 9 out of 10 heart patients take their medicine
only for 3 or 4 months and then revert back to their old ways of living, be that smoking,
eating the wrong foods, or not taking their medications.118 Clearly, the fear introduced
into the discussion by doctors is insufficient to change most people’s behaviors. As Alan
Deutschman argued, “It rarely does any good to tell someone, ‘Dude, you’re in denial.’
The facts won’t set them free. Knowledge isn’t power when the facts are too much
to bear. Then knowledge is anxiety.” Moreover, Deutschman emphasized another
important point “to show how people can change when the facts and fear haven’t
motivated them. The real key is to give people hope, not facts.”119 Again, remember
Kotter’s key point that to have any chance of transformational change, the “feelings”
of those being asked to change behaviors are more important than the logic for the
change. Intellectual buy-in alone will not suffice.
It is important to remember that individual stakeholders’ or organizational mem-
bers’ beliefs in the organization’s purpose, vision, mission, desirable outcomes, and
the ability to change their mindsets and behaviors rests in the individuals, not the
strategic leaders. As Black and Gregersen point out:
For people to really get moving, they must clearly see in their own minds—not
yours—where they are going. They must believe they have the required resources
to walk the path and reach the promised-land. And they must believe that out-
comes they value will result from following the path outlined by the new map
in reaching the destination. The key thing to remember here is that their belief
that all three components are in place counts—not yours. If they don’t see it and
believe it, nothing else really matters.120
Furthermore, McKinsey’s Emily Lawson and Colin Price suggested four basic condi-
tions critical for employees to change their behavior. These include: providing “. . . a
compelling story, because employees must see the point of the change and agree with
it”; “. . . role modeling, because they must also see the CEO and colleagues they admire
behaving in the new way”; providing “. . . reinforcing mechanisms, because systems,

C h a pte r 4  18 5
processes, and incentives must be in line with the new behavior”; and, “. . . capabil-
ity building, because employees must have the skills required to make the desired
changes.”121

Summary
Clearly, the ever-changing nature of the external operating environments for most
organizations will continue to present new challenges, including many that are
unprecedented. To meet the resulting level of uncertainty, the strategic leader must
ensure persistent examination and alternative strategy formulation. The leader’s abil-
ity to identify opportunities in dynamic, sometimes threatening environment can
potentially generate massive rewards. On the other the hand, the leader’s inability to
identify risks can destroy an organization. That is why performing strategic analysis,
formulating strategy and vision, and determining whether or not the organization
must change (and if it has the necessary agility and resources to adapt and embrace
the new directions) are essential responsibilities of the strategic leader. The results
of navigating the external environment and formulating the vision and strategy can
make or break the strategic leader. Their capacity to see around corners, identify risks,
opportunities, and patterns, and make sense of the environment is the foundation for
building successful strategies to tackle vital issues. The results of these efforts deter-
mine the extent to which the organization can sustain its current purpose, mission,
vision, strategic objectives as in the past, or the status quo is no longer a viable option
and the organization must change direction—and how it operates.
After conducting this analysis and generating strategy to move the organization
forward, the strategic leader must take all of the information compiled and make
informed decisions. In thinking about their decision options, strategic leaders must
also take into account the power and politics inside and outside of the organization
before they make decisions. This is especially true if a government or military orga-
nization is contemplating change.

Notes
1
The author expresses appreciation for the contributions and insights to this chapter provided by
John Matheny, Office of the Secretary of Defense for Policy; and Brad Davidson, recent Master’s degree
graduate from George Mason University School of Public Policy.
T. Owen Jacobs, Strategic Leadership: The Competitive Edge (Washington, DC: National Defense
2

University, 2005), 11.


3
Nassim Taleb, The Black Swan: The Impact of the Highly Improbable (New York: Random House,
2010), xvii.
Gloria Macias-Lizaso and Kiko Thiel, “Building a Nimble Organization: A McKinsey Global Survey,”
4

McKinsey Quarterly, June 2006.

18 6  L e a d in g a t t h e S t r a te g i c L eve l
Donald Sull, The Upside of Turbulence: Seizing Opportunity in an Uncertain World (New York:
5

HarperBusiness, 2009), 140.


6
Ibid.
7
Personal discussions with Tom Ridge, former Director of Homeland Security and Governor of
Pennsylvania, ICAF, 2010.
8
Personal interview with Bob McDonald, Chairman, President, and CEO of Procter & Gamble.
9
Personal Interview with General James Cartwright, USMC, Vice Chairman of the Joint Chiefs of
Staff; former Commander, U.S. Strategic Command
Personal Interview with Cynthia Valles, Executive Vice President, AMEX, former Industry Chair
10

and Visiting Professor for ICAF from American Express; Executive Vice President, Customer Service,
AMEX Europe.
Personal interview with Dave Zuercher, Executive Vice President, International and Insurance Ser-
11

vices, Wells Fargo.


12
Personal interview with Bob Stevens, Chairman and CEO of Lockheed Martin.
George Day and Paul Schoemaker, Peripheral Vision: Detecting the Weak Signals That Will Make or
13

Break Your Company (Boston: Harvard Business School, 2006), 1.


Chun Wei Choo, “Environmental scanning as information seeking and organizational learning,”
14

Information Research, October 2001, 7, 1, available at <http://InformationR.net/ir/7-1/paper112.html>.


Brian Huffman “Why environmental scanning works except when you need it,” Business Horizons,
15

May/June 2004, 47, 3, 44.


16
Ibid.
17
Jack Welch and Suzy Welch, Winning (New York: HarperBusiness, 2005), 178.
For example, focusing on past behaviors rather than exploring alternative approaches, this, in turn,
18

might change the strategy.


Hong-Sang Jeong and Ralph Brower, “Extending the Present Understanding of Organizational
19

Sensemaking,” Administration & Society 40, no. 3 (May 2008), 230.


D. Harris and S. Zeisler, “Weak signals: detecting the next big thing,” Futurist, November-December,
20

2002, 36, 6, 25.


Personal interview with John Matheny, Office of Secretary of Defense for Policy. The framework for
21

the 2008 Wall Street debacle provided by Mark Foulon, Professor of Economics at ICAF and former
Acting Under Secretary of Commerce for Industry and Security and Treasury Chief of Staff for Inter-
national Affairs.
22
Personal interview with John Matheny, Office of Secretary of Defense for Policy.
Leon Fuerth, “Foresight and anticipatory governance,” Foresight, 2009, 11, 4, 15, available at <www.
23

emeraldinsight.com/journals.htm?articleid=1801358&show=pdf>.
Office of the Vice President for Research and Applied Learning, “Actionable Foresight Workshop,”
24

Research Highlights (National Defense University, April 2011), 3.


For further information on these two government foresight initiatives, visit UK’s foresight Web sites
25

at <www.bis.gov.uk/foresight> and <http://wiwe.iknowfutures.eu/iknow-description/>.


26
Fuerth.
27
Ibid.
Doug Randal, “Exploring and learning from the future: five steps for avoiding strategic surprises,”
28

Strategy & Leadership, 2009, 37, 2, 27.

C h a pte r 4  18 7
Ibid. Reproduced with permission of Emerald Group Publishing Limited in the format Journal via
29

Copyright Clearance Center—All Rights Reserved.


Personal interview with VADM Conrad Lautenbacher, USN (Ret.), Vice President for Science, Com-
30

puter Sciences Corporation. Former Director of NOAA, President and CEO of the Consortium for
Oceanographic Research and Education (CORE), and Deputy Chief of Naval Operations (Resources,
Warfare Requirements and Assessments) in charge of Navy programs and budget.
Personal interview with Renee Acosta, President & CEO, Global Impact.
31

Personal interview with Jay Sloan, President of J.J. Sloan & Associates; former SES leader at Defense
32

Intelligence Agency (DIA): Director of Policy Support; Defense Intelligence Officer for East Asia and
the Pacific; Director of Estimates.
Ram Charan, Know-How: The 8 Skills That Separate People Who Perform from Those Who Don’t (New
33

York: Crown Business, 2007), 53.


34
Ibid., 54.
35
Ibid.
36
Ibid., 56.
37
Ibid., 55.
38
Ibid.
39
Ibid., 77.
40
Ibid., 56.
Personal interview with LTG Claude Christianson, USA (Ret.), Director of the Center for Joint and
41

Strategic Logistics, National Defense University; former Director for Logistics, the Joint Staff.
Personal interview with Mark Foulon, Professor of Economics at ICAF. Former Acting Under Sec-
42

retary of Commerce for Industry and Security and Treasury Chief of Staff for International Affairs;
consultant with McKinsey.
Personal interview with LTG Ron Iverson, USAF (Ret.), CEO of LGS Innovations (subsidiary of
43

Alcatel-Lucent and the classified portion of Bell Labs); former 7th Air Force Commander and Deputy
Commander of United States Forces in Korea.
44
John Kotter and Dan Cohen, The Heart of Change (Boston: Harvard Business School, 2002), 68.
45
Ibid., 69.
46
Jacobs, 207. Italics in original.
Personal interview with General George Casey, USA (Ret.), former Chief of Staff of the United States
47

Army (2007–2011); and Commanding General, Multi-National Force–Iraq (2004–2007).


48
Burt Nanus, Visionary Leadership: Creating a Compelling Sense of Direction for Your Organization
(San Francisco: Jossey-Bass, 1992), 16.
Gary Yukl, Leadership in Organizations, 7th ed. (Upper Saddle River, NJ: Pearson Education, 2010),
49

310.
50
Ibid., 313.
51
Kotter and Cohen, 82.
Ken Blanchard and Jesse Stoner, “The Vision Thing: Without It You’ll Never Be a World-Class Orga-
52

nization,” Leader to Leader (Winter 2004), 24–25. Italics in original.


53
Ibid.
54
Ibid.

18 8   L e a d in g a t t h e S t r a te g i c L eve l
55
Mark Lipton, How Vision Keeps Companies on Course (Boston: Harvard Business School, 2003), 73.
56
Nanus, 34.
James Kouzes and Barry Posner, The Leadership Challenge, 4th ed. (San Francisco: John Wiley & Sons,
57

2007), 109.
58
Lipton, 73.
59
Kouzes and Posner, 125.
60
Ibid., 121.
61
Ibid.
62
Nanus, 140.
63
Gordon Sullivan and Michael Harper, Hope Is Not a Method (New York: Broadway Books, 1996), 77.
64
Welch and Welch, 68. Italics in original.
65
Kouzes and Posner, 152.
66
Ibid., 82.
67
Yukl, 290.
68
Jim Collins and Jerry Porras “Building Your Company’s Vision,” Harvard Business Review 74, no. 5
(1996), 73.
69
Ibid.
Henry Shelton, Joint Vision 2020 (Washington, DC: Government Printing Office, June 2000), 1, avail-
70

able at <www.fs.fed.us/fire/doctrine/genesis_and_evolution/source_materials/joint_vision_2020.pdf>.
Robert Gates, QDR (Washington, DC: Department of Defense, February 2010), 4, available at <www.
71

defense.gov/qdr/images/QDR_as_of_12Feb10_1000.pdf>.
72
James Mattis, JOE (Suffolk, VA: U.S. Joint Forces Command, February 2010), available at <www.
jfcom.mil/newslink/storyarchive/2010/JOE_2010_o.pdf>.
73
Personal interview with Cartwright.
“Defining Strategy: Creating a Common language of business terminology,” Strategic Direction, 2009,
74

25, 4.
Andrew Krepinevich and Barry Watts, Strategy for the Long Haul: Regaining Strategic Competence
75

(Washington, DC: Center for Strategic and Budgetary Assessments, 2009), x.


76
Ibid.
77
Ibid., 39.
78
Samuel Griffith, Sun Tzu: The Art of War (New York: Oxford University Press, 1971), 84.
79
Ibid.
80
Hugh Courtney, Jane Kirkland, and S. Patrick Viguerie, “Strategy Under Uncertainty,” McKinsey
Quarterly, June 2000, 81, available at <https://www.mckinseyquarterly.com/Strategy_under_uncer-
tainty_1064>.
The author expresses appreciation to John Matheny, Office of the Secretary of Defense for Policy, for
81

the development of this mini case study.


82
Clarke’s memorandum for Condoleezza Rice of January 25, 2001, “Presidential Policy Initiative/
Review—The Al-Qida Network,” is available at <www.gwu.edu/~nsarchiv/NSAEBB/NSAEBB147/
clarke%20memo.pdf>.
83
Ibid.
84
Ibid.

C h a pte r 4  18 9
85
Ibid.
86
Ibid.
87
Ibid.
88
George W. Bush, Decision Points (New York: Crown, 2010), 186.
Douglas Feith, War and Decision: Inside the Pentagon at the Dawn of the War on Terror (New York:
89

HarperCollins, 2008).
90
Ibid., 507.
To review Donald Rumsfeld’s Memorandum for the President of September 30, 2001, “Strategic
91

Thoughts,” see document #13, available at <www.gwu.edu/~nsarchiv/NSAEBB/NSAEBB358a/index.


htm#13>.
92
Ibid.
93
General David Petraeus, “ICAF Course Introduction,” transcript, July 2010.
94
Personal interview with Christianson.
95
Personal interview with Mark Foulon, Professor of Economics at ICAF, former Acting Under Secre-
tary of Commerce for Industry and Security; Consultant with McKinsey.
96
John Kotter, A Sense of Urgency (Boston: Harvard Business Press, 2009).
97
Ibid., 47.
98
The author served as the Director of the Navy’s worldwide leadership and command excellence poli-
cies and programs from 1988–1992 (for example, NAVLEAD). In this role, the author argued for and
gained acceptance by CNO and SECNAV to change the name from TQM to TQL.
Josep Isern, Mary Meaney, and Sarah Wilson, “Corporate transformation under pressure,” McK-
99

insey Quarterly, April 2009, 8, available at <https://www.mckinseyquarterly.com/PDFDownload.


aspx?ar=2308>.
100
Rich Karlgaard, “Our Challenge Is Change, Not Globalization,” Forbes, November 27, 2006, available
at <www.forbes.com/forbes/2006/1127/035.html>.
David Herold and Donald Fedor, Change The Way You Lead Change (Stanford: Stanford University
101

Press, 2008), 2.
102
Ibid., 117.
103
Brian Hindo, “At 3M, A Struggle Between Efficiency And Creativity,” Businessweek, June 11, 2007.
104
Kotter and Cohen.
105
Ibid. Italics in original.
106
Stewart Black and Hal Gregersen, Leading Strategic Change (Upper Saddle River, NJ: Pearson Educa-
tion, 2003), 91.
107
Annabel Beerel, Leadership and Change Management (Thousand Oaks, CA: SAGE, 2009), 11.
108
Ibid.
Thomas Kuhn, The Structure of Scientific Revolutions, 3rd ed. (Chicago: University of Chicago Press,
109

1996).
Alan Deutschman, Change or Die: The Three Keys to Change at Work and in Life (New York: Harp-
110

erCollins, 2007), 28–29.


111
Black and Gregersen, 72.
112
Ibid., 73. Italics in original.
113
Beerel, 13.

19 0  L e a d in g a t t h e S t r a te g i c L eve l
Ibid.
114

Examples of reviews include Christiane Demers, Organizational Change Theories (Thousand Oaks,
115

CA: Sage Publications, 2007).


James O. Prochaska, John Norcross, and Carlo DiClemente, Changing for Good: A Revolutionary
116

Six-Stage Program for Overcoming Bad Habits and Moving Your Life Positively Forward (New York:
Avon Books, 1995).
117
Black and Gregersen, 86.
118
Deutschman, 42.
119
Ibid., 211.
120
Black and Gregersen, 87. Italics in original.
Carolyn Aiken and Scott Keller, “The irrational side of change management,” McKinsey Quarterly,
121

April 2009, 101, available at <https://www.mckinseyquarterly.com/PDFDownload.aspx?ar=2335>.

C h a pte r 4  191
CHAPTER 5 | A Strategic Leader
Competency—Leveraging Power
and Politics

Strategic leaders are the key interface between the organization’s external and internal
environments. Through this prism and the investment required to properly evaluate
and make sense of these strategic environments (external and internal), the strategic
leader formulates the vision and strategy needed to gain and sustain organizational
purpose, vision, competitive advantage, and, ultimately, long-term viability and sus-
tainability. This chapter examines two essential strategic leader competencies: effective
and constructive use of power and politics.
As renowned scholar on power Jeffrey Pfeffer explained, “Any new strategy worth
implementing has some controversy surrounding it and someone with a counter
agenda fighting it. When push comes to shove, you need more than logic to carry the
day. You need power.”1 Furthermore, John Matheny, Office of the Secretary of Defense
for Policy, emphasized, “In order to transfer strategy into action, the leader must know
how to master the art of persuasion using political savvy.”2
Clearly, power and politics are an integral part of organizational dynamics in the
strategic environment. Strategic leaders must be able to leverage effectively both power
and politics to further the collective goals of the organization, as well as to lead organi-
zational transformation. This is particularly evident in the highly volatile interagency
environment of government departments and agencies (military and nonmilitary).
To be successful in achieving appropriate organizational outcomes, strategic lead-
ers must understand the role of power and politics and be adept in their use strategi-
cally and constructively. As Harvard Professor Linda Hill pointed out, “Organizations
are inherently political entities, and managers who ignore or fail to understand how
power and influence work in organizations find it difficult to be effective and ethical
on the job.”3
Both power and politics are value-neutral terms; they are assets the strategic leader
can use either positively or negatively. Positive (or constructive) use results in fostering
the best interests of the organization and its stakeholders. Negative (or destructive) use
typically results in internecine warfare, such as self-promotion, deception, exploitation,
selfish manipulation, or win-lose competition.
This chapter examines types of power and its sources, political power and political
savvy, ethical considerations in the use of political power, and practical implications
based on the views of some of the interviewed strategic leaders.

C h a pte r 5  19 3
Types of Power and Its Sources
When people think about organizational power, they immediately picture the CEO,
the President and his Cabinet secretaries, the Chairman of the Joint Chiefs, or some
individual personality viewed as possessing significant power. In these cases, the focus
is on the power (perceived ability) to control others from their senior-level positions
within an organization. Yet potential power is available to anyone at any organizational
level. It can be formal or informal, positional or personal.
Certainly, a strategic leader at the apex of an organization wields significant posi-
tional power, for example, control of resources; authority to hire or fire; opportunity
to build alliances, mandates, and teams to formulate strategies; and to determine
rewards and punishment. However, this power exists in the specific context and cir-
cumstance. For example, in the work environment, the CEO can tell a subordinate
leader how to perform a specific mission, task, or to take certain actions. Yet that same
CEO has no power to tell that same person how to live his or her own life outside of
the organization.
Some equate power with the availability of resources, but that is not always the
case. In 2010, Meg Whitman, billionaire and former CEO of eBay, spent millions
running as the Republican candidate for governor of California. Despite the huge
expenditures of her personal fortune, she lost to California’s Attorney General Jerry
Brown in the general election.
So what is power? Pfeffer defined power as “the potential ability to influence
behavior, to change the course of events, to overcome resistance, and to get people
to do things they would not otherwise do.”4 Leadership scholars Warren Bennis and
Burt Nanus explained that power is “the basic energy needed to initiate and sustain
action . . . the capacity to translate intention into reality and sustain it.”5 Defining
influence, Hill said that it is “the exercise of power to change the behavior, attitudes,
and/or values of that individual or group.” She clarified that it is easier to change
behavior than it is to change attitudes and values.6 Therefore, power is the potential
to influence. The leader with power can make a choice as to which influence tactics to
use. Power gives the strategic leader the capacity to make some things happen. As Zia
Yusuf, a strategic leader at SAS software company, emphasized, “you need two things
to succeed: substantive business knowledge, so you know what to do, and . . . political
skills, so you can get it done.”7
However, strategic leaders warrant caution regarding the use of power. There is a
paradox with power. As British historian Lord Acton famously stated, “Power tends
to corrupt; absolute power corrupts absolutely.”8 Clearly, the strategic leader must
continuously guard against the urge to make impulsive decisions or to take unwar-
ranted aggressive actions (good or bad) simply because they have the power to do so.
With power, some strategic leaders can become enamored with their own success and

19 4  L e a d in g a t t h e S t r a te g i c L eve l
thinking. This makes them less willing to listen to others, especially outliers—trapping
them within their own frames of reference.

Sources of Power
Power can come from a variety of sources. Individuals will accrue different amounts
of power throughout their lives, and they will exercise their power in a myriad of ways.
In order to understand how to exercise power effectively, it is important to consider its
source. Power can originate from conferring rewards or in directing coercion, from
within authority or reciprocal relationships. It can come from having information,
being the expert, and/or knowing the right people. It can also reside in the synergies
of the group process.
Discussing aspects of power, leadership scholar Gary Yukl offered the following:
Power is the capacity to influence the attitudes and behavior of people in a
desired direction. Authority is the right to influence others in specified ways,
and it is an important basis for influence in formal organizations. Potential
influence derived from a manager’s position in an organization is called posi-
tion power, and it includes legitimate power, reward power, coercive power,
information power, and ecological power. Potential influence derived from
the characteristics of the person who occupies a leadership position is called
personal power, and it includes expert and referent power.9
Sources of power can be broken down into three distinct categories: (1) positional
power, (2) personal power, and (3) political power. The following definitions/constructs
provide clarity to these three terms.
Positional Power includes potential influence derived from formal or legitimate
authority, control over resources and rewards, control over punishments, control over
information, and control over organizational work. More specifically:
• Position, authority, or legitimate power is the justifiable right of a person to control
others, and the concomitant obligation of others to obey. Formal authority refers
to a “person’s position in the organizational hierarchy and his or her explicit ‘job
description’ of rights and privileges and responsibilities.”10
• Reward power depends on not only control over resources, but also the ability to
reward others through influence or actual control over compensation, political sup-
port, jobs, recognition, and other symbolic gestures.
• Coercive power is the capacity to constrain someone from taking action adverse to
the interests of the organization. Yukl posits, “Coercive power is invoked by a threat
or warning that the target person will suffer undesirable consequences for noncom-
pliance with a request, rule, or policy.”11
• Information power involves both the access to vital information and control over
its distribution to others.

C h a pte r 5  19 5
• Affiliation power is power gained (or delegated) from an authority/legitimate power
source through association or as a surrogate.
• Ecological power involves control over the physical environment, technology, and
organization of work.
Personal Power is generated through expertise, record of accomplishment, attrac-
tiveness, and effort:
• Expert or reputation power occurs when a person has specialized knowledge that
is valued by another person; a strong, positive record of accomplishment of perfor-
mance. It refers to “task or organizationally relevant competencies. The more unique
and critical a person’s expertise, the more important it will be as a source of power.”12
However, expert power remains a source of power only as long as a person maintains
the actual expertise and others need it.
• Referent power, also known as friendship and loyalty, comes from having others want
to identify with the leader. This often occurs due to the leader’s charisma, personality,
empathy, and other personal attributes.
Summarizing the importance of appropriate use of power, Dr. James Koch, Presi-
dent Emeritus at Old Dominion University, explained:
Leaders are individuals who are able to exercise power effectively. I have always
been a fan of the French and Raven description of the sources of power: coer-
cion, reward, legitimate power—where a board or someone defines your role
and says “this is what your authority is”; expert power—where the leader really
shows that he or she really knows what they are doing; and then there is the
charismatic power—where you have a charismatic leader who has a vision
where people just leap on to and buy into. Effective leaders utilize these sources
of power effectively. Moreover, if you cannot exercise power, you cannot be a
leader. It is just that simple.13
—Pause—Before addressing political power—the third category of power—take a
moment to read the following mini case study. Reflect on the above elements of power
noted in the two above categories: positional power and personal power. Identify the
various sources of power used in the case study.

“Failure Is Not an Option”—A Mini Case Study


Many may remember these famous words made by Gene Kranz, the flight director in
charge of the Apollo 13 mission to the moon in the movie Apollo 13. Launched April
13, 1970, Apollo 13 headed for the moon with Jim Lovell, Fred Haise, and Jack Swigert
aboard. Because of incredible teamwork, both aboard the spacecraft as well as in
NASA’s mission control and supporting engineering facilities across the United States,
the astronauts were successful in returning their crippled spacecraft safely back to Earth.

19 6  L e a d in g a t t h e S t r a te g i c L eve l
Both in the movie and during the actual mission, there were a number of examples
of the exercise of power. As the mission director, Gene Kranz had the authority and
“position” power to assign tasks and direct actions. Respected by others, Kranz’s “word
was law. . . . The only way for NASA to overrule a flight director during a mission was to
fire him on the spot.”14 Kranz also exhibited “personal” power. He had the visible confi-
dence that the spacecraft would return safely. He exhibited “enabling” power through
his collaboration and delegating to others in a manner that successfully influenced
those on his team to make good choices—resulting in a successful solution to the crisis.
This Apollo 13 example illustrates another form of power: “referent” (or associa-
tive) power. This type of power is relevant to knowledge, expertise, and so forth, as
illustrated by John Aaron, a 27-year old NASA engineer who was a flight controller
for the Apollo 13 mission. Aaron gained recognition for preventing the cancellation of
the Apollo 12 mission due to unusual telemetry readings. Based on researching previ-
ous issues regarding telemetry, he was the one person with the special knowledge to
restore telemetry for the mission and gained the respect of fellow NASA engineers as
the “steely-eyed missile man.”
Arnie Aldrich, command and service module branch chief, called in Aaron for help
for two reasons: “One was that Aaron was an expert on the command and service
module’s instrumentation system. The other was that Aaron was one of the best mis-
sion controllers in NASA.”15 After reviewing the situation, Aaron told Aldrich and others
that the command module needed to be powered down—all the way off—no heaters,
no telemetry—nothing.
“Now Aaron and the other members of the Tiger Team were gathered in a room
near mission control. Kranz soon arrived and looked around the crowded space. The
controllers were subdued and shaken—they had failed to contain the crisis, and the crew
was still in extreme danger. But the last thing the astronauts needed was for controllers
to begin second-guessing themselves.”16 While Kranz never actually uttered the famous
phrase, “Failure is not an option,” he used the phrase as the title to his 2000 autobiog-
raphy. In that book, Kranz said he “went to the front of the room and started speaking.
His message was simple. ‘I said this crew is coming home. You have to believe it. Your
people have to believe it. And we must make it happen.’”17 Soon thereafter, Kranz began
making some basic assumptions regarding reentry. Aaron recalled:

He pretty much laid out kind of an assumption that we’d do a normal power-up
in a normal sequence, and I think I was the one who finally raised my hand,
so to speak, and said, ‘Well, Gene, we can’t do that. We can’t do that.’ And he
said, ‘Well, why can’t we do that?’ I said, ‘We don’t have enough power to do
that.’ He very astutely, Gene being Gene, said, ‘Tell me more, John.’ So I told
him some more, and he said, ‘I’ll tell you what.’ He says, ‘We’re going to put you
in charge of power. Anybody that needs to use power in the spacecraft has to

C h a pte r 5  19 7
get their sequence cleared with John. We’re going to put you in charge of the
power.’ So that made me the power broker, so to speak.”18

Kranz and others yielded to what Aaron recommended. His task was to devise
an electrical system approach that would enable the crew to power up the command
module again prior to reentry. History clearly shows he did his job well! Not only does
this mini case study illustrate a number of different sources of power; it illustrates the
importance of a strategic leader being a good listener and the willingness to delegate.

Political Power. The generation of this third category of power can be through
bargaining and negotiating, coalitions, decisional control, group power, cooptation,
and institutionalization.
• Coalition or alliance power occurs when individuals and/or groups form an alli-
ance, network, or coalition inside or outside an organization to support or oppose a
particular policy, program, or change with the purpose of helping each other to gain
what they want. Lee Bolman and Terrence Deal summarized the importance of this
use of power by saying, “Managers who spent too little time building networks had
much more difficulty getting things done.”19
• Control over agendas and key decisions occurs when individuals have access to deci-
sionmaking arenas and the ability to influence those agendas by placing individuals
in important decisionmaking bodies or establishing procedures or decision criteria
that favor one party over others.
• Framing: control of meaning and symbols occurs when opinion leaders and/or
charismatic leaders have the ability to shape meaning, beliefs, values, and identity.
According to Bolman and Deal, “Viewed positively, this fosters meaning and hope.
Viewed cynically, elites can convince others to accept and support things not in their
best interests.”20
• Bargaining and negotiating occur when two or more parties have some interests in
common and other interests in conflict and they engage in negotiations to achieve
mutually acceptable benefits/losses for each.
• Cooptation undermines expected opposition by a group or faction by inviting them
to participate in the process with the intent of altering their point of view.
• Institutionalization occurs when executives are able to control information and
symbols, using them to interpret events. This could be to magnify the importance
of some events and minimize the impact of others. It could also be to justify their
policies and debunk their critics. Hill states, “The distribution of power and influ-
ence can become institutionalized and thereby endure beyond its usefulness. People
with power do not give it up easily. They create structures, policies, and procedures
to guarantee their power; the organizational culture that develops further helps to
support and consolidate power.”21
• Group power occurs when the group ability in problem-solving, conflict resolution,
or creative brainstorming is greater than the individual contributors. While a leader

19 8  L e a d in g a t t h e S t r a te g i c L eve l
will have occasion to act independently on the global stage, most of the decisions
made at the strategic level will generally involve the effective use of group power (high
performance teams). One of the primary roles of a leader is to create conditions that
allow group power to operate constructively.
• Political processes involve efforts by members of the organization to increase their
power or protect existing power sources. Common political processes include
forming coalitions and networks, gaining control over important decisionmaking
processes, bargaining and negotiating, coopting rivals, and institutionalizing power.
Bolman and Deal explained, “The political issue is how competing groups articulate
preferences and mobilize power to get what they want.”22
—Pause—Take a moment to reflect on the following questions and note your initial
thinking and insights.
1. How have you used power in an organizational setting? Were you comfortable in
using it? Why or why not?
2. Do you avoid using power? If you were attempting to influence action by others,
what keeps you from assembling your power base or using power?

Politics and the Strategic Leader


Effectiveness at the strategic level requires the strategic leader to be adept at organiza-
tional and strategic politics. Political savvy is essential. Many leaders become wary of
the use of politics. The connotation of “playing politics” is usually a pejorative term.
While people can perceive organizational politics as a factor at the operational level,
in most likelihood, it was minimal. Yet at the strategic level, it can make or break a
strategic leader’s ability to succeed. As Professor Gerald Ferris argued, “a leader’s politi-
cal skill is one of the key skills that differentiate effective from ineffective leaders.”23
Lieutenant General Dave Melcher, President of ITT Defense Solutions, explained,
“Playing politics is difficult for any leader, as you are trying to balance the right amount
of intervention with neutrality. You need to have political savvy, but also know how
to use it selectively.”24 Political savvy is akin to the skills of “scanning your external
environment” and “reducing complexity.” If a strategic leader understands the inner-
workings of his or her environment (which can often be political), he or she will have
the ability to reduce complexity. Doing so will facilitate their operations and allow
them to achieve their organization’s objectives in an effective and efficient manner.
As noted previously, both power and politics are neutral terms. Politics is a tool
available to the strategic leader with the potential to influence others to a specific
course of action. Certainly, leaders can use it negatively if self-serving and is not in
line with or in the best interests of the organization’s values, vision, mission, or stake-
holders. Positively, the use of political skill can be very important when there is no
consensus, or there are competing values and propositions that need to be resolved
within strategy or decisionmaking processes. Pfeffer defined “[P]olitical behavior

C h a pte r 5  19 9
as activities to acquire, develop, and use power and other resources to obtain one’s
preferred outcomes when there is uncertainty or disagreement about choices.”25 For
example, in the decisionmaking process, often there are competing views. Leaders
of the strategic leadership team may be using different frames of reference or mental
models (based on their specialties and experience), and their views of possible solu-
tions may be in conflict. This would be especially true if considering major changes in
direction, strategy, or organizational structure and processes. In such cases, political
skill is an important option potentially needed to establish some measure of consensus
on a way forward.
Leadership scholar Owen Jacobs posited, “In its pure form, politics is simply the
art of building a power base that will enable discretionary control of unprogrammed
resources that will support some undertaking. The undertaking may reflect blatant
self-interest, totally altruistic public interest, or something in between.”26 Jacobs
explained that the use of political skills is another optional and available source of
power for the strategic leader. He suggested that the exercise of power (or politics),
“occurs in situations in which leadership solutions have not been tried or are not
available, and/or in which rational and bureaucratic methods of choice have not been
preferred, or have not worked, or are precluded from use. These conditions also define
the situations that promote political action.”27
Consequently, “The underlying purpose of politics is thus identified as being about
mobilizing support for particular actions by reconciling different interests and values.
This approach is conceptually different from the ‘politics solely as self-interest’ perspec-
tive.”28 Therefore, in many respects, political awareness and skills are most useful in
“managing differences”—be they differences in values, goals, priorities, interests across
a wide-variety of external stakeholders as well as internal organizational elements.
Ferris suggested, “politically skilled individuals combine social astuteness with the
capacity to adjust their behavior to different and changing situational demands in a
manner that appears to be sincere, inspires support and trust, and effectively influences
and controls the responses of others.”29 He concluded the following four dimensions
form the construct of political skill.
Social Astuteness. Individuals possessing political skill are astute observers of
others. They understand social interactions well and possess the ability to interpret
accurately their behavior and the behavior of others. They are keenly receptive and
responsive within diverse social settings and have high, relatively objective self-
awareness. . . . Socially astute individuals are often seen as ingenious, even clever, in
dealing with others.
Interpersonal Influence. Politically skilled individuals have an unassuming, yet
convincing personal style that, when focused on others, can exert powerful influ-
ence. . . . Interpersonal influence [allows people to adapt and calibrate their behavior
to different situations in ways that elicit the desired responses from others].

2 0 0   L e a d in g a t t h e S t r a te g i c L eve l
Networking Ability. Individuals with political skill are adept at identifying and
developing diverse contacts and networks of people. People in these networks tend to
hold assets seen as valuable and necessary for successful personal and organizational
gains. Because of their typically subtle style, politically skilled individuals easily
develop friendships and build strong, beneficial alliances and coalitions. . . . Finally,
they are often highly skilled negotiators and dealmakers and are adept at conflict
management.
Apparent Sincerity. Politically skilled individuals appear to others as having high
levels of integrity and as being authentic, sincere, and genuine. They are, or appear to
be, honest and forthright. [Because it focuses on the perceived good intentions of the
leader, this] dimension of political skill is crucial [to the ultimate success of influence
building]. . . . Individuals high in apparent sincerity inspire trust and confidence in
and from those around them because their actions are not interpreted as manipulative
or coercive.30 [The word apparent reflects that it is the perception of those being influ-
enced that matters. If others perceive the leader as being genuine, sincere, and having
as their objectives “what is best for the organization,” enhances the leader’s overall
success at influencing behavior. If, however, people perceive leaders as manipulative
or insincere, people will resist the leader’s objectives and approaches.]31
In table 5-1, Ferris provides a meta-theoretical framework of political skill.

Table 5-1. Meta-Theoretical Framework of Political Skill


POLITICAL SKILL EFFECTS ON POLITICAL SKILL EFFECTS ON POLITICAL SKILL EFFECTS ON
SELF OTHERS GROUPS AND ORGANIZATIONS
Intra-psychic Processes Interpersonal Processes Group-level Processes
•P ersonal resource develop- • Influence tactics and • E stablishment of vision
ment strategies •D  iagnosis of team climate
•P ersonal goals •N  etworking and positioning • F acilitation of team member
•C  oalition-building interaction

Adapted from Gerald Ferris et al., “Political Skill in Organizations,” Journal of Management, 2007, 33,
299. Adapted and reproduced with permission of SAGE Publications in the format Journal via Copyright
Clearance Center—All Rights Reserved.

Working in a “Political” Environment


When discussing politics, there is the big “P” and the small “p.” Thus far, the discus-
sion focused on the little p. Obviously, those strategic leaders working in the govern-
ment or in the military must also be cognizant of the big P, that is, political agendas
imposed by Congress, the President and executive branch. Following changes of
administration, for example, there are new political appointees assigned to lead the
various government agencies and to staff the White House. The primary mandate

C h a pte r 5  2 01
of these political appointees will always be to implement and fulfill the political
agenda of the President, while secondarily seeking to impose their visions on their
assigned agencies. Consequently, those strategic leaders supporting or working with
political appointees must retain a discerning appreciation of these often competing
or conflicting agendas.
There are instructive examples of cases where leaders made decisions based on
political priorities, rather than use the logical decision-process related to organiza-
tional expected outcomes. A good example is the Columbia space shuttle disaster.
Despite the lessons learned (or lack of them) from the space shuttle Challenger disas-
ter, NASA continued to put pressure on contractors and staff to do it fast and do it
cheap. In addition, the mindset regarding shuttle flights dangerously evolved from
“experimental” to “routine.” This mindset led to scheduling shuttle flights as if they
were similar to an airline. The political priorities became that of launching the shuttles
on a set schedule—and do it as cheaply as possible. This was in contrast to the logi-
cal, thoughtful process of treating each shuttle flight as a unique experimental flight
requiring all the necessary checks and balances associated with such experimentation.
In addition, as Jacobs pointed out, political skills and power include the allocation of
scarce resources. Clearly, NASA leaders were very concerned about resources and the
continued political and funding support for the shuttle program in general.
Typically, military officers are particularly keen to avoid becoming involved in
partisan politics, be it the big P or the small p. They see themselves as apolitical. As
operational leaders, they operate most often with a core value that organizational
politics is unseemly for a military officer. Yet when moving to the strategic level, it is
essential that senior officers in the military become politically astute. For example,
General Colin Powell, when he was Chairman of the Joint Chiefs of Staff, visited the
National Defense University and acknowledged, “People accuse me of being a political
officer.” And he responded, “That’s right!” He argued:
The environment that I work in as Chairman is political. When I go to meetings
and I go to the White House or I’m working as the national security adviser, guess
what? Most of the time I’m the only uniformed officer in the room. Everybody else
is from another agency. I have to understand the politics of those agencies. I have
to understand what their equities are. I have to understand what their concerns
are. What their objectives are as members of the interagency environment. If you
are going to go to senior strategic levels, you must become political.32
History highlights situations during which strategic leaders faced critical decisions
that had the potential for major political implications. Although President Dwight
Eisenhower invoked the Insurrection Act that federalized the National Guard troops
allowing desegregation of a high school in Arkansas, President George W. Bush
decided not to do so when Governor Kathleen Blanco refused to give the Federal

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Government authority over those troops in the aftermath of Hurricane Katrina. Bush’s
decision on this was not without careful political considerations.
As discussed in his book Decision Points, President Bush revealed that a lack of
leadership and strategy development appropriate to the scale of the devastation was a
root cause behind perceptions of a slow and inept Federal response: “Who’s in charge
in New Orleans?” Bush asked this question in a conference room aboard Air Force One
4 days after Hurricane Katrina made landfall.33 The answers that the President received
exposed a fundamental problem with the leaders in charge of the relief effort: “The
governor is in charge,” insisted New Orleans Mayor Ray Nagin. Louisiana Governor
Kathleen Blanco replied, “I think it’s the mayor.”34 The bickering between these elected
leaders showed that they had no strategy in place or even the desire to take personal
control of the situation. Bush recalled that the law gave state and local authorities the
lead in response to natural disasters while the Federal Government played a supporting
role. Moreover, he noted that Alabama and Mississippi seemed to have the situation
under control, but “it was clear that the authorities in Louisiana could not lead.”35
Unfortunately, President Bush failed to take adequate, timely, and decisive action
more quickly in the aftermath of Katrina. It was evident early on that state and local
officials were unprepared to develop, deploy, or effectively manage the response strat-
egy. The President pressed Governor Blanco twice for approval for Federal command
of the National Guard, but she refused to give an answer. By his own admission, Bush
should have federalized the response sooner, with or without the governor’s consent.
Upon reflection, Bush summed up his thoughts and wrote, “As the leader of the federal
government, I should have recognized the deficiencies sooner and intervened faster. I
prided myself on my ability to make crisp and effective decisions. Yet in the days after
Katrina, that didn’t happen. The problem was not that I made the wrong decision. It
was that I took too long to decide.”36
Instead of decisively sending Federal troops to aid in the effort (which was clearly
the correct decision), Bush was concerned that “the world would see a male Republican
president usurping the authority of a female Democratic governor by declaring an
insurrection in a largely African American city.”37 This sentiment delayed a decision
that ultimately became too little too late. Hurricane Katrina revealed a situation in
which the stakeholders were widespread, the consequences were dramatic—and a
fundamental change in how the United States dealt with natural disasters resulted. Not
only was this event a black swan, in retrospect, many will remember it as a strategic
leadership failure at every level.
To be effective at the strategic level, strategic leaders in government—military or
civilian—need to understand the various uses and sources of power and to develop
effective political skills. While some leaders may believe the use of political power is
unseemly, it would be naïve to think that one does not need to be adept in using politi-
cal skills to be successful at the strategic level.

C h a pte r 5   2 0 3
Power and Politics—Ethical Considerations
Because both power and politics are value-neutral, often how a strategic leader uses
these two assets reflects his or her character, as well as the ethical and moral climate
and culture of the organization. University of Athens professor George Gotsis and
research assistant Zoi Kortezi argue that distinguishing constructive or positive politi-
cal behavior from its negative counterpart without considering ethics is not possible.
They stated, “positive politics does not and cannot emerge in an ethical vacuum, in
a context devoid of any ethical connotations. In sharp contrast to negative political
behavior reminiscent of a Machiavellian dissociation of politics from ethics, construc-
tive politics needs to be enriched with a potential that only a moral tradition can be
in a position to provide.”38
In essence, Gotsis and Korteze argue that a climate and culture that provides
a normative ethical and moral foundation will be conducive to positive/construc-
tive political behavior. This requires that the strategic leader not only be and model
ethical behavior, but also be committed to developing shared organizational beliefs,
values, goals, and ideas that reflect such ethical behavior. Similarly, Jacobs posited,
“Political skill is essential for success in the strategic environment. So is the skillful
use of power. However, in both cases, the higher demand of morality and ethics must
guide the identification of directions, the formation of coalitions, the unification of
stated and operating values, ideals, and principles, and the community’s concern for
its members.”39

Strategies and Tactics of Power and Influence


Jeffery Pfeffer suggested timing is a critical factor in the use of power and influence.
While not the only strategy or tactic of power and influence, timing can certainly be
one of the most important. Pfeffer argued that actions that are well timed may succeed,
while the same actions, undertaken at a less opportune moment, may have no chance
of success. Regarding timing, Pfeffer offers the following:
• Being early and moving fast: Staking out a position or taking some action that will
be difficult to undo can compel those who come later to accommodate themselves to
the leader’s positions. When it is difficult to undo what the leader has done, then the
leader’s actions serve as a base for further negotiations. And being first often provides
the advantage of surprise and finding the opponent unprepared.
• Delay: One of the best ways to stop something is to delay it, and a very successful way
of delaying something is to call for further study, “review,” or consideration. Delay
can cause proponents of an initiative to simply tire of the effort, backers of a project
to move on to other projects or organizations, or individuals to miss deadlines.
• Deadlines: The opposite of delay is deadline. Deadlines are an excellent means to get
things accomplished. They convey a sense of urgency and importance, and provide a
useful countermeasure to interminable delay. Proposals made near the deadline for

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a decision often receive less scrutiny and attention and are likely to pass rather than
if revealed or introduced sooner.
• Order of consideration: The order of consideration affects more than simply how
one perceives things. Agendas, for example, can establish the use of subjects and
sequences to build commitments around a course of action that might otherwise be
impossible to obtain. Because of the committing and anchoring effects of sequences
of choice, the selection of topics and their order of presentation become an important
tactical decision.
•P  ropitious moments: Perhaps the scarcest resource in organizations is attention. Time
spent attending to one issue is time not devoted to other concerns. Thus, finding the
right set of circumstances to advance one’s ideas is critical. A good idea offered at
the wrong time is doomed. On the other hand, an idea for a new product or course
of action that would otherwise have languished may be received eagerly if times are
tough, the competition keen, and attention is focused on promising new products
or innovative solutions.40
Research at the National Defense University offers the following strategies and tactics:41
• Framing and reframing tactics that give the leader the ability to set a context within
which present and possible future decisions are evaluated, and an important percep-
tual lens that provides leverage for developing innovative ideas.
• Interpersonal influence tactics enable the leader to understand the needs and con-
cerns of others, manage constructive relationships, use active listening skills, ask
probing questions to understand countervailing power positions, anticipate indi-
vidual response to ideas or information, and maintain a broad network of individual
contacts.
• Empowerment tactics that call for high involvement and participation in the deci-
sionmaking process, modifying and adapting one’s ideas to include suggestions from
others, involving others in the strategy formulation and implementation process,
looking for creative and innovative solutions that benefit the total organization, and
instilling confidence in those who will implement the solution.
• Structural tactics that allow the leader to use his/her formal power to consolidate,
expand, and control the organizational landscape.
• Logical persuasion tactics that enable the leader to persuade others by emphasizing
the strengths and advantages of his/her ideas, developing more than one reason to
support one’s position, using systems thinking to demonstrate the advantages of the
approach, and preparing arguments to support their case.
• Bargaining tactics used by the leader to gain influence by offering to exchange fac-
tors or resources, by making concessions, or by negotiating a decision that mutually
advances the interests of all participants.
Leadership scholar Gary Yukl describes the outcomes of power:
• Commitment: When the person internally agrees with a leader’s decision or request
and makes a great effort to carry out the request or implement the decision effectively.

C h a pte r 5   2 0 5
• Compliance: When the person is willing to do what the leader asks, but is apathetic
rather than enthusiastic about it and will make only the minimal effort needed to
comply with the request or decision.
• Resistance: When a person is opposed to the decision or request and actively tries
to avoid carrying it out.42

How Power Is Lost


• Resists change. Leaders can lose power because of their inability or unwillingness to
change as environments, circumstances, and problems change.
• Pride, privilege, and patience. “Power is also lost because changed circumstances
render previous skills or networks obsolete, and because people may acquire posi-
tions without learning enough about the power dynamics in their organizations.”
In addition, power can often be lost “because once in a position of power, it is some-
times irresistibly tempting for us to reap the benefits of our position immediately.
We sometimes overestimate our real power to bring about change, forgetting that
authority is always a consequence and a multiple of the relationship between those
with power and those who grant that power.”43

• other causes44
• technical incompetence
• self-serving/unethical practices
• micromanagement
• arrogance
• explosive and abusive behaviors.

Inaccessibility Insights and Practical Application of Power and


Politics as Noted by Interviewed Strategic Leaders
The interviewed strategic leaders emphasized effective use of power and politics is
essential at the strategic level. For example, John Matheny of the Office of Secretary
of Defense for Policy explained that “Power can be any kind of power. It can be posi-
tion power, the power of knowledge, expertise. It could be power because you have
the resources. . . . If you do not understand power and are not politically savvy, you
are dead as a strategic leader. I see both power and politics as assets. They can either
be positive or negative based on how you use them.”45 The following five examples
represent a number of the strategic leader’s views regarding power and politics—used
both positively and negatively.
Admiral Stanley Arthur, USN (Ret.), former Vice Chief of Naval Operations
and senior leader at Lockheed Martin: “Both power and politics need to be managed,”
according to Arthur. He explained, “To be effective you have to learn to manage power
and politics, or you are going to find yourself out on a limb someplace and somebody is
going to saw it off on you.” Furthermore, he stressed the need for strategic leaders to be

2 0 6   L e a d in g a t t h e S t r a te g i c L eve l
adroit in political savvy. Political agendas and maneuvers may affect the organization
from many directions. The strategic leader needs to understand the dynamics of that
environment, and how to craft an adaptive strategy that leads to success regardless.
He explained:
Power and political maneuvering can come from the Congress; it can come
from inside the Pentagon. There are all sorts of places where they will try to use
their leverage to influence you. You have to find out what are the sacred cows
that each of those points tend to build a fence around. You have to know when
you are going to invade that space, and if you have to invade that space, do you
need some allies with you to do it. Or do you go quietly in and say, ‘I am going
to invade your space and this is why, and if you have any problems with it, we
had better settle it right now?’ Therefore, you have to know what the environ-
ment is, and you have to know whether you have enough horsepower to play
in it. If you do not have enough horsepower to play in it, then you need to find
out where it is.46
Lieutenant General David Melcher, USA (Ret.), President of ITT Defense &
Information Solutions: “In any organization that is big and complex and has leaders
at various levels who are trying to make it work, there’s going to be a certain amount
of political awareness that you have to have. Who relies on whom in the organiza-
tion? Who gives the best advice? Who doesn’t give the best advice? If you want to get
something to the chairman, but you don’t want to talk to the chairman directly about
it, who do you talk to? How do you work the informal network to get what you want
accomplished?” At ITT, “I think most people are fairly direct and straightforward, and
I try to be the same. I try to be situationally aware. I’ve learned all the personalities. I
understand who is likely to fight this or that; and I’ve learned how to work the things
that we want to get run through the CEO in the best way.”47
Cynthia Valles, an Executive Vice President, American Express: “The fact is poli-
tics exist everywhere. You have to understand who your allies are, who you can count
on or who might possibly derail you and why. While I’ve observed people who abuse
power to get what they want; usually for personal benefit, power can also be used very
effectively to advance an agenda and achieve positive outcomes for the organization
as a whole.”48
John Matheny provided two examples of the negative use of political power. First,
“I’ve gone into meetings where within about five minutes you realize the fix is in. There
is an agreement between two of the three principals and the other principal is isolated,
and it’s clear that they’ve matched cards before the meeting and the script is predict-
able. That’s power, and it’s used all the time in Washington.” In his second example, he
explained, “I’ve been in other situations where one agency, in this case the State Depart-
ment, was denying the Defense Department access to something that was material to

C h a pte r 5   2 0 7
the Defense Department’s interest. I had to have my boss contact his counterpart in the
State Department to get him to release it, and the guy did. I watched it happen over the
phone and basically it was the threat of going public to get him to do it.”49
General James Cartwright, then Vice Chairman of the Joint Chiefs: “Politics, like
money, it is just another pillar out there and if you don’t understand it, you can’t get to
solutions.” Moreover, there is the interpersonal side to politics. “If you can’t operate in
that environment . . . and I am not saying that everybody has to be great at it . . . but
you have got to at least understand the motivational activity. You have to be able to
read people to some extent and understand what motivates them in the generality and
then in the specific forum. So understanding that skill of being able to pick it out and
say, ‘I understand what is motivating and what is important to you.’ I am either going
to adjust my strategy to accommodate it or I am going to have to find a way to neutral-
ize you . . . change your mind, whatever it is.” He explained, that at the strategic level,
“You are generally not dealing with anybody who is a cast off, if you don’t understand
it, you can be what you think is a good General but the organization is not going to
move in any significant way.”50

Getting into the Unmanned Aerial Systems Business—


A Mini Case Study51
Vice Admiral Norm Ray, USN (Ret.), former President of Raytheon International (Europe),
provided a hypothetical example illustrating how a strategist would approach the
challenge of creating new opportunities, and how power and politics are factors in the
development of that strategy. He used the example of an organization considering going
into the into unmanned aerial systems (UAS) business: “Because they are going to put a
gazillion dollars into unmanned aerial systems in the next 10 years, you make a strategic
decision to be a part of this $3 billion program. You ask your strategic leadership team,
‘If we are going to get in the UAS business, how do we do that?’”
This soon leads to considerations regarding the most effective strategy to accom-
plish the strategic objective. Who will become the partners in this business venture?
He explained, “You have to make a judgment, and when you are trying to make a stra-
tegic decision on how we are going to team for a particular pursuit, you have to make
decisions regarding the possible partners. You come up with a list, and then you do a
SWOT [strengths, weaknesses, opportunities, and threats] analysis on each one. One
of the things on your list is going to be politics. Are they strong, weak, or decisive?
What is the extent of their ability to influence Congress?” He noted that some potential
partners are impressively strong and others are not: “Politics gets involved because it
influences whether you are going to get the resources, whether you are going to get
negative politics, whether you will get the congressman from Boeing, the senator from
Boeing, opposing you, because you decide to go with BAE Systems or something?”

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Admiral Ray emphasized that “The strategic leader (or the organization’s strate-
gist) needs to calculate all of this. And ultimately, when the organization has significant
resources going on the line to pursue a particular strategy, the strategist (the decider,
if you will), if he is really good at it, has to have a feel for all of the factors influencing
potential success before he decides we are going to go in the UAS business. He or she
must articulate meaningful rationale as to why we are going to do it.” Moreover, “This
is a credible way forward; it appears there is an opportunity. If we can join with these
three people and I think we can, we have the political keys. We have the capability. We
have the resources. We have the technical capability. We’ve got the political clout, we’ve
got the congressional districts covered, and we can sell this to our CEO.” The CEO is
holding them “responsible for our strategy of 10 percent growth in the next five years.
To do that, we have to take this course of action. And we think we can do that. Now we’re
going to go sell it to him, and he’s going to evaluate the merits of making that decision.”

—Pause—Take a moment to reflect on the following questions and note your initial
thinking and insights.
1. Reflecting on the previous discussion on power and politics, what is your view
toward the use of these two key factors of persuasion? Do you concur that they are
value-neutral? Do you believe to be successful at the strategic level the leader must
be adept in the use of power and politics?
2. What are your thoughts regarding Admiral Ray’s hypothetical example above?
Do you relate to the example? Why or why not?

Strategic Leaders—Judicial Use of Power


A majority of those ascending to the strategic level indicate that the higher they go
the less power they can use unilaterally. While they may have the power vested within
the authority of their position, for example, CEO, secretary of a government agency,
the inappropriate use of position power to dictate actions can result in disaster for
the organization and for the strategic leader personally—regardless of the merits of
the decision or actions. What the positional power does provide is the power to influ-
ence—to be an authoritative figure enhances persuasiveness, without being dictatorial
or confrontational.

Hispanic Officers in the U.S. Marine Corps—A Mini Case


Study
When Richard Danzig was the Under Secretary of the Navy, he was very concerned about
the low representation of Hispanics in the officer corps of the U.S. Marine Corps. While
the Marine Corps was enlisting substantial numbers of Hispanics in the enlisted ranks

C h a pte r 5   2 0 9
(approximately 16 to 18 percent), the officer ranks were seeing Hispanics commissioned
at only 3 percent. Secretary Danzig believed this could become a problem for the Marine
Corps. He could direct the Commandant of the Marine Corps to set recruiting targets or
quotas to address the problem, yet he did not. Danzig believed that using his authority
to direct such a change in policy was not the correct approach and that the Marine Corps
recruiters themselves needed to see the value in recruiting more Hispanic officers. He felt
that if he dictated change through policy, they could easily ignore the change initiative,
especially in a large, bureaucratic organization. Consequently, Danzig took the following
approach:

I spent a substantial amount of time, maybe 12 meetings over the course of two
or three months, talking to Marines involved in recruiting and manpower about
this issue. My question to them was, “Do you care about this? Should you care
about this?” The answer I generally got back at the beginning of the discus-
sions was, “No. If I’m getting good Marines as officers, why should I care about
Hispanics?” And when you scratch the surface, their feeling was they ought
to pick officers on the basis of who scores best on the entry criteria. If we start
saying we care about having one particular group—they were not anti-Hispanic,
obviously—the results will be a dilution of merit and reduce the quality of the
officer corps—that is the most important thing they consider. My feeling was I
needed to honor those views. They were well intentioned. They had the right
kinds of priorities about the Marine Corps. If we were going to talk about His-
panics in this context, we needed to talk about them in the context of what the
recruiters cared about, their values, and their aspirations for the Marine Corps.
Slowly, over time, I persuaded them that on balance it would be better for the
Marine Corps if there were more Hispanics officers—without sacrificing qual-
ity en route, and without quotas. Why would that be? Because, among other
things, America has increasing fractions of Hispanics in the population. We are
making the generals of the future in who we’re recruiting now as officers, so
if there were 2 percent or 3 percent of Hispanics now in the officer corps, the
most percentage of generals 25 and 30 years from now would be 2 percent, 3
percent. The attitudes of the enlisted ranks toward the officer corps might be
less desirable than if there were some role models in that officer corps. The
ability to deal with problems in the enlisted ranks would be affected by this, et
cetera, et cetera.
In the end, all the participants in this long-running discussion agreed that it
would be desirable to increase the number of Hispanics in the officer ranks—if
we could do it without sacrificing quality. It was only when we got to that point
that we began to turn to, “Well, how could you do this?” People’s views were,
“I don’t want any quotas. I don’t want to sacrifice quality at all.” It turned out

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then somebody within the Marine Corps came forward with, “Well, we could do
some more recruiting at a college where Hispanics are.” I pointed out to them,
“Look, how many ads do you run in Spanish? How about the kinds of ads you
are running?” It turns out they’re rather racially indicative, where they’ve got
a white knight on a chessboard and so on. “What about the people who are
recruiters? How many of them are Hispanics? Might that affect your ability to
draw people?” Light bulbs went on.
Then one of the participants in the discussion had the bright idea to identify
why the Marine Corps was rejecting a large number of qualified Hispanic officer
candidates. He learned that their rejection occurred because kids from the main-
stream colleges were easier to recruit earlier in the year when there were plenty
of officer candidate quotas. However, the Hispanics were coming in later in the
year when there were no quotas available. We realized that we could change
all this. Then I said, “Well, look, why don’t we set a goal of 8 percent Hispan-
ics in the officer corps,” and there was a lot of resistance, still. The resistance
pivoted around the fact that once we set a goal, Marines will always make their
goal, and so we’ll sacrifice too much to make this goal and we don’t want to fail.
Understanding that, I said, “All right, why don’t we just call it an aspiration, not
a goal?” Then everybody signed up, and the Marine Corps more than doubled
its numbers of Hispanic officers over the next years because people understood
why they wanted to do it.
They found a way to think about it that was compatible with what they cared
most about, and with their culture. The argument shifted from whether to
increase the percentage of Hispanic officers in the Marine Corps as something
owed in some sense to Hispanics, or equality of opportunity, to wanting quali-
fied Hispanics to be officers. If somebody did not want to support their recruit-
ment, the rejoinder to them became, “What have you got against the Marine
Corps? Don’t you care about the Marine Corps’s future? You need to do this
for the future of the Marine Corps.” Once they came to believe that, then they
were all behind it.
While I had the positional power to direct the Marine Crops to increase recruit-
ment and set policy to support my decision, I do not believe I would have the
necessary buy-in of the recruiters or their energy and drive to make it happen.
My point is, only by understanding the culture and honoring it, and seeing how
you can integrate your proposition with that culture, can you make the kind of
progress that I think really is deeply rooted.
In the end, it was their program. Moreover, they had better ideas than I did, by far.52

C h a pte r 5  211
—Pause—Take a moment to reflect on the following questions and note your initial
thinking and insights.
1. Do you concur with Danzig that the higher leaders go in the organization, “the
less power they can use unilaterally”?
2. How would you handle the issue of Hispanic officers? Do you believe Danzig’s
approach was the best approach? Why or why not?
3. What means of power and politics are illustrated in this mini case study?
4. What sources of power and politics are you leveraging well now? What areas do
you plan to work on to be more effective as a strategic leader? Is your organization
constraining or preventing you from being as powerful as you need to be?

In concluding this section, results reported by the Center of Creative Leadership


(CCL) and table 5-2 provide recommended strategies to gain and leverage power. Those
of you aspiring to become a strategic leader, serve a strategic leader, or are currently
serving as a strategic leader may compare and contrast your thinking and approaches
to the use of power with those cited and reflect on what will work best in your efforts
to become an effective strategic leader.
In 2008, a CCL study reported that “leaders can be more effective when they empha-
size the power of relationships and the power of information, and also develop their other
available bases of power.” CCL recommended 11 strategies for leveraging power effectively:
1. Make relationships a priority. Identify people with whom you need to establish
or develop a relationship. [You will compromise] your ability to use the power of
relationships . . . if you are not connecting with the right people. . . . Be aware of
how others perceive you and look for ways to influence the perception by soliciting
feedback from trusted others.
2. Don’t overplay your personal agenda. While the power of relationships can be an
effective method for promoting your own agenda, it also runs the risk of having you
perceived by others as self-serving, not a “team player,” or even deceitful. . . . Be care-
ful to ensure that advancing your own agenda is not perceived as a misuse of power.
3. Maximize your communication network. Think about the people you communicate
with the most. Are they providing you with access to unique information or redun-
dant information? Look to expand your communication network to find people who
may be untapped sources of information.
4. Be generous with information. If you are a central node or conduit of information,
remember that keeping information to yourself has potential negative consequences.
Share information broadly and with integrity. . . . Of course . . . don’t . . . make the
opposite mistake and reveal confidential or personal information.
5. Make the most of your position. Research and experience suggest that authority
does not automatically accompany a formal leadership role. . . . To increase percep-
tions of your position power, find subtle ways to communicate your formal author-
ity. . . . [Meanwhile, identify other sources of power—and use them].

212   L e a d in g a t t h e S t r a te g i c L eve l
6. D evelop your brand of charisma. The key to better leveraging the power of cha-
risma (whatever your [definition or] level of charisma may be) is to make small
changes in your image while maintaining your authenticity. Maintain the char-
acteristics that make you who you are, but try to identify two or three behaviors
that might increase your ability to connect with others (such as making more eye
contact, smiling more often). Practice those new behaviors, enlisting help from a
coach or mentor.
7. Be the expert. Power in general . . . is in the eyes of the beholder. You can’t just have
power de facto unless there are people willing to perceive you as having power.
The same holds true for expert power—it comes from actual expertise . . . or the
perception of expertise. Don’t be shy about . . . your experience and expertise.
8. Tailor your power to reward others. Many leaders mistakenly assume that leverag-
ing reward power only means giving people more money. While this option sounds
attractive, it is not always possible. Instead, consider recognizing and incenting
your team members in other ways.
9. Reward with words. Give positive feedback and give it often.
10. Punish with purpose. While the power of punishment may conjure up terrible
images, it can actually serve a very useful purpose. In today’s context of complex,
global organizations, many employees are frustrated by lack of accountability
at all levels. When team members fail to live up to expectations, a good dose of
corrective (but kind) feedback can work wonders—not only to get the job done,
but also to establish more power for yourself. Communicate and enforce your
standards, but be sure to provide support along the way. Also, be explicit about
consequences for behavior or results that don’t meet expectations—and follow
though consistently.
11. Teach others. Leveraging your full power does not require that you hoard it. If
you want to empower the people you lead, you also need to teach them to use
the power they have available to them. Think about the people you lead and
rank order them based on their power. What are those at the top of the list doing
effectively? What could those at the bottom of the list be doing better? Use seven
bases of power as a way to evaluate, communicate, and teach about leadership
power in your organization.53

In summary, this chapter examined the importance of understanding power and


politics while revealing techniques used to leverage them. Clearly, a strategic leader’s
competency in power and politics either enhances or detracts from his or her ability
to influence others and to perform the required work at the strategic level.

C h a pte r 5  213
Table 5-2. Guidelines for Building and Using Power
HOW TO INCREASE AND MAINTAIN POWER HOW TO USE POWER EFFECTIVELY
LEGITIMATE POWER
• Gain more formal authority • Make polite, clear requests
• Use symbols of authority • Explain reasons for requests
• Get people to acknowledge authority • Don’t exceed scope of authority
• Exercise authority regularly • Verify authority, if necessary
• Follow proper channels in giving orders • Be sensitive to people’s concerns
• Back up authority with reward and power • Insist on compliance, if appropriate

REWARD POWER
• Discover what people need and want • Offer desirable rewards
• Gain more control over rewards • Offer fair and ethical rewards
• Ensure people know you control rewards • Explain criteria for giving rewards
• Don’t promise more than you can deliver • Provide rewards as promised
• Avoid complex, mechanical incentives • Use rewards symbolically to reinforce desirable
• Don’t use rewards for personal benefit behavior

EXPERT POWER
• Gain more relevant knowledge • Explain reasons for requests
• Keep informed about technical matters • Explain why requests are important
• Develop exclusive sources of information • Listen seriously to people’s concerns
• Use symbols to verify expertise • Show respect for people
• Don’t make rash, careless statements • Act confidently and decisively in a crisis
• Demonstrate competence by solving • Provide evidence that a proposal will be suc-
difficult problems cessful
• Don’t lie or misrepresent facts
• Don’t keep changing positions

REFERENT POWER
• Show acceptance and positive regards • Use personal appeals when necessary
• Act supportive and helpful • Indicate requests are important to you
• Don’t manipulate and exploit people for personal • Don’t ask for a personal favor that is
advantage excessive given the relationship
• Defend someone’s interests and back them up • Provide an example of proper behavior
when appropriate
• Keep promises
• Make self-sacrifices to show concern
• Use sincere forms of ingration

214  L e a d in g a t t h e S t r a te g i c L eve l
Table 5-2. Guidelines for Building and Using Power
HOW TO INCREASE AND MAINTAIN POWER HOW TO USE POWER EFFECTIVELY
COERCIVE POWER
• Gain authority to use punishments • Inform people of rules and penalties
• Don’t make rash threats • Give ample prior warning
• Don’t use coercion in manipulative ways • Remain calm and helpful, not hostile
• Use on legitimate punishments • Ask people to suggest ways to improve
• Fit punishment to infraction • Administer discipline in private
• Identify credible penalties to deter unaccept- • E ncourage improvement to avoid the need for
able behavior punishment
• Don’t use coercion for personal benefit

Notes
1
Jeffrey Pfeffer, “Power Play,” Harvard Business Review, July–August, 2010, 87.
2
Personal interview with John Matheny, Office of Secretary of Defense for Policy (OSD-P); former
OSD-P Chair for ICAF; military assistant to VP Mondale and VP George H.W. Bush; former Director
of Operations and Equipment Standards for the United States Golf Association.
3
Linda Hill, “Power Dynamics in Organizations,” Harvard Business School Teaching Note 9-494-883,
revised March 22, 1995, 2.
4
Jeffrey Pfeffer, Managing with Power: Politics and Influence in Organizations (Boston: Harvard Busi-
ness School Press, 1992), 30.
5
Warren Bennis and Burt Nanus, Leaders: The Strategies for Taking Charge (New York: Harper & Row,
1985), 17.
6
Hill, 2.
7
Pfeffer, “Power Play,” 86. Italics in original.
8
In 1887, Acton expressed this view in a letter to Bishop Mandell Creighton. More than a hundred years
earlier in 1770, William Pitt, Britain’s Prime Minister, stated a similar phrase: “Unlimited power is apt
to corrupt the minds of those who posses it.” Available at <www.phrases.org.uk/meanings/absolute-
power-corrupts-absolutely.html>.
9
Gary Yukl, Leadership in Organizations, 7th ed. (Upper Saddle River, NJ: Pearson Education, 2010),
185.
10
Hill.
11
Yukl, 7th ed., 159.
12
Hill.
Personal interview with James Koch, Board of Visitors Professor of Economics and President Emeritus
13

at Old Dominion University, and co-author with Jim Fisher on the book Presidential Leadership.
14
Stephen Cass, Apollo 13, “We Have a Solution,” ieee spectrum, April 2005, available at <http://spec-
trum.ieee.org/aerospace/space-flight/apollo-13-we-have-a-solution>.
15
Ibid.

C h a pte r 5  215
Ibid.
16

Ibid.
17

Kevin Rusnak, “Interview with John Aaron,” Oral History 3 Transcript, January 26, 2000, available
18

at <www.jsc.nasa.gov/history/oral_histories/AaronJW/JWA_1-26-00.pdf>.
Lee Bolman and Terrence Deal, Reframing Organizations, 4th ed. (San Francisco: Jossey Bass, 2008),
19

203.
20
Ibid., 204.
21
Hill, 4.
The preceding political power discussion adapted from Bolman and Deal, 201. Reproduced with
22

permission of John Wiley & Sons—All Rights Reserved.


23
Gerald Ferris et al., “Political Skill in Organizations,” Journal of Management, 2007, 33, 312.
Personal interview with LTG Dave Melcher, USA (Ret.), President of ITT Defense & Information
24

Solutions; former Deputy for Budget, Assistant Secretary of the Army.


Richard Hughes and Katherine Beatty, Becoming a Strategic Leader (San Francisco: John Wiley &
25

Sons, 2005), 141.


T. Owen Jacobs, Strategic Leadership: The Competitive Edge (Washington, DC: National Defense
26

University, 2005), 154.


27
Ibid.
Jean Hartley and Clive Fletcher, “Leading with Political Awareness: Leadership Across Diverse
28

Interests Inside and Outside the Organization,” in Leadership Perspectives, ed. Kim James and James
Collins, 168 (New York: Palgrave MacMillian, 2008).
29
Ferris et al., 291.
30
Ibid., 292.
The preceding adapted from Gerald Ferris et al., 292. Adapted and reproduced with permission of
31

SAGE Publications in the format Journal via Copyright Clearance Center—All Rights Reserved.
32
Alan Whittaker, “Introduction to ICAF class of 2010” (General Powell’s quotation from Dr. Whit-
taker’s presentation), August 2009.
33
George W. Bush, Decision Points (New York: Crown Publishers, 2010), 308.
34
Ibid.
35
Ibid.
36
Ibid., 310.
37
Ibid., 320.
George Gotsis and Zoe Kortezi, “Ethical Considerations in Organizational Politics: Expanding the
38

Perspective,” Journal of Business Ethics, 2010, 93, 506.


39
Jacobs, 165.
40
Pfeffer, Managing with Power, 227–245.
Strategic Leadership and Decision Making: Preparing Senior Executives for the 21st Century (Wash-
41

ington, DC: NDU Press, 1997), 319–324.


Gary Yukl, Leadership in Organizations, 6th ed. (Upper Saddle River, NJ: Pearson Education, 2006),
42

147.
43
Pfeffer, Managing With Power, 309.
44
Strategic Leadership and Decision Making, 324–325.

216  L e a d in g a t t h e S t r a te g i c L eve l
45
Personal interview with Matheny.
Personal interview with Admiral Stanley Arthur, USN (Ret.), former Vice Chief of Naval Operations
46

and President of Lockheed Martin Missiles and Fire Control.


47
Personal interview with Melcher.
Personal interview with Cynthia Valles, Executive Vice President, American Express; former Industry
48

Chair and Visiting Professor for ICAF from American Express; Executive Vice President, Customer
Service International, American Express.
49
Personal interview with Matheny.
Personal interview with General James Cartwright, USMC (Ret.), former Vice Chairman of the Joint
50

Chiefs of Staff; former Commander, U. S. Strategic Command.


Personal interview with VADM Norm Ray, USN (Ret.), Executive for the Spectrum Group; former
51

President, Raytheon International, Europe; NATO Assistant Secretary General for Defense Support.
52
Personal interview with Richard Danzig, Chairman of the Center for a New American Security;
former Secretary of the Navy.
The preceding adapted from Vidula Bal et al., “The Role of Power in Effective Leadership,” Center for
53

Creative Leadership White Paper, 2008, 17–18. Reproduced with permission of the Center of Creative
Leadership—All Rights Reserved.

C h a pte r 5  217
SECTION III: Strategy to Action—Strategic
Leader Work
CHAPTER 6 | Building and Leading a
Strategic Leadership Team1

Many of today’s news articles and case studies glamorize CEOs and other senior lead-
ers for their accomplishments. Whether facing “life or death” struggles with their
opponents or their environments, or exploiting challenging opportunities in their mar-
kets with enormous success, hyper-inflated journalistic accounts might lead readers to
conclude that individual leaders “took the economic hill by force” and single-handedly
led the organization to victory against great odds. Not heard nearly as often, however,
is the invaluable support system established by these leaders that helped them make
the right decisions about the right issues, and to act decisively in the face of a VUCA
environment. As described by the interviewed senior leaders, now, more than ever,
“the demands on those who occupy the top roles of contemporary organizations are
rapidly outdistancing the capabilities of any single person, no matter how talented.”2
Referring to the Strategic Leadership Model (figure 2-1), the first of the seven pie-
shaped sectors is “Building and Leading Strategic Leadership Teams.” Though the initial
sector of the “internal environment” is where these team members reside, as seen in the
previous chapters, the external environment often generates problems beyond the ability
of a single individual to conquer. Consequently, the wise strategic leader will often use
the leadership team to assist in the external and internal scanning and sense-making
process, as well as the organizational vision and strategy formulation efforts.
Senior teams in organizations may be referred to by a variety of names, includ-
ing: the “Top Management Team,” “Senior-Level Team,” “Executive Team,” “Senior
Leadership Team,” “Strategic Leadership Team,” “Top Management Group,” and/or
the “Executive Committee.” In government, each agency may have similar terms for
their top-level executives, or there may be interagency teams headed by senior lead-
ers from different agencies, or councils, e.g., the NSC. For the purpose of this chapter,
the term “Strategic Leadership Team” (SLT) will refer to the leaders at the top of an
organization that function together to address the challenges inherent in “big picture”
scanning, planning, and VUCA environment operations.
Depending on the external demands on the organization, other leadership mod-
els and constructs can serve an organization. For example, the Library of Congress
is made up of a number of world-class organizations—The National Library, The
U.S. Copyright Office, and the Congressional Research Services. Led and managed
independently, these three organizations receive funding from different sources, and

C h a pte r 6  2 21
in most circumstances are unrelated businesses. They are essentially held together by
the intertwining infrastructure units (e.g., facilities, contracting, human resources,
financial, etc.). Having an executive committee to review, debate, and offer recom-
mendations to the Librarian of Congress on those special issues that transcend the
individual organizations makes sense. To force these leaders into a team, however,
could waste valuable time needed to run their separate organizations effectively and
efficiently. The distraction and “the opportunity costs of pulling them away from their
individual accountabilities for the time it takes to conduct a good meeting” would
likely outweigh the benefits.3 In this construct, the executive committee functions
more like a holding company than a strategic leadership team.
So how do strategic leaders know if they need to form an SLT or find an alternative
model? Harvard professor Ruth Wageman and colleagues suggested that answering
several key questions may help strategic leaders determine if they need a SLT.

Table 6-1. Self-test—Do You Need a Leadership Team?4

WHAT IS CHALLENGING YOUR WHAT LEADERSHIP FUNCTIONS REQUIRE


ORGANIZATION? COLLABORATION?
Significant growth or retraction Information exchange among senior leaders
that is essential for alignment
Horizontal integration of semiautonomous Consultation with you for strategic and com-
units plex decisions
Major changes in capital or other resources Coordination of a key change initiative or
interdependent operations
Externally originated challenges to traditional Decisionmaking about critical enterprise
ways of operating issues
If you selected any of the above, you likely If you selected two or more of the above, you
need to form an SLT likely need to form an SLT
Source: Modified from Ruth Wageman et al., Senior Leadership Teams: What It Takes to Make Them
Great (Boston, MA: Harvard Business School, 2008), 41, figure 2-1.

Given the prevalence of the conditions and needs noted in table 6-1, forming
a strategic team composed of the organization’s senior leaders intuitively makes
sense. A team composed of seasoned senior executives could provide the flexibility
required to cross organizational and institutional boundaries. Further, this team
could advance creative and innovative ideas, including alternative strategies address-
ing critical issues facing the organization. In addition, this approach enables leaders
to draw on the diverse experiences and strengths of their team. Having such a team
allows leaders to more effectively and successfully make organization-wide deci-
sions; establish an appropriate vision that emphasizes future organizational vitality;

2 2 2   L e a d in g a t t h e S t r a te g i c L eve l
monitor the organization’s execution to meet near-term and long-term strategic
objectives; and to increase the opportunities for the team members to learn, grow,
and build commitment.5
Many of the same principles apply when leading both operational teams and stra-
tegic leadership teams. One key difference is that with strategic teams, team members
will likely know more about their domain of expertise than the strategic team leader.
Not only are they accomplished professionals, they are the best of the best in their
respective areas of oversight. SLT members also have enormous demands on their
time, and need to balance functional demands as well as the requirements of the SLT,
short- and long-term priorities, and tactical and strategic thinking. SLT members
often need to make decisions and execute in an environment rife with uncertainty
and ambiguity, making judgment calls on high-stakes issues with little information.
Strategic leaders can help their team of experts rise to these challenges by retain-
ing particular focus on three key aspects of SLT leadership. These include selecting
highly qualified team members and managing the boundary of the team; determining
how to deploy most effectively that team to implement the organizational strategy;
and creating an environment where trust-based relationships can grow and flourish,
which will help ensure the ongoing health and high-performance of the team. This is
an iterative set of considerations—not a sequential process.

Building the Team


Jim Collins, researcher and executive educator, cautioned that getting the right people
on the team is a leader’s first objective, even before setting strategy.6 Upon appointment
to a top executive position, few leaders have the luxury to build their leadership teams
from scratch. Often they will inherit an existing team, which is sometimes dysfunc-
tional, or not equipped to meet you and challenges as a team. Strategic leaders have the
responsibility “to make thoughtful choices about team composition and about ways to
keep membership boundaries clear. Defining who is—and who is not—a member of
the leadership team is a matter that can pose significant emotional and interpersonal
challenges, even for experienced leaders.”7
Despite these challenges, team composition is one of the most powerful levers
available to shape the SLT’s performance.8 Although it may be tempting to put off an
evaluation of the current team’s performance and the tough choices that might ensue,
leaders will often experience waves of disruptive issues downstream that could have
been nipped in the bud through timely, decisive action. Dave Zuercher, executive vice
president for Wells Fargo, cautioned:
You need to be careful about not spending a lot of time trying to develop some-
one who, in your gut, you know is not on the team, or doesn’t agree with your
philosophy. When you look back on it, it generally costs you more money

C h a pte r 6   2 2 3
because you ultimately have to get rid of the person and you have to find some
way to give them some kind of package to leave. Or you end up having to put
them through a performance plan that ruins the productivity of their organi-
zation for a period of time while they are not performing. Or can also ruin the
efforts of all the people underneath them. Not taking action can result in stifling
a whole group of people while you have been trying to support or work on this
one individual. If I had it to do all over again, I would have been much tougher
on that dynamic.9
Bob McDonald, Chairman and CEO, Procter and Gamble, noted that when his
predecessor, A.G. Lafley, came in as CEO, he changed 75 percent of his executive team
during the first 9 months. McDonald explained that it was not that they did not buy
in to Lafley’s vision and strategic direction. Rather, “It was a dysfunctional group.”10
It is important to give this process a fair amount of time and consideration. As
Collins noted, “When Colman Mockler became CEO of Gillette, he didn’t go on a
rampage, wantonly throwing people out the window of a moving bus. Instead, he spent
fully 55 percent of his time during his first 2 years in office jiggering around with the
management team, changing or moving thirty-eight of the top fifty people.”11 How long
these changes take and the amount of appropriate effort is contextual to a particular
situation. The common thread is that successful leaders dedicate themselves to getting
the right people on the team, and the wrong people off.
What is less clear is how to assess the team dynamic and make judgments about
who will be the best fit. Most leaders agree that it is an intuitive versus analytical process.
Collins suggests using the following two questions to help make that determination:12
• I f you had the opportunity, would you hire this person?
• If the leader submitted their resignation in favor of a better opportunity, would you
be disappointed or secretly relieved?
Wageman et al. suggest a complementary set of evaluation criteria. “At issue
is whether an individual executive can handle both parts of the leadership job: the
responsibilities of the position he or she holds, and participation in a team that brings
an enterprise perspective to every problem. If not, then you do not have the right
person for the job.”13

—Pause—Take a moment to reflect on the following questions. Note your initial


responses.
1. Reflecting on teams you led or served on, did you have a sense of who worked well
on the team, and who did not? How did you know?
2. W hat are the characteristics of the people you work with well? What qualities do
you appreciate in a fellow leader?

2 24   L e a d in g a t t h e S t r a te g i c L eve l
3. B
 ased on your prior experience, what are the consequences of not proactively and
intentionally choosing the members of a team?

In addition to determining whether individual leaders on the pre-existing team


are the right fit, the leader must also declare the boundaries of the team. Researchers
report that there is often confusion regarding who is on a leadership team and the
number of members. In a recent study, researchers found that only 9 percent of the
120 management teams they interviewed agreed with the number of members on the
leadership team. The teams often reported the size of the leadership team as being
in the double digits and in many cases larger than the number reported by the chief
executive who formed the team.14 Given that rapid change is the norm for organiza-
tions in a VUCA environment, one might expect some confusion. Still, the frequency
and scale of the misalignment is surprising.
An individual accrues significant power and prestige originating from their
membership on an SLT. In addition, being a member allows personal influence
regarding organizational strategy and allocation of resources. These factors increase
the likelihood of leaders lobbying for inclusion, rather than self-selecting for their
ability to contribute. It is a common misconception that individual leaders placed in
senior roles must be included in the SLT. Wageman and Harvard colleague Richard
Hackman counter that a real leadership team can be born when the leader “defines a
circumscribed set of leadership functions to be fulfilled collaboratively, and chooses
specific team members whose capabilities will contribute to those purposes.”15 Wage-
man et al. note that SLT “membership is not a right or a privilege but depends on what
the team needs to be successful.”16
Clarity about who is on the team and the rationale for their selection are required to
protect the boundary of the team and to create conditions for stability over time. Stable
SLTs produce better results because “members have the time and opportunity to hone
their ability to work together. They can become highly interdependent, with members
drawing heavily on their colleagues’ special knowledge, skill, and experience in the
work they do together.”17 It is essential that a new leader apply the proper consideration
regarding the membership and boundary of his or her SLT. This key activity, however,
is only one step. The leader must also determine how to best deploy the SLT (see chapter
4). The next section describes how to align the SLT operating model to the strategy.

Defining the Operating Model


The goal of the strategic leadership team is to bring the organization’s strategy to life. Too
often, leadership teams have no explicit model, guardrails, or guidelines to determine
how to organize themselves to deploy the strategy. Often overlooked is the critical step of
aligning the team’s operating model with the strategy—to the detriment of the organiza-
tion. As a result, such unaligned teams have a difficult time balancing functional and

C h a pte r 6   2 2 5
cross-functional responsibilities, and therefore unintentionally act at cross-purposes,
creating gaps and/or overlap of effort. By intentionally designing the team’s operating
model, a strategic leader better equips the SLT for success. Moreover, they can use the
operating model to manage the team and judge the team’s performance.
An operating model can take many forms, and can contain multiple components.
It can contain a set of guiding principles that ensure the team acts in concert when
making distributed decisions. It can contain a model for how team members need
to engage with one another to solve different types of problems. It can also contain
the fundamental outline of how the team will function when implementing strategic
goals—the focus of this chapter.
A strategic leader should start by reflecting on the strategy and considering the
following questions:
• Which goals can members of this team take ownership of as a part of their functional
responsibilities?
• What goals or areas of oversight require a complete and robust picture of current
conditions?
•W  here—and when—are advice and informed opinions required to help the strategic
leader make decisions?
• What goals require coordinated effort across organizational functions or business
units that will ensure there are no gaps or overlaps during implementation?
•W  hat are the goals that this team must shape and drive together to be successful?
Ideally, a leader should maximize the team’s agility. Therefore, any strategic goals
that fit squarely into a team member’s functional responsibilities should remain there
whenever possible. Holding individual team members accountable for producing
results in their areas of direct oversight increases the level of trust between a strategic
leader and his or her team. There may be times when function-specific information or
decisions are highly interrelated or interdependent with others, however, and should
be under the purview of the SLT. Several operational modes may help SLTs efficiently
and effectively address these issues together. Wageman and Hackman refer to them
as four fundamental functions of SLTs:
• Information-sharing—least interdependent
• Consultative
•C  oordinating
• Decisionmaking—most interdependent.18
While a different SLT could function in each of the four modes, those assigned to a
decisionmaking SLT will most likely engage in all four of these functions.
Information-sharing. An SLT whose primary function is information-sharing
focuses on the exchange of information gained from both the external and internal

2 2 6   L e a d in g a t t h e S t r a te g i c L eve l
environments. These teams can assemble a coherent conception of the environments
from the disparate facts gathered within sub-groups of an organization. Members of
such teams are only loosely interdependent; they need each other for information but
require little additional interaction to fulfill their responsibilities. Informational teams
are the most basic kind of leadership team.19
Consultative. A predominantly consultative SLT provides advice and consultation
to the team leader. Debate of opinions, observations, and insights about the strategic
environment are characteristic behaviors for such teams.
Coordinating. An SLT whose predominant function is coordinating focuses on
aligning leadership activities to enhance the execution of strategic initiatives. They
monitor and facilitate the implementation of directives or strategies developed by the
strategic leader. “The function of a coordinating team is to manage the operational
interdependencies of the enterprise. Members of coordinating teams are highly inter-
dependent, have shared responsibilities, and must work together frequently and flex-
ibly to accomplish their shared purpose.”20 Coordinating teams can also be an ideal
model for leading, driving, and monitoring major organizational change initiatives.21
Decisionmaking. Finally, a decisionmaking SLT is charged with making “the
small number of critical decisions that are most consequential for the enterprise as a
whole.”22 Wageman and Hackman noted that once a team reaches the level of cohesion
and trust where it is capable of making decisions together, it also has the flexibility to
function in any one of the four ways described above.
Creating a map that connects the strategic goals and how the team should func-
tion to achieve those goals will create clarity and streamline how the team operates.
Table 6-2 provides a simplified example.

Table 6-2. Simplified Example How Team Should Function to Achieve Stated Goals
AUTONOMOUS INTERDEPENDENT

STRATEGIC GOAL FUNCTIONAL INFORMATION- CONSULTATIVE COORDINATING DECISIONMAKING


SHARING

Innovative X
Products
Sustainable X
Practices
New Market X
Opportunities
Operational X
Excellence
Top Talent at X
VP-Level and
Above

C h a pte r 6   2 2 7
Here, the model reflects the primary function of the SLT by strategic goal. This
may be adequate in some situations, but it will often be necessary to define the model at
the next level of detail. For example, product innovations might be under the purview
of their functional owners until an investment decision is required, at which point the
functional leaders bring it to the SLT as a consultative or decisionmaking body. Or
new market opportunities may be researched, defined, and tested within a function
with the SLT being informed along the way, but the decision on which opportunities
to pursue must be consultative.
Regardless of how comprehensive the operating model, it should be simple enough
to commit to memory, flexible enough to handle inevitable exceptions and special
cases, and become a living document that the strategic leader (and the SLT) revisits
and reassesses as strategy shifts over time. The case study at the end of this chapter
illustrates that a revised operating model is a key success factor when deploying a new
organizational strategy.
The clarity created by establishing an operating model will have an enormously
positive impact on the productivity and focus of the strategic leadership team. In one
study, “Less than 5 percent of survey respondents said their company had a rigorous
and disciplined process for focusing top management’s time on the most important
issues [strategic planning, etc.].”23 Only 12 percent “believed that their top manage-
ment meetings consistently produced decisions on important strategic or organiza-
tional issues.”24 Once the operating model is established and everyone is clear on how
the SLT should function together to make progress achieving high priority strategic
goals, it will be far easier to determine the pattern of interaction that best supports
those functions.
The most common forum for interaction is team meetings. Most of the inter-
viewed senior leaders acknowledge being at meetings where engagement is poor
and the purpose is unclear. In fact, in his Harvard Business Review article, Michael
Mankins writes, “[W]hen asked how they set meeting priorities, most executives said
they were driven by the crisis of the moment (‘We have a production problem in Unit
A; therefore, this month we will focus top management on Unit A’); historical prec-
edent (‘Every November, we review our human resource policies’); or egalitarianism
(‘Everyone in the room will get his or her chance to speak’).”25 An operating model
helps leaders set more effective agendas, enhancing the best use of meeting time.
Perhaps more importantly, however, a clear and explicit operating structure helps
the strategic leader and the SLT establish which individuals are responsible for spe-
cific organizational strategic goals, as well as which goal fulfillment responsibilities
are assigned among the team. Wageman et al. suggested that “Although individual
responsibilities generally are quite clear, how a collection of leaders together can pro-
vide something more than the sum of individuals’ responsibilities is difficult for many

2 2 8   L e a d in g a t t h e S t r a te g i c L eve l
leaders to articulate.”26 Shared goals give the team a sense of purpose and a clear arena
for exploring collaboration and shared decisionmaking. Without it, each leader sets
“his or her own agenda and vision. There is no team focus, no shared direction, and,
as a result, no traction.”27
Conversely, one can imagine a team unified by a shared purpose, clear about
shared goals, and inspired to work and lead together. On this team, “team members
are cohesive . . . are genuinely interested in what others think; [and] . . . are willing
to listen to and clarify what is being said.”28 Moreover, “[Team members] are open
to accepting the leadership and influence of others whose expertise, information, or
experience are relevant to the decision or task at hand.”29

—Pause—Take a moment to reflect on the following question. Note your initial


responses.
Have you served on a team whose shared goals were not clear? If so, what was the
impact on productivity and the ability for the team to produce results?

Developing Trust-based Relationships


Wageman et al. posed a series of questions summarizing the challenge that most
leaders face in forming an SLT: “How do you harness a group of high-performing,
high-spirited thoroughbreds, in all probability the most talented individuals in your
organization, so that they all run together and pull the organization in the direction
it should be headed? How do you create a real, effective, top leadership team?”30 They
argued, “No CEO can make a leadership team great. What the CEO can do is put in
place certain conditions that increase the chances that a group of senior executives
will develop into a superb leadership team.”31
Clearly, getting the right people on board and establishing shared goals through
an operating model is important. However, as professors Murray Barrick, Bret
Bradley, Amy Kristof-Brown, and Amy Colbert explained, “Effective real teams not
only structure their tasks and rewards in a way that encourages them to work as
one, but also spend considerable time talking to each other and building a cohesive
team spirit.”32
The best way to create a cohesive team that can carry the strategy forward is to
provide fertile ground to grow trust-based relationships. Patrick Lencioni, author
and consultant, emphasizes, “[T]rust is the confidence among team members that
their peers’ intentions are good, and that there is no reason to be protective or
careful around the group. In essence, teammates must get comfortable with being
vulnerable with one another.”33 However, can an individual leader influence that
comfort level?
Commenting on emotions and the importance of emotional intelligence to team
effectiveness, emotional intelligence experts Daniel Goleman, Richard Boyatzis, and

C h a pte r 6   2 2 9
Annie McKee emphasized the importance of a cooperative climate:
Emotions are contagious, and it’s natural for people to pay extra attention to the
leader’s feelings and behavior. So, very often, it is the group leader who sets the
tone and helps to create the group’s emotional reality—how it feels to be part of
the team. A leader skilled in collaboration can keep resonance high, and thus
ensure the group’s decisions will be worth the effort of meeting. Such leaders know
how to balance a team’s focus on the task at hand with attention to the relation-
ships among the team members. They naturally create a friendly, cooperative
climate in the room, a climate that fosters a positive outlook on the future.34
Despite a leader’s best efforts, however, there is still an onus on the leadership team
members to have the courage to take risks with the group and put forth their honest insights
and opinions for the team’s consideration. General Chuck Krulak offered the following:
You try very hard early on to get people on board with you, to get them to think
that they can make comments, think out of the box, and do all of these things
without fear that they are going to hurt themselves in any way. I call that “moral
courage.” If they have the moral courage to tell the emperor that he isn’t wear-
ing his pants . . . then the environment that’s so chaotic is smoothed. The white
water is smoothed just a little bit, because you’ve got more eyes on the white
water—more eyes on the environment—all of them recognizing that whatever
they say, crazy or not, is going to be received. They’re going to be listened to.35
Dave Zuercher emphasized the importance for the SLT to develop and continually
recognize a team concept and shared leadership. “I believe that the reason we do that
is . . . there are rivalries, of course, . . . but there is no serious competition because we
are all rewarded on how well the company does in its commitment to the customer
as measured by the amount of products and services that it sells to our customers.”36
It is also important to reinforce team cohesion through incentives. Recognizing
this issue, American Express is experimenting with its remuneration for individual
and team performance. Kevin Cox, Executive Vice President for Human Resources for
American Express, explains how they are attempting to enhance team collaboration:
Compensation obviously drives a lot of a change effort. It’s not everything,
but it forces the focus. We put about 20 percent, in some cases 25 percent, of
our key leaders’ incentive compensation at risk around collaboration. For
example, two leaders have some shared goals that may actually be disruptive to
either of their respective businesses. But, if they are both working for the CEO,
he will actually award their bonuses based on the evidence of our collabora-
tion, and therefore their unit’s collaboration. While it isn’t everything, eight
months into this year, it has changed the flow of information and construct

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of many meetings. We are making progress. It’s more than baby steps to get to
the point where we are all trying to win a collective game, as opposed to being
too provincial or too feudal.37

Managing Conflict
There can be such a thing as too much of a good thing, however, when it comes to team
cohesion. Harvard professor Linda Hill cautioned, “[I]f the team members become too
supportive of one another, they begin to stop confronting each other. In very cohesive
groups, strong norms to preserve harmonious and friendly relationships can evolve
and ‘groupthink,’ as opposed to critical thinking, can occur.”38
As a result, a most critical factor in ongoing team performance is the ability to
manage conflict well. Stanford professor Kathleen Eisenhardt and her colleagues
argued that “Discord, contention, debate, disagreement—in short, conflict—are
natural” in SLTs.39 They state:
Reasonable people are likely to perceive an ambiguous and uncertain world in
different ways, to make differing assessments about what might happen in the
future, and to prefer different alternatives. In addition, given the high stakes
facing senior executives, they are likely to be particularly passionate and vocal
about their beliefs. The likelihood of conflict is further exacerbated by the fact
that senior executives usually lead their own large and important sectors of the
corporation. So, they receive information and pressure from their own unique
constituencies within the firm and form objectives that reflect their differing
responsibilities. Thus . . . there is apt to be active, engaged conflict within top
management teams.40
Consequently, “If a team is to become highly productive, its ability to allow construc-
tive conflict and creative abrasion is vital.”41
There are two types of conflict SLT members must learn to manage:
• I ntellectual Conflict (or Task Conflict)
•A  ffective Conflict (or Interpersonal or Relationship Conflict).
The first is referred to as intellectual conflict, or “task conflict,” and is usually
regarded as productive and a sign of team health. Task conflict relates to differing
points of view about the nature of, or the best way to proceed with, the task. Lead-
ers characterize task conflict by a healthy debate of the facts and the options for the
path forward. Linda Hill argues that candid discussions of team members’ different
points of view and frank questioning of underlying assumptions result in stronger,
more creative decisions.42 Such discussions are useful to “expose concealed gaps in
information and force debate of alternate approaches, thus providing an opportunity
for better understanding.”43

C h a pte r 6  2 31
The second is affective conflict, interpersonal conflict, or “relationship conflict.”
On the surface, these conflicts may appear to be about work or work product, but
they are fundamentally rooted in a lack of trust between SLT members. Cornell
professors Tony Simons and Randall Peterson observed three distinct impacts of
relationship conflict. First, it limits “information processing ability . . . [because
members] spend their time and energy focusing on each other rather than on the
group’s problems.”44 Second, “[it] limits [the] group members’ cognitive functioning
by increasing their stress and anxiety levels.”45 Finally, “relationship conflict encour-
ages antagonistic or sinister attributions for other group members’ behavior, which
can create a self-fulfilling prophecy of mutual hostility and conflict escalation.”46
These conflicts can be present as an undercurrent to team interactions, only bubbling
to the surface in times of distress or heated debate, creating standoffs or impasses.
As such, relationship conflict can be both hard to diagnose and toxic to the ongoing
productivity of the team.
Hill urged that “Once affective conflict has emerged, it is important not to ignore
its existence.”47 The team leader must deal with interpersonal conflict immediately or
divisions will emerge within the SLT and have ripple effects throughout the organi-
zation. As self-awareness is necessary to be successful as a strategic leader, so it is for
teams of such leaders as well. The latent power relationships and difficulties of col-
laboration that exist within any SLT can be overcome through communication, trust,
and a frank recognition of the roles played by each and every member of the team—if
team members are motivated to do so. When these elements are not present, relation-
ship conflict may ensue, thereby compromising most tasks the SLT aims to achieve.
A shared foundation for the SLT’s collective action can serve as a tool to over-
come group conflict or channel it for the betterment of the whole organization. As
Dave Zuercher noted, “I think you learn to manage relationship conflict by getting
people to be more outwardly focused . . . you get people to start focusing not so much
on themselves, but instead on the goal that needs to be accomplished. It gets people
thinking about ‘us.’”48
Many SLTs, unfortunately, develop team norms that only permit expression of
either positive feelings or feelings of disagreement. The key is to identify biases and
look at the content of issues in an objective and neutral manner. In some cases, the SLT
members—high individual achievers in their own right—may not have developed the
interpersonal skills or emotional stability necessary to successfully deal with conflict
expected at the strategic level. A key challenge for the SLT leader is to ascertain the root
causes of the member’s discomfort. Initially, it may be difficult to discover, as it “often
lies with long-established and deeply imbedded ground rules, or habits that govern
the group. The strategic leader must be able to identify the symptoms and motives
behind a member’s discomfort.”49

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Establishing Trust
Trust is a primary buffer and defense against the discomfort of extended task con-
flict and ensuring that task conflict does not devolve into relationship conflict. Trust
reflects the quality of relationships and their resiliency in the face of challenge. As
established earlier in this chapter, one way to define a trust-based relationship is the
extent to which people are willing to be vulnerable to one another. However, how does
one build trust? How does one measure it?
Consider the following “Trust Equation” developed by consultants David Maister,
Charles Green, and Robert Galford in their book The Trusted Advisor.50
Where:
T = trustworthiness
T = C + R + I C = credibility
S R = reliability
I = intimacy
S = self-orientation

In this model, it may be helpful to think about “intimacy” as level of comfort with
another person, and “self-orientation” as level of misalignment between the motives of
one SLT member and another. Clearly, if someone believes that another person is cred-
ible, reliable, and feels comfortable around him or her, he or she will find that person
more trustworthy. The limiting factor, which may not be as obvious, is the extent to
which someone understands and believes another person’s motives are aligned with
his or her own. The lower that value, the higher the divider in the equation, which can
limit trust significantly.
Team-based trust must start with the strategic leader. As Stephen M.R. Covey,
author of The Speed of Trust, noted, leaders “who trust only themselves can take their
companies only as far as they themselves can take them. . . . They run the high risk of
driving away their best and most talented people who simply won’t work in a restric-
tive environment of control.”51
A high degree of team-based trust correlates with superior SLT performance.
It requires the time and space for team-relationship building. It requires the skills
to manage task conflict, minimize relationship conflict, and to know the difference
between the two. When these are in place, it is possible to have open and honest dia-
logue about the level of trust present on the team—and what can happen to increase it.
Developing trust-based relationships is essential to the overall success of SLTs.
Team norms that permit the respectful consideration and acknowledgment of each
member’s feelings is essential. By reinforcing positive team norms in handling conflict
and emotion, the SLT can prevent one member’s distress from hijacking the attention
and responses of the entire SLT.52 It will self-manage and self-correct. Finally, the
intentional development of trust among team members is crucial. Consequently, the

C h a pte r 6   2 3 3
SLT leader must constantly be aware of his or her relationship to each team member,
the team members’ relationships with each other, and their relationship to the team
as a whole.

Conclusion
In summary, the VUCA environment places enormous cognitive and social burdens
on senior leadership—especially as it relates to seeing and interpreting the strategic
environment, envisioning an ideal future, formulating and implementing an appro-
priate strategy to meet both near- and long-term strategic objectives, and monitoring
for results. Consequently, strategic leaders are turning to SLTs as a means to gain and
sustain organizational viability and vitality. As with strategic leadership, SLTs are dif-
ferent from teams typically functioning at operational and tactical levels.
Team focus and member selection are crucial to overall team success. The SLT
team leader must always keep in mind the primary reason for building and leading the
team—to successfully implement the organizations strategy. Through careful plan-
ning, screening, intuition, and emotional intelligence, the team leader must help the
team build shared values, frames of reference, and views of organizational strategy,
direction, and desired outcomes. Rigorous debate and a “sparring culture” within an
operating climate of trust will help protect the quality of the team’s decisionmaking
from the dangers of “groupthink.”
It is through such attention to all facets of creating and nurturing the team that
the SLT can build a sense of unity and synergy. Such a climate will enhance openness,
innovation, and the willingness of members to meaningfully and productively par-
ticipate. Most SLTs operate best in a shared leadership construct, with the SLT leader
serving as a facilitator encouraging team members to bring their expertise, insights,
and professional judgment to bear on critical matters facing the organization. Lead-
ing SLTs is one of the most challenging tasks of a strategic leader’s career, and, when
successfully achieved, the most rewarding.

From Autonomy to Interdependence:


The Journey of a Strategic Leadership Team—A Mini Case
Study53
Background
This is a true account of a global Fortune 500 company. Names have been changed,
but the context and content reflect an accurate and complete accounting of actual
events.
John C. is a Senior Vice President of Technical Services for a Fortune 500 technology
company. His organization is responsible for three primary functions:

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• r esponding to customers who call with technical questions
• s ending replacement equipment or spare parts to customers
• p roviding customer insights to the Engineering organization to improve product
quality.

The company’s primary source of revenue is their products. However, customers pay to
receive these services, so Technical Services is also an important source of revenue for
the company. John’s organization measures success based on two metrics: customer
satisfaction and gross margin.
Sounds simple, but the scale of the business makes this a very complex organi-
zation. They receive over two million customer calls every year from five call centers
located all over the world, and handle another seven million Internet customer cases.
The corporation manages 1,000 spare-part warehouses, from which they deliver more
than one million spare parts annually to customers in over 120 countries—often within
2 to 4 hours. Every day, the organization has to make calculated decisions about what
type and how much equipment to keep in which warehouse. If leaders keep too little
equipment on hand, they will not be able to keep their service-level commitments to
customers. If they keep too much equipment on hand, inventory costs become exces-
sive, negatively impacting gross margins.

A Strategy for the Early 2000s: G Is for Growth


In 2002–2006, the company was growing extremely fast and Technical Services
employed a simple and successful strategy: “Never be a barrier to growth.” Decentral-
ized, region-based organizational structure supported this strategy. John had four Vice
Presidents reporting to him, as shown below:

John C.
SVP, Technical
Services

Diane L.
EA

Karen R. Gordon D. Nancy S. Derek J.


VP, Asia Pacific VP, North America VP, Latin America VP, Europe

C h a pte r 6   2 3 5
Each Vice President was solely responsible for the call centers and the spare-part
warehouses in his or her respective region. As a result, they ran independent orga-
nizations optimized for the conditions present in the region. For example, the North
American market was relatively homogenous, mature (big customers, steady, predict-
able growth), with reliable transportation infrastructure. Therefore, Gordon could meet
the needs of his region with just a few spare-part warehouses, each carrying almost
no excess inventory. He could easily support the region with a single call center that
provided English-only support.
By contrast, Karen needed to support countries as diverse as Australia, India, Singa-
pore, China, and Korea. Her call centers required staff that could support the languages
and dialects of every country in her region. Tariffs on imports and exports meant that
she needed to store spare parts within each county. Because growth in Karen’s markets
was much less predictable, she had to carry inventories of excess spare parts to make
sure they could keep up with demand.
Given the strategy (never be a barrier to growth) and the context (the stark differ-
ences between Karen’s and Gordon’s environments), the organization’s structure made a
lot of sense. It also meant that there was little need for Karen and Gordon to collaborate
or make shared decisions. John worked with each of his direct reports one on one to
help them plan budgets, make investments, and optimize their businesses. His direct
reports had a cordial relationship with one another. Their team meetings focused on
information exchange. They were a group of high-performing, autonomous leaders,
each doing their part to contribute to the stellar success of the organization as a whole.

—Pause—Take a moment to reflect on the following questions. Note your initial


responses.
1. When have you seen a team like this work well?
2. How did the team model support the strategy?

A Strategy for the mid-2000s: G Is for Global


Good leaders, the saying goes, respond to change, but great leaders anticipate change.
In 2006, John’s metrics were excellent and trending well. However, he began to see indi-
cators that a shift was under way within the company and in the external environment.
The top five trends revealed themselves to include:

• Slowing growth. The business was no longer doubling every year. With decreased
growth, internal pressures increased to manage costs.
• Global customers. More and more customers were not specific to a region, but were
global enterprises who expected a globally consistent experience.
• Cross-functional initiatives. The company was increasingly focused on cross-func-
tional efforts, and in John’s regional structure there was no obvious point person for
these efforts.

2 3 6   L e a d in g a t t h e S t r a te g i c L eve l
• Global initiatives. Inside Technical Services there was an increasing focus on cross-
region initiatives, such as the development of a new technology infrastructure.
• Emerging markets. The company was moving into emerging markets, such as Eastern
Europe, Africa, and the Middle East. These emerging markets were all over the world
and yet had much in common. Until now, geographical proximity correlated to market
similarity, but that no longer held true.

Based on these changes in the market and in the company, John revised his strat-
egy. The new strategy was to optimize for global efficiency and consistency. The mantra
changed from “never be a barrier to growth” to “regional was absolutely necessary;
global wherever possible.” This strategy required a significant organizational structure
change. Rather than continuing to operate using a pure regional structure, he moved to
develop an organization that now consisted of a mix of the pre-existing regional teams,
combined with two global organizations responsible for cross-regional activities, strate-
gies, and investments.
With this pivotal organizational reconfiguration, he added two new Vice Presidents
to the mix: Sanjay, who was responsible for global strategies and investments, and
Jim, who was responsible for global consistency in operations. In addition, Nancy’s
responsibilities expanded to include not only Latin America, but also other emerging
counties having similarities to the Latin American counties, such as Eastern Europe.
Some of the responsibilities previously held by the regions moved to one of the two
new Vice Presidents.

Illustrated below is the new organizational configuration:

John C.
SVP, Technical
Services

Diane L.
EA

Sanjay G. Jim F. Karen R. Gordon D. Nancy S.


VP, Global VP, Global Derek J.
VP, Asia VP, North VP, Latin
Consistency Consistency VP, Europe
Pacific America America

The new strategy and structure now created interdependencies between members
of John’s team. For example, Jim’s new “Global Consistency” team was responsible for
setting polices affecting entire regions. Moreover, Sanjay was responsible for making
budgetary decisions that would ultimately affect economic resources available from

C h a pte r 6   2 3 7
one region to another. This meant that John’s leadership team, if it was to continue its
strategic success, had to transform from a relatively autonomous team of leaders to an
interdependent leadership team.
The actual reorganization was relatively straightforward and implemented quickly.
In addition to the organizational change, John also changed the bonus structure. Prior to
the change, 80 percent of each VP’s bonus was on individual performance and 20 percent
on the organization’s overall performance. To underscore the need for collaboration, he
shifted the ratio dramatically. Now, only 40 percent of each VP’s bonus was on individual
performance and 60 percent on overall performance. In addition, the team conducted a
detailed review of its key decisions and assigned decision rights for each one.
However, despite a clear structure, clear decision rights, and the right incentives, it
soon became clear that the new organizational structure was not operating as intended.
For example:

• Many people one or two levels deep in the organization did not understand the strat-
egy or their role in it, indicating that the senior leaders were not communicating it
effectively.
• Committees, councils, and ad hoc teams were “popping up like weeds,” complicating
and delaying decision processes.
• Turf and budget battles were starting to appear.

Why was this? It came down to two interrelated root causes:

1. Although everyone on the strategic leadership team understood the changes made
to the organizational structure, there was an undefined range of perspectives on how
it was supposed to operate. In some cases, these perspectives were in direct conflict
with one another.
2. Although the leaders now needed to engage in joint decisionmaking and lead as a
team, they had not yet developed the trust, empathy, and the capacity for productive
conflict. (Note: “productive conflict” is respectful, authentic dialogue in which oppos-
ing views on an issue or decision are expressed and debated in the interest of serving
the needs of the business. This is in stark contrast to “destructive conflict,” in which
individuals undermine or attack others to achieve personal gain.)

As John stepped back to reflect, he realized that while implementing the mechani-
cal aspects of a new structure, he neglected making the meaning (the why) clear
and compelling to his team. He also recognized that he underestimated the change
management required, even for his most senior leaders. Consequently, the team was
not equipped to make the shift from a model based on autonomy to a model based
on interdependence. John saw that if he wanted this new strategy to work, he would
need to take corrective action. He decided to take the team to a remote offsite location
and spend some intensive time together to accelerate their reformation as a different
kind of team.

2 3 8   L e a d in g a t t h e S t r a te g i c L eve l
—Pause—Take a moment to reflect on the following questions. Note your initial
responses.
1. What indicators would you use to determine if your organizational structure
needed to change?
2. W hen have you seen an organization modify its strategy but fail to align the
structure or the team model to support the strategy?
3. When have you experienced/benefited from “productive conflict”? When have
you experienced “destructive conflict” between teams or groups in your organi-
zation? How did the leader ensure the teams engaged in productive, rather than
destructive, conflict?
4. W hen have you seen “turf wars” develop in organizational structure change?
What, if any, steps did he take to align the teams?

Building a Strategic Leadership Team


This group of seven leaders sequestered themselves in a remote oceanside hotel for
2 full days. They brought in a consulting firm specializing in this kind of work.
John opened the meeting by explaining that this offsite was all about accelerating
the shift from an autonomous team model to an interdependent team model. Because
they had the rare luxury of time, the team began by reviewing the series of decisions
that led to the new strategy and structure. Through a facilitated process, they talked
about the consequences of not changing and the opportunities if they did success-
fully make this shift. This led to the first breakthrough. Through the dialogue, the team
finally and fully internalized why the change was so essential. With their hearts and
minds more committed to the change, they were ready to move to the next step. Next,
John highlighted some of the key differences between an autonomous team and an
interdependent one (see table 6-3).

Table 6-3. Key Differences between Autonomous and Interdependent Teams

AUTONOMOUS LEADERSHIP TEAM INTERDEPENDENT LEADERSHIP


TEAM
Optimize for the performance of my Optimize for the organization’s perfor-
function mance as a whole
Understand my function in depth Understand the interdependencies
between functions
Set priorities with my direct reports Set priorities with peers
Have cordial, superficial relationships Have trust-based relationships with
with peers peers
Focus team dialogues on information- Focus team dialogues on decisionmak-
sharing ing and issue resolution

C h a pte r 6   2 3 9
Table 6-3. Key Differences between Autonomous and Interdependent Teams (cont.)

AUTONOMOUS LEADERSHIP TEAM INTERDEPENDENT LEADERSHIP


TEAM
Avoid conflict with peers Willingly engage in productive conflict
as needed to reach the best decisions

With the context set, the team tackled the two biggest issues.
Issue #1: Clarifying the intention behind the organizational structure. Building
an interdependent strategic leadership team begins with a shared sense of purpose.
The facilitators began by asking the leaders two questions: 1) Are the regional Vice
Presidents more like General Managers of their region or are they more like “Feet on
the Street?” 2) Are the Global Vice Presidents more like the people setting the direction
or a centralized resource to the regional Vice Presidents? The answers, shown below,
were very revealing. Each dot on each spectrum reflects the personal perspective of a
member of the leadership team.

The point here is that there is no wrong answer, but there must be a consistent one.
For example, Jim believed he was supposed to develop global policies that the regions
would then follow. The Regional VPs believed Jim’s responsibility was to document
existing policies, and where possible, rationalize them. Again, neither is wrong, but they
are different enough that if left unresolved, conflict and mistrust would continue to build.
When John saw the range of opinions, he knew this was a moment of truth. He had
a range of options. He could: 1) let the differences persist and sort themselves out along

24 0   L e a d in g a t t h e S t r a te g i c L eve l
the way; 2) discuss the pros and cons of each choice and come to a group decision; or
3) make an executive decision and ask the team to align to that decision

—Pause—Take a moment to reflect on the following question. Note your initial


response.
If you were John and saw the range of responses illustrated above, what would you do?

In this case, John stepped in to declare his expectations on both points. He made it
very clear that the Regional VPs were to be more like GMs and the Global VPs were to
be more like resources. This was a courageous moment. In declaring where he drew the
line, he created much-needed clarity, but in doing so, disappointed his new Global Vice
Presidents. John later commented on the criticality of that choice, noting that even in
the most collaborative teams, the senior leader needs the authority to make executive
decisions to support the strategy.
Issue #2: Building trust-based relationships. Now everyone had a shared under-
standing of how they were to operationalize the structure. However, they did not have
sufficiently strong trust-based relationships. Trust-based relationships are the foun-
dation for productive conflict, collaborative decisionmaking, and, ultimately, results.
Through a highly structured, highly facilitated dialogue, they began to build that trust
as a team. They began by defining the components of trust (figure 6-1).

Figure 6-1. Components of Trust

It is critical to note that trust is situational. A person might be highly capable in one
role and very incapable in another. Similarly, someone could be able to execute con-

C h a pte r 6  241
sistently and then, when tasked with additional responsibilities, become overburdened
and therefore unreliable.
There is a misconception that trust is something that just “happens.” The truth is
that trust can and is built or diminished with each interaction between two people. It
begins by being clear about why there may be low trust levels between two people.
Table 6-4 illustrates examples of the difference between low trust and high trust for
each dimension.

Table 6-4. Trust—Key Differences between Autonomous and Interdependent Teams


ELEMENT OF TRUST TRUST IS LOW WHEN . . . TRUST IS HIGH WHEN . . .
Motive I do not understand your motives or I I believe you are honest and transpar-
believe your stated motives are differ- ent in your motives and that we have
ent from your real motives or I believe shared interests
your interests are in conflict with mine
Capability I do not believe you have the skills I believe you have the capabilities
or judgment to do your job well and and judgment to do your job with
therefore, you cannot be counted excellence
on to execute against your account-
abilities
Consistency I do not believe you will follow through I believe your word is solid gold.
on your commitments, either because If you say you will do something, I
you are overloaded or because you know you will follow through or pro-
don’t value keeping promises actively renegotiate a commitment

By organizing trust into these components, the leaders were able to engage in
honest and productive conversations about the current levels of trust within their
relationships and what steps to take to improve them. The team held highly structured
one-on-one “trust building” conversations. Typical exchanges went something like
this: One leader would say to another, “My current level of trust for you is (a number
between 1 and 10). What makes it that high is (the things that create trust). What keeps it
from being higher is (the things that get in the way of trust). What I will do to build trust
between us is (offer). What I ask of you is (request).”
For example, Karen said to Sanjay, “My current level of trust for you is a 6. What
makes it that high is that you’re incredibly capable and I know you will do your job with
excellence. What keeps it from being higher is that I’m afraid our motives are not aligned.
You’re rewarded for cutting costs, but I manage a high-growth, high-cost market and if
you cut my budget too much, I won’t be able to serve my region. What I will do to build
trust between us is schedule regular calls between your team and mine to share the
very specific details about our market requirements and the resources necessary to
meet them. What I ask of you is that you talk to me before bringing a budget proposal
forward that includes any significant cuts to my budget.”

24 2   L e a d in g a t t h e S t r a te g i c L eve l
These conversations were very difficult because of the risk initially perceived by
team members. Conducted at the conclusion of the 2-day offsite, the setting for these
conversations was safe, private, and inspiring. These conversations were a turning
point for the team. Though they were only the beginning, they set the stage for the team
to become an interdependent, global team. However, not everyone was able to make
this journey. One team member, Derek, lacked the desire and capabilities to build trust,
engage in productive conflict, and collaborate with the other leaders. John worked with
him for some time before ultimately deciding that Derek was no longer the right kind
of leader to take Technical Services forward. John decided to replace Derek. John and
Derek worked together for many years and this was a difficult, but critically important,
decision.
A strong strategic leader recognizes that not all his or her direct reports can operate
within an interdependent team and is willing to address those issues quickly and directly.
Seeing John put his personal relationship aside to make a decision for the good of the
organization further strengthened the team’s cohesion. When Derek’s replacement
was hired, the team was able to integrate the new team member quickly and went on
to execute the new strategy with excellence. In each subsequent year, both their gross
margin and their customer satisfaction ratings increased.

—Pause—Take a moment to reflect on the following questions. Note your initial


responses.
1. When have you seen trust make or break a team?
2. What signals would tell you whether a team has sufficient levels of trust?
3. If a strategic leader is unsure about his team’s level of trust with each other, how
can he or she get honest feedback on where the areas of weakness are?
4. How can the strategic leader ensure his team has a shared mission and understands
the strategy, structure, and goals in the same way? How often should the strategic
leader take steps to ensure his team’s alignment to the organization’s purpose?

Concluding Thoughts
As of this writing, John’s strategy evolved again. Now, he is using a highly centralized,
shared-services model. This requires even greater levels of trust and relationship among
his team. Although some of the players have changed, John continues to set the bar for
developing and leading highly effective, interdependent strategic leadership teams by
following these simple, but powerful guidelines:

1. Make sure your strategy reflects the market conditions and trends, shifting customer
requirements, the corporate strategy, and constraints.
2. Make sure your organization structure supports the strategy.
3. Make sure your strategic leadership team model enables you to execute as intended.

C h a pte r 6  24 3
—Pause—Take a moment to reflect on the following questions. Note your initial
responses.
1. What are the cues that you might watch for to decide if, how, and when to evolve
your strategy, structure, and team model?
2. How can you check your team’s perception of the organizational goals and strategies?
3. How can you assess whether the team is equipped to execute as intended?

In summary, this chapter examined the important task of building and leading
strategic leadership teams. As seen, the external environment often generates problems
that are simply too large for a single individual to conquer.

Notes
1
The author thanks Renee Cullinan, Meredith Mohr, and Julie Walker of Atalanta Partners—recog-
nized experts in senior-level teams—for their review, advice, and insights regarding this chapter, as well
as their collaboration in the development of the concluding real-world case study.
Ruth Wageman et al., Senior Leadership Teams: What It Takes to Make Them Great (Boston: Harvard
2

Business School, 2008), xiii.


3
Ibid., 31.
4
Ibid., 41; modified from figure 2-1.
Owen Jacobs, “Creating and Managing Teams,” Leadership Course Reading (Washington, DC:
5

National Defense University, n.d.), 1–11.


Jim Collins, Good to Great: Why Some Companies Make the Leap . . . and Others Don’t (New York:
6

HarperCollins Publishers, Inc., 2001), 45–46.


7
Ruth Wageman and J. Richard Hackman, “What Makes Teams of Leaders Leadable?” in Handbook
of Leadership Theory and Practice, ed. Nitin Nohria and Rakesh Khurana (Boston: Harvard Business
Press, 2010), 496.
8
Michiel Kruyt, Judy Malan, and Rachel Tuffield, “Three Steps to Building a Better Top Team,” McK-
insey Quarterly (February 2011), 1–5.
9
Personal interview with Dave Zuercher, Executive Vice President, International and Insurance Ser-
vices, Wells Fargo & Company; Chairman, Wells Fargo Global Broker Network.
Personal interview with Bob McDonald, Chairman, President & CEO, The Procter & Gamble Com-
10

pany.
11
Collins, Good to Great, 57.
12
Ibid., 58.
13
Wageman et al., Senior Leadership Teams, 17.
14
Wageman and Hackman, 486.
15
Ibid., 496.
16
Wageman et al., Senior Leadership Teams, 17.

24 4   L e a d in g a t t h e S t r a te g i c L eve l
Ibid., 16.
17

Wageman and Hackman, 488.


18

19
Wageman et al., 36.
20
Ibid., 38.
John Kotter and Dan Cohen, “Building the Guiding Team,” in The Heart of Change (Boston: Harvard
21

Business School Press, 2002), 37–60.


22
Wageman and Hackman, 489.
23
Michael Mankins, “Stop Wasting Valuable Time,” Harvard Business Review (September 2004), 60.
24
Ibid., 61.
25
Ibid., 60.
26
Wageman and Hackman, 481.
27
Wageman et al., 8.
Linda Hill, “A Note on Building and Leading Your Senior Team,” Harvard Business School Note,
28

9-402-037 (June 6, 2002, revised), 10.


29
Ibid.
30
Wageman et al., 8.
Ibid., xiv.
31

32
Murray Barrick et al., “The Moderating Role of Top Management Team Interdependence: Implications
for Real Teams and Working Groups,” Academy of Management Journal 50, no. 3 (June 2007), 555.
Patrick Lencioni, The Five Dysfunctions of a Team: A Leadership Fable (San Francisco: Jossey-Bass,
33

2002), 195.
Daniel Goleman, Richard Boyatzis, and Annie McKee, “The Emotional Reality of Teams,” Journal
34

of Organizational Excellence 21, no. 2 (Spring 2002), 56.


Personal interview with General Chuck Krulak, USMC (Ret.), President, Birmingham-Southern
35

College; Board of Directors for Union Pacific and non-executive director for Aston Villa British Soccer
Club; former USMC Commandant; former Vice Chairman of MBNA and Chairman & CEO for MBNA
Europe Bank.
36
Personal interview with Zuercher.
37
Personal interview with Kevin Cox, EVP Human Resources, American Express.
38
Hill, 10.
Kathleen Eisenhardt, Jean Kahwajy, and L.J. Bourgeois III, “Conflict and Strategic Choice: How Top
39

Management Teams Disagree,” California Management Review 39, no. 2 (Winter 1997), 43.
40
Ibid.
41
Hill, 10.
42
Ibid., 11.
Andrew Ward et al., “Improving the Performance of Top Management Teams,” MIT Sloan Manage-
43

ment Review (Spring 2007), 85.


Tony Simons and Randall Peterson, “Task Conflict and Relationship Conflict in Top Management
44

Teams: The Pivotal Role of Intragroup Trust,” Journal of Applied Psychology 85, no. 1 (2000), 103.
45
Ibid.
46
Ibid.

C h a pte r 6  24 5
47
Hill, 11.
48
Personal interview with Zuercher.
49
Ward et al., 88.
David Maister, Charles Green, and Robert Galford, The Trusted Advisor (New York: Free Press, 2000),
50

69–70.
Stephen M.R. Covey, The Speed of Trust: The One Thing that Changes Everything (New York: Free
51

Press, 2006), 192.


52
Goleman et al., 59.
53
This case study was the result of collaboration between the author and Renee Cullinan, Meredith
Mohr, and Julie Walker of Atalanta Partners (<www.atalantapartners.com>), experts in building strong
strategic leadership teams for their clients (2011).

24 6   L e a d in g a t t h e S t r a te g i c L eve l
CHAPTER 7 | Decisionmaking at the
Strategic Level

Previous chapters focused on the activities performed by the strategic leader that
require exercising judgment and making decisions. This chapter focuses on decisions
made by the strategic leader—or the strategic leadership team (SLT)—that can have a
major impact on organizational performance and/or its relationship with the external
environment. Referring to the strategic leadership model (figure 2-1), following the
selection and orientation of the SLT, the strategic leader and his new team evaluate
promising strategies relative to organizational competencies and the availability of
resources. Following review of the facts and the application of informed intuition, the
strategic leader makes the decision or a series of decisions that bring the strategy to life.
Jeffrey Pfeffer, a leading scholar in the fields of power and organizations, concluded
there are three key elements to remember regarding decisionmaking:
1. A decision by itself changes nothing.
2. “At the moment a decision is made, we cannot possibly know whether it is good
or bad. Decision quality, when measured by results, can only be known as the
consequences of the decision become known. We must wait for the decision to be
implemented and for its consequences to become clear.”
3. “Perhaps most important, observation is that we almost invariably spend more time
living with the consequences of our decisions than we do in making them.”1
H. Ross Perot, then CEO of Perot Systems, suggested that strategic leaders, when
making decisions, should not second-guess themselves about the specific decision.
His point is that once a decision is made, the minute the leader begins to question
“Did I make the right decision?” the leader undermines that decision. Based on the
feedback and results of the previous decision, the phrase “I can always make another
decision” summarizes Perot’s perspective. He did not imply, however, that evaluating
a decisionmaking process after the fact is not a valid practice; rather, in the process of
making the decisions—it is similar to driving a car—always look through the front
window rather than the rear-view mirror. “That’s why the front window is larger,” he
added with a grin.2
The interviewed strategic leaders agreed that decisionmaking at the strategic level
is significantly different from typical decisionmaking processes at the operational
and tactical levels. Whereas most decisions at lower levels are routine or established
through accepted procedures, strategic decisions are unstructured and rarely routine.

C h a pte r 7  247
In addition, decisions at the strategic level are consequential—they will have second,
third, fourth, and later order effects.
An example of strategic leaders being aware of potential second and third order
of consequences is the National Security Agency (NSA) following 9/11. Michael
Lawrence, Senior Executive Service (SES) with the NSA, recalled how the environ-
ment changed after the terrorist attacks of 9/11. “Back at the Agency, when I was
working with the Director, part of the challenge was our environment exemplified
VUCA. The attacks of September 11 really ratcheted up the requirements for us to be
ahead of the power curve. . . . It was one of those events that acted as a driving force
for change. When we looked at the transformational effort needed, we wanted to
have something that would set transformation in motion and was custom made for
the NSA. That empowered General Hayden, then Director of the NSA, to institute
changes.” To facilitate the change process, “NSA received a tremendous amount of
cash infusion because the constituents, the Congress, and the Senate wanted action.”
However, with the significant additional funding, the Director expressed concern
for the “time when the money will stop. . . . So all of those items that you purchased
at the time, they are going to have a life cycle. If you are an operational leader, that
wouldn’t be something you would think about. The complexity and uncertainty of
the environment requires the strategic leader to look into the second and third order
consequences of his decisions.”3
Leadership scholar Owen Jacobs pointed out, “The ability to make good decisions
under uncertain conditions is one of the hallmarks of strategic leadership.”4 Yet those
leaders viewed as making good decisions may be in the minority. Consider this: In a
2009 McKinsey survey of 2,207 executives, “only 28 percent said that the quality of
strategic decisions in their companies was generally good, 60 percent thought that bad
decisions were about as frequent as good ones, and the remaining 12 percent thought
good decisions were altogether infrequent.”5 “Decisionmaking is arguably the most
important job of the senior executive and one of the easiest to get wrong.”6
Strategic decisions rarely follow a prescribed decisionmaking framework. Many
elements of the decision process are intangible and fuzzy, without a clear picture of
how to approach the problem—much less the solution. Jacobs explained, “Because
of the VUCA nature of these unstructured [strategic] problems, there even may be
no agreed-upon strategy for developing workable solutions even with appropriate
framing. When dealing with such problems, a lot of creativity often is demanded
to find novel approaches, as yet undiscovered technologies, or contingencies previ-
ously unimagined.”7

Who Makes the Strategic Decisions?


Considering the complexity of the decisionmaking environment at the strategic
level, and the necessity to anticipate often hard-to-determine second and third order

24 8   L e a d in g a t t h e S t r a te g i c L eve l
consequences, engaging other members of the strategic leadership team is often
prudent when making decisions at that level. Jacobs agreed, stating:
The likelihood of unanticipated indirect effects—the ripple effect—is so great in
really complex systems that prudent decision makers test and fine-tune their
proposed solutions with [experienced, trusted] advisors before implementing
them. In most cases, the ultimate quality of the decision will strongly depend on
the quality of these advisors, their relationship to the decision maker, and their
relationships with one another—the extent to which they have . . . [evolved] into
a real team with shared commitment to a common purpose.8
Jacobs acknowledged, however, that leaders must remember there is a tradeoff
when considering team inputs. He explains:
When the problem space is either too complex for any single individual to
comprehend totally, or involves such diverse constituencies that no decision
can be implemented without sub­stantial input from the many different inter-
ests invested in the issue, investing in a decision team approach may pay very
handsome dividends. . . . On the other hand, investing in a lengthy decision
process to make an easy decision will often in itself create dissent. . . . [The]
members of the decision team—with responsibilities in their own right—will
feel their time is being wasted. The question is when to use what kind of deci-
sionmaking process.9
Furthermore, apprehension during the decisionmaking process may create uncer-
tainties within the organization. The strategic leadership team, the managers, and the
workforce need to know that their leader can make a decision. As General Charles
Krulak, former Commandant, U.S. Marine Corps, and Vice Chairman MBNA,
explained, “Lots of times decisions in the corporate world or the military involve a lot
of sitting around and knocking it out, but at the end of the day one person needs to
make the decision. That person is the leader at the apex of an organization.”10
Regardless of the decisionmaking strategy, technique, skill sets of the leader (or
the leadership team), or process, the results of the process vary according to the people
involved. As leadership scholar Donald Hambrick stated:
In the face of the complex, multitudinous, and ambiguous information that
typifies the top management task, no two strategists will identify the same
array of options for the firm; they will rarely prefer the same options; if, by
remote chance, they were to pick the same options, they almost certainly would
not implement them identically. Biases, blinders, egos, aptitudes, experiences,
fatigue, and other human factors in the executive ranks greatly affect what
happens to companies.11

C h a pte r 7  24 9
Thinking Behind Strategic Decisionmaking
Whether making decisions with input from a team or as the lone leader, understanding
what influences those decisions is important. Previously, attention focused on the need
for strategic leaders to hone their strategic and reflective thinking skills, enhance their
frames of reference and mental models, and confront their biases and their impact.
Doing so enables strategic leaders to combine logical and analytical reasoning with
informed intuition, thereby enhancing the decisionmaking process.
To summarize, logical and analytical reasoning typically works well with the
structured, routine decisionmaking often found at the operational and tactical levels.
Whereas judgments made by informed intuition, or “gut instincts,” may be required at
the strategic level. At the strategic level, the VUCA environment often requires leaders
to make decisions that involve increasingly dynamic, unstructured challenges. The
broader the leader’s frames of reference, mental models, and thinking skills, the more
informed their gut instinct will be. As Oxford professor of organizational decision-
making Gerald Smith noted, “The capacity for reflective thought is a decisionmaker’s
most valuable resource.”12
The following sections outline various aspects of rational and intuitive decision-
making in more detail.

Rational Decisionmaking Model


Decision trees, cost-benefit analysis, and other analytical decisionmaking processes
often depict the rational model. It is a simple model borrowed from economic theory
that offers a straightforward sequence to the decisionmaking process. Rational deci-
sionmaking requires understanding the goals desired and familiarity with common
frames of reference. A typical rational model has the following seven steps:
1. Define goals
2. Identify alternatives
3. Calculate the consequences
4. Assess the risks and uncertainties
5. Decide the most favorable using a calculated ratio of benefits to costs
6. M onitor implementation
7. Begin again.
There are issues, however, with the actual use of the model, even for structured
decisionmaking requirements. For example, “[researchers] found persistent behavioral
violations of rational norms. Evidence that preferences are constructed on the fly
threatens the model’s claim that people have stable preference structures.”13 As deci-
sion scholars Gerard Hodgkinson and William Starbuck argued:
Decisionmakers have neither full information nor the competence and capaci-
ties to process the myriad of information that is available, nor do they have

2 5 0   L e a d in g a t t h e S t r a te g i c L eve l
perfect knowledge of the issues at hand. . . . Furthermore, those who have studied
it have described actual decisionmaking as iterative and complex, punctuated
by digressions, and warped by biases and misperceptions.14
Furthermore, Smith posited, “Increasingly . . . proponents of rational methods are
recognizing that, except in special circumstances, decision analytic techniques are
not useful. Arguably the most that the teaching of decisionmaking can take from the
rational model are a few principles and its conceptual framework, encapsulated in a
decision tree.”15

Intuition in Decisionmaking
As previously examined in chapter 3, intuition commonly refers to “an experiential
phenomenon based upon implicitly stored knowledge in which there is a complex
interplay of cognitive and affective processes operating below the level of conscious
awareness. The process of intuiting involves rapid, holistic information processing of
which the recipient is unaware.”16
In comparing intuition in decisionmaking with rational models, professors
Eugene Sadler-Smith and Paul Sparrow suggested:
A rational action is feasible if decisionmakers [agree] about goals and cause and
effect relationships, and if they are cognizant of the environmental and other
constraints, under which decisionmakers take action. Conversely, if decision-
makers cannot come to consensus on goals and cause and effect relationships,
and are not fully cognizant of environmental constraints (including uncertainty)
they cannot rely exclusively upon rational methods. Hence, the limits of ratio-
nality may be all too apparent in uncertain environments where it is difficult
to identify, to measure and predict key variables and their interrelationships.
Rational analysis and intuitive judgment are complementary components of
effective decisionmaking.17
Cynthia Valles, an Executive Vice President at American Express, explained
that “Although you try to make decisions based on the best information available,
ultimately you have to decide with your gut exactly how much information is enough
to make a decision. Reliance upon the gut reflex comes largely with experience.”18 All
of the interviewed senior leaders indicated they relied on informed intuition when
making decisions. For example, Peter Schlote, CEO of Tesat-Spacecom Gmbh & Co.,
expressed that “As a strategic leader, you always seek consensus and logic when making
a decision, but ultimately intuition drives the decisions made at the strategic level.”19
Based on observations and experiences, informed intuition helps the strategic leader
synthesize and make sense of disparate information and volatile conditions. Unfortu-
nately, many decisions at the strategic level are made with inadequate information and

C h a pte r 7  2 51
sensitive time frames. Consequently, as General Richard Myers, USAF (Ret.), former
Chairman of the Joint Chiefs of Staff, noted, “That’s why, when it comes down to it,
most decisions are made by informed intuition.”20
In view of the previous and above discussions regarding intuition, its use by the
strategic leader must be considered as part of the strategic decisionmaking process,
especially when facing challenging and unstructured issues inherent in the VUCA
environment.
Take a moment to solve the following problem as quickly as possible:
•A bat and a ball cost $1.10 in total.
• Th
 e bat costs $1 more than the ball.
•H ow much does the ball cost?
Most likely, if you answered quickly, the answer offered will be “10 cents.” Intu-
ition quickly surmises that the sum $1.10 easily breaks down into $1 for the bat and 10
cents for the ball. Studies consistently demonstrated that 50 percent or more intelligent
people selected 10 cents as the answer rather than the correct answer of “5 cents.” In
view of the above result, scholar Daniel Kahneman argues, “The surprisingly high rate
of errors in this easy problem illustrates how lightly the output of effortless associative
thinking is monitored; people are not accustomed to thinking hard, and are often
content to trust a plausible judgment that quickly comes to mind.”21 This example of
an initial “gut” reaction demonstrates that a strategic leader should always challenge
and validate his or her intuition results.

The Vroom-Yetton-Jago Decisionmaking Model


In 1973, Victor Vroom and Philip Yetton developed a normative or prescriptive deci-
sion-tree model reflecting five decision processes that ranged from highly autocratic
through consultative to participative. The original model identified seven situational
variables (e.g., need for commitment, goal alignment, decision importance, potential
for conflict) and prescriptive decision rules to govern either decision quality or decision
acceptance. In 1988, to increase prescriptive validity, Vroom and Arthur Jago updated
the model providing five additional situational factors (e.g., severe time constraints)
and enhanced prescriptive specificity using linear equations rather than decision rules;
and in 2000, Vroom made further modifications.22 Figure 7-1 provides a simplified
depiction of the model.

2 5 2   L e a d in g a t t h e S t r a te g i c L eve l
Figure 7-1. Vroom-Yetton-Jago Levels of Involvement in Decisionmaking

Delegate with Constraints


TIME

Facilitate Consensus

Gather Input from Team and Decide

Gather Input from Individuals and Decide

Decide and Announce

LEVELS OF INVOLVEMENT

The following is a brief description of each of the five levels of decisionmaking and
some suggested pros and cons for each level.

Level I: Decide and Announce. Leader makes the decision and either announces
or “sells” it to the group or organization.
• Pro: Can make decision and implement quickly—but to avoid possible indifference
or lack of motivation to implement, leader should explain rationale as to why he or
she made the decision unilaterally; leader controls the situation.
• Con: May not consider all the necessary information. May use “rule of thumb” deci-
sion process that is not valid for the specific issue at hand. May alienate members of
the group or organization unnecessarily.
Level II: Gather Input from Individuals and Decide. Leader gathers input from
selected individuals or the group individually and then makes the decision.
• Pro: Can go to recognized experts to gather additional information in order to make
a more informed decision; does not require meeting with the entire group.
• Con: Others in the group may wonder why the leader did not consult with them—
they may perceive the leader as “playing favorites.” Could result in the group or
organization not motivated to implement the decision.

C h a pte r 7   2 5 3
Level III: Gather Input from the Group and Decide. Leader gathers input from
the group and then makes a decision.
• Pro: Including the group in gathering the data enhances the chance for synergy and
better-informed decisionmaking.
•C  on: If leader makes a decision different from what the group suggests, the group may
feel that they were “used”—that the decisionmaking process was preordained by the
leader and the process was a façade; may result in members of the group undermin-
ing implementation; may not be so willing to participate in future decisions. It takes
more time for the leader to make the decision.
Level IV: Facilitate Consensus. Leader presents issue or problem to the group
and facilitates the decisionmaking process within the group. If the group is unable to
reach consensus, the leader has the option to make the decision.
• Pro: Enhances buy-in and ownership by members of the group; educates members
of the group; implementation could be quicker as more people are knowledgeable
regarding the decision process and what needs to be done. Helps to build and sustain
trust and respect between group members.
• Con: Takes more time—possibility the decision is “watered down” from what would
be best for the organization; group may not function well in reaching a decision (e.g.,
poor collaboration skills).
Level V: Delegate with Constraints. Leader delegates the problem to the group
and authorizes the group to make the decision within specified boundaries. Leader
does not abandon the group, but facilitates support and resources to enable the group’s
success in making a decision.
• Pro: Good for building team leadership skills and ownership of the decision by the
group; frees leader to focus on other issues.
• Con: Takes more time; may lead to a decision not viewed by the leader as optimal;
team may not have the skills to reach a quality decision.
In essence, the model is about levels of participation—when to involve others
in the decisionmaking process. While the model appears simple in presentation,
its actual use is much more complex. Myriad factors influence the selection of a
specific decision approach. Some examples include: how well the decisionmaker
perceives the issue; the leader’s judgment regarding amount of time available for
making a decision; the perceived knowledge and expertise held by the leader (e.g.,
if the leader has a high opinion of his or her knowledge, may lead to a more auto-
cratic decision process); the perceived knowledge and skill of the group or team
members in participating in the decision process, and the situation or context sur-
rounding the decision; and, an appreciation as to where the necessary knowledge
and skills for making the decision reside.

2 5 4   L e a d in g a t t h e S t r a te g i c L eve l
Vroom offered the following thoughts regarding the model: “[P]redictions of
the quality of the decision resulting from each of the five decision processes are
based on where the problem-relevant knowledge resides (in the leader, in the group,
both, or neither), the extent to which the goals of group members are aligned with
the organization, and the competence of the team members in working together.”23
Therefore, successful strategic leaders examine each decision requirement and, based
on a case-by-case analysis, determine the best decisionmaking process for the situa-
tion and context. Continued use of one particular approach can lead to complacency,
demotivation, and possible loss of the leader’s credibility.

Ethical and Moral Implications


Strategic leaders must always consider ethical and moral implications in decisions at
the strategic level. This is especially true when faced with ethical dilemmas—typically
more nuanced and complex at the strategic level than at the operational or tactical
levels. “Right versus Right” ethical decisionmaking at the strategic level can be very
complicated and requires a good ethical foundation and excellent critical, creative, and
the complex-thinking skills examined in the “Personal Dimensions” chapter. Strate-
gic leaders can run into difficulties because of actual or perceived ethical breaches.
Therefore, they should always consider the ethical dimension of their behavior and
be aware of perceptions of impropriety.
Ethics scholar Richard Kidder identified four primary choices leaders face in “Right
versus Right” ethical dilemmas, or the “Dilemma of Choice between Competing Values”:
Truth vs. Loyalty
Individual vs. Community
Short-term vs. Long-term
Justice vs. Mercy24
Kidder describes three principles leaders can use to resolve these ethical dilemmas:
•E
 nds-based (Utilitarian)—“Do what’s right for the greatest number of people.” Requires
we weigh the pros and cons in terms of future effects, intended and unintended.
•R
 ule-based (Kantian)—“Follow your highest sense of principle.” “Act only on that
maxim through which you can at the same time will that it should become a uni-
versal law.” —Immanuel Kant (German philosopher)
•C
 are-based (Golden Rule)—“Do what you would wish others to do to you.”25
Similarly, Professor Gerard Rossy suggested five questions to assist leaders to more
effectively deal with ethical dilemmas in the decisionmaking process:
1. What are my self-interests in this situation and context? How might they influence me?
2. What would lead to the greatest good for the greatest number? What are the legiti-
mate interests of others?

C h a pte r 7   2 5 5
3. What laws, rules, regulations, policies, principles and values, or socially appropriate
behaviors apply?
4. What are my obligations to others in this situation? How should the principle of
reciprocity apply?
5. What will be the long-term impact on important stakeholders and me?26
Strategic leaders use both rational decision models and intuition to evaluate the
appropriate ethical and moral implications of decisionmaking. For example, as with
other insights and “gut” feelings, intuition provides reflexive judgment as to “this is
wrong” or “this is unethical.” Intuition can provide the sudden injection of a moral
judgment into the decisionmaking process regarding a proposed alternative or poten-
tial decision. If the organization has a strong ethical and moral climate and culture,
the more likely it will be for leaders and members of the organization to react with
automatic ethical contextual intuitive responses during a decisionmaking process.
Strategic leaders often use the rational model of conscious and intentional rea-
soning as an effective tool to evaluate more thoroughly the ethical implications of a
proposed decision or solution. In addition, senior leaders can prescribe a procedure or
strategy to ensure they and their strategic leadership team members evaluate ethical
implications as part of their formal decisionmaking process. Effective ethical deci-
sionmaking at the strategic level requires the strategic leader to both behave ethically
and reward ethical behavior, while resisting unethical behavior in the organization.

—Pause—Take a moment to respond to the following exercise: The Ultimatum


Game. Do not read the discussion that follows until you respond to the two questions
regarding how you would play the game.

The Game
Player 1 receives an offer for a total of $100 dollars. To receive the money, Player 1 must
offer a portion of the money to Player 2, and Player 2 agrees to accept the amount and
knows that the total amount offered to Player 1 is $100. Player 2 will determine the
actual amount Player 1 receives.

The Rules
Player 1 decides the amount he or she is willing to offer Player 2. Player 1 can choose
any portion of the $100 to give to Player 2.
•P  layer 2 can accept or reject the offer.
• If Player 2 accepts the offer, Player 2 receives the offered amount and Player 1 keeps
the remainder.
• I f Player 2 rejects the offer, neither Player 1 nor Player 2 receive any of the money.

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You and a Stranger Play the Game

•Y  ou are Player 1: What would be your offer to Player 2? Write down your answer.
• You are Player 2: Player 1 offers you $20. Would you accept or reject this offer? Write
down why you accepted or rejected the offer.
Discussion
Based on economic rational decisionmaking, Player 2 should accept whatever Player
1 offers, regardless of the amount. Rationally, any amount is more than what Player
2 had! Yet, in using this game with ICAF students for a number of years, for Players
2 who received a small offer—sometimes $40 or less—the majority rejected the offer.
Why? The answer typically given is that the offer was not “fair.” This example dem-
onstrates that emotion is often part of the decisionmaking process. The Ultimatum
Game presents Player 2 with the twin demands of the cognitive goal of accumulating
money and the emotional goal of resisting unfairness.27

Emotion in Decisionmaking
It is important for senior leaders to recognize that emotion is a major factor in deci-
sionmaking, especially at the strategic level. Intuition is a construct of data residing
in the leader’s brain, where much recollection and reasoning include emotional tags.
Most memories are not associated with a specific fact; rather, memories typically relate
to a story component; and most stories remembered have an emotional component.
Many rational decisionmaking models minimize or ignore the influence of emotions
on people’s behavior.

Wang Laboratories28—A Mini Case Study


An Wang, who earned a doctorate in applied physics from Harvard, was a brilliant
inventor and innovator. He created the company Wang Labs, which grew into a $2 billion
company. Wang invented the magnetic pulse memory core (an essential component
for computers), which he sold to IBM after 4 years of arduous negotiations. He became
embittered because of the process and the belief that IBM challenged his patent claim
to close the deal.
In 1978, Wang proclaimed that by the mid-1990s his company would replace IBM
as the number one computer company in the world (Wang at the time had sales around
$3 billion, whereas IBM was close to $47 billion). Wang developed the word proces-
sor, and rather than seeing it as a product, he fell in love with it. When Wang received
word that IBM’s personal computer (PC) was a major threat to the word processor, he
dismissed the threat.
When he finally entered the PC market, he chose to use his own non–IBM compat-
ible proprietary system. “An Wang’s blind hatred of IBM created an unwinnable strategy.

C h a pte r 7   2 5 7
Ever since he sold his rights to the magnetic core memory, he felt cheated and exploited
by the giant computer company and he would be damned if he would let that happen
again!”29 After years of struggling, in 1992 Wang Labs filed for Chapter 11 bankruptcy
protection. While there were a number of strategic errors and an insatiable desire for
control, a clear component to the downfall of a once great company was the emotional
component of An Wang’s decisionmaking.

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. Have leaders in your organization made decisions based on emotion rather than
on facts and logic? If so, why do you think emotion drove their decisionmaking?
Did the decision produce a favorable outcome?
2. When was the last time emotion drove your decisionmaking, either personally
or professionally?

Not Enough Information


Often strategic leaders must make decisions without sufficient information. Colin
Powell argued that decisions can—and must—be made with only between 40 and
70 percent of the data in hand and available. He cautioned, “Don’t take action if
you have only enough information to give you less than a 40 percent chance of
being right, but don’t wait until you have enough facts to be 100 percent sure,
because by then it is almost always too late. Today, excessive delays in the name of
information-gathering breed ‘analysis paralysis.’ Procrastination in the name of
reducing risk actually increases risk.”30 The VUCA environment does not always
allow for lengthy analysis prior to making a decision. In such situations, senior
leaders must rely more on their expertise and intuition—complemented by those
of their senior leadership team.
Financial consultant Dimitris Chorafas explained, “Every decision is a judgment,
and it is usually part of a process of selection among alternatives. Decisions are rarely
a matter of choosing between ‘right’ and ‘wrong,’ nor are they often based [solely] on
facts—because ‘facts’ are so frequently unknown or uncertain. For the most part,
decisions are based on opinion, and these tend to reflect untested hypotheses about
events which are probable or expected.”31 Therefore, many leaders consider collabora-
tion with others in the decisionmaking process essential for making a more informed
decision. In some cases, organizations use group electronic decision-support systems
to enhance their decisionmaking process. Broadening the number of members who
will offer inputs into the solution enhances the frames of reference and opens the
field of options to consider when lacking information. (Keep in mind the pros and

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cons associated with soliciting inputs from a team noted earlier in this chapter when
determining if a particular decision benefits from collaboration.)

Too Much Information—Information Overload


The enormous amount of often desperate, extraneous information available to strategic
leaders (as well as the requests for information from others) challenges them (and their
SLT) to know what deserves attention, absorption, and management, as well as what
to ignore. Too much information can overwhelm or delay effective decisionmaking.
Every piece of information presents a choice that requires a decision on what to do with
it. In some cases, the overload of information can lead to paralysis. Research concluded
that the flow of information and the attempts needed to make sense from all of it are
“changing the way we think, not always for the better.” The research determined that
“trying to drink from a fire hose of information has harmful cognitive effects. And
nowhere are those effects clearer, and more worrying, than in our ability to make
smart, creative, successful decisions.”32
For example, Angelika Dimoka, director of the Center for Neural Decisionmak-
ing at Temple University, using functional MRIs, showed that as information flow to
the brain increased, activity in the brain’s center for cognitive decisionmaking—the
Prefrontal Cortex (PFC)—also increased. However, as the researchers provided more
and more information, the “activity in the dorsolateral PFC suddenly fell off, as if a
circuit breaker had popped.” Dimoka concluded that “The . . . [participants] reach
cognitive and information overload.”33
As reviewed earlier, intuition—that coming from the subconscious rather than
conscious level—is an important contributor to creativity and one’s ability to deal
with uncertainty and complexity at the strategic level. Psychologist Maarten Bos of
Radboud stated that when people receive significant amounts of complex information
regarding a decision, “they default to the conscious system . . . that causes them to
make poorer choices.”34 Often, a strong focus on the conscious and its logical thinking
and (more linear) decisionmaking approach hinders creativity and its contribution
to intuitive thinking.
Strategic leaders need to understand how they receive, process, and manage infor-
mation, as well as how they approach using information during their decisionmaking
process. Begley suggested the following approaches to help avoid information overload
and the dangers of it hindering decisionmaking capacity:
Experts advise dealing with emails and texts in batches, rather than in real
time; that should let your unconscious decisionmaking system kick in. Avoid
the [potential] trap of thinking that a decision requiring you to assess a lot of
complex information is best made methodically and consciously; you may make
a better decision, and regret it less, if you let your unconscious . . . [consider the

C h a pte r 7   2 5 9
merits of the issue] by removing yourself from the info influx. Set priorities: if
a choice turns on only a few criteria, focus consciously on those. Some people
are better than others at ignoring extra information. These “sufficers” are able
to say enough: they channel-surf until they find an acceptable show and then
stop, whereas “maximizers” never stop surfing, devouring information, and
so struggle to make a decision and move on. If you think you’re a maximizer,
the best prescription for you might be the “off” switch on your smart phone.35

Deciding the Focus of Attention in Decisionmaking


A major issue for strategic leaders in a VUCA environment is making the decision on
where to focus one’s attention—especially when dealing with wicked problems. Again,
it is common that strategic leaders may connect the dots quickly, be decisive—and be
decisively wrong. In other cases, the dots may not connect because the leader is not
using the proper perspective. Ted Leonsis, in addition to his many sports and business
interests, also is the founder and chairman of SnagFilms, the Web’s leading online
distribution channel for documentary and independent films. He shared the following
case study that illustrates how leaders might need to change their perspective in order
to achieve a breakthrough, or an “aha” moment.

Premature Deaths in Africa—A Mini Case Study36


Infant and child mortality is high throughout Africa, but in one village, an alarmingly
high number of premature deaths in children caught the focus of a particular charity.
This charity raised millions of dollars and sent doctors and engineers to the village in
an attempt to find and fix the root of the problem. Initially, they thought the problem
was the water supply. However, upon further study, they concluded the source must be
the mosquitoes. All the solutions proposed required more funding than they had—the
death tolls continued to rise. Here were the smartest people, with the best of intentions
and millions of dollars, working to change what they thought was wrong, and they were
not succeeding.
Then, an insightful graduate student decided to take on the project. Knowing there
was little funding available and that previous attempts failed to root out the problem,
he began reading through all the information related to the project and its failures. He
concluded, “I can’t fix the water system or the power grid or kill malaria.” So, what does
he do? He changes his perspective. Rather than focus on why the children are dying, he
decides to focus on what is different about the children who are not dying. He decides
to model what the mothers of those children who are living are doing. What he found
was incredible. The children who survived were not drinking different water or bitten
by mosquitoes less; they were practicing different eating habits.

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In this village culture, there was a communal cooking post where typically most of
the village ate one big meal a day. However, the kids who were surviving were children
of poorer mothers who ate smaller portions and ate three or four small meals a day,
rather than one big meal. Because they were poorer, they allowed their children to eat
seafood, something that normally was not allowed in this culture until adulthood. In
addition, these poorer mothers tended to breastfeed their children longer than tradition
suggested. Subsequently, the graduate student created a “council of mothers” to act
as an example for the rest of the village. He suggested, “Let’s feed the kids five times a
day instead of one time a day and you teach the other mothers how to do it. And then
put a little shrimp in when you are feeding them.” The results: In 3 years, the charity cut
the number of premature deaths by an astonishing 80 percent.
Leonsis ends the story by stating, “The answer was right in front of them, with the
mothers. And all this kid did was act as a contrarian. Everyone focused on what was not
working—his brilliant “Aha!” was that not everyone was dying. He just thought, “How
come these kids aren’t dying?”37

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. Have you participated in a decisionmaking process where your perspective fun-
damentally changed as a result of someone else’s perspective?
2. How well does your organization encourage and discuss a number of perspectives
in their decisionmaking process? Does it work well? Why or why not?
3. The above case study is an example of reframing the problem or challenge (as
discussed in chapter 3, “Cognitive Capacity”). The reframing can lead to new “big
ideas” that under the “old” perspective or mental framework appears unsolvable.
How effective is your ability to reframe the problems or challenges faced in your
organization?

The Popular Use of “Job Rotation” and “Stretch” Assignments


to Improve Decisionmaking Capacity
Most organizations believe experience on the job is the best teacher of leadership.
Furthermore, most practitioners encourage those leaders viewed as “high potentials”
for senior leadership positions to rotate into different functional units for development.
As leadership scholar Gary Yukl remarked, “Job rotation programs with substantive
assignments in different subunits of an organization offer a number of developmental
opportunities.” For example, on a rotational assignment, the developing leader has the
following opportunities: face the challenge of developing new relationships; acquire
current or new understanding regarding technical issues with different processes;
evaluate unique problems and issues; acquire new skills; deal with risk-taking and

C h a pte r 7  2 61
uncertainty; and, make decisions in a less comfortable environment. The expecta-
tion is these developing leaders will grow, become more adaptive and resilient, and
gain confidence, while expanding their frames of reference and mental models. Such
learning broadens these anointed young leaders’ informed intuitions and enhances
their capacity as decisionmakers. Furthermore, some may view such assignments as
self-fulfilling prophecies for these fortunate few.
In addition, executives focused on grooming a “high potential” suggest a chal-
lenging assignment in an area they believe the “fast-track” individual needs to add
development or experience. Referred to as “stretch” assignments, they provide con-
ditions and environments in which the developing leader can “stretch” his or her
thinking, analytical reasoning, and decisionmaking beyond current experience or
expertise. It provides an important opportunity for the individual leader to grow and
to demonstrate that he or she can handle the added complexities and responsibilities
inherent in the stretch assignment—or not. These rotational and stretch assignments
can vary from 6 months to 3 years.

Techniques to Enhance Strategic Decisionmaking


Chapter 6, “Building and Leading a Strategic Leadership Team,” emphasized that a
strategic leader operating in a turbulent, VUCA environment cannot know all the
critical elements necessary for successful strategic decisionmaking. With relentless
change and the increasing tempo of uncertainty, complexity, competition, and public
scrutiny, many strategic leaders are turning to and relying more on building and
leading senior-level strategic teams. Consequently, effective management of the team
decision process is an important responsibility for the emerging strategic leader.
In view of the various “traps” and issues associated with making effective strategic
decisions, strategic leaders will consider various strategies, techniques, and support
systems that enhance their decisionmaking effectiveness. These various decision-
support techniques (sometimes computer-aided systems), if appropriately applied, may
add value over the unstructured decisionmaking processes by helping to reduce bias,
groupthink, and the restrictions of existing mental models and frames of reference. A
decisionmaker can use one or more such techniques to help decide on the perceived
best course of action. Examples include decision trees, expected value, cost-benefit
analysis, sensitivity analysis, future scenarios, consensus method, dialectic inquiry,
devil’s advocacy, Delphi method, and technology-enhanced decision-support systems.
Any technique, model, or decision-support system requires practice if it is to be
used effectively. Further, it is likely that a technique found useful in one circumstance
may not necessarily be the most effective in a different scenario. Strategic leaders
seeking to improve or optimize their strategic decisionmaking processes will need to
identify, and then gain, adequate experience using those decision processes that work
best for their organization, situation, and the context of the challenge or problem faced.

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The following discussion outlines some important methods used by strategic
leaders.

Make a Balance Sheet38


In making “big, hard decisions,” Randy Komisar, a partner with Kleiner Perkins
Caulfield & Byers, used what he called a simple balance sheet listing the pros and
cons regarding the issue at hand. Each member of the team provided answers to such
questions as “Tell me what is good about this opportunity; tell me what is bad about
it.” He instructed them not tell him their judgments until later. Commenting on the
process, he reported, “They start the process without having to justify and thereby
freeze their opinions and instead are allowed to give their best insights and consider
the ideas of others.” Komisar did not ask for anyone’s judgments until all members
provided their views and revealed the entire balance sheet.
Prior to addressing each member’s conclusions, members focused on the assump-
tions and biases of other members—which enhanced opportunities for individual
members to recognize their own biases. In addition, Komisar suggested that the bal-
ance sheet process mitigated “friction that typically arises when people marshal the
facts that support their case while ignoring those that don’t.” In addition, he stated the
process “emphasizes to the group that each participant is smart and knowledgeable,
that it was a difficult decision, and that there is ample room for the other judgment.”
Finally, he noted that although the process sounded “tedious and slow,” they were able
to move quickly as they were not seeking a perfect solution—decision timeframes
often do not permit it. Consequently, he made sure that each decision was “tested,
measured, and refined.” They proceeded if the test results were positive, and if not,
they “‘course correct’ quickly.”

Consensus Method
As identified by Vroom and Jago, consensus is a viable approach when attempting to
catalyze and stimulate participation within a group or team in the decisionmaking
process. A consensus decision helps ensure the support and willingness of the entire
group to implement the emerging decision.
In general, those using the consensus method permit the team (or group) members
to discuss openly their ideas and opinions, advocate for their views and proposals, and
challenge each member’s facts and assumptions. Usually facilitated by the leader (or
someone assigned to manage the process), the decision process continues until a con-
sensus is reached by the team members. If reaching a consensus fails, the decision then
reverts to the team leader. “While everyone must be willing to accept the final decision,
each individual need not be completely satisfied with the group’s recommendations.”
The consensus method typically works best when three situational variables are
aligned: 1) the team members have a shared vision/goal; 2) the members are willing to

C h a pte r 7   2 6 3
be open with their thinking; and 3) the problems addressed are well-structured and
are subject to having “a single best solution, and where increasing study makes that
solution all the more obvious.”39 Some strengths of the consensus method include:
• Leaders are familiar with using the consensus approach and are more comfortable
using it.
• Participants do not need a lot of training or experience with the method to be suc-
cessful in using it.
•P  articipants usually support the decision and are more committed to its success.
• Can lead to a better-informed decision—“to look beyond obvious solutions to find
potential outcomes of greater value to all involved.”40
The majority of the interviewed senior leaders favor a consensus decisionmaking
approach. For example, retired Navy Vice Admiral Conrad Lautenbacher, now a Vice
President with the Computer Sciences Corporation, explained, “Collaborative deci-
sions are important because they enable cooperation, communication, and ultimately
leave people with the feeling of confidence about what they have contributed. Collabo-
ration often leads to consensus and consensus leads to buy-in.”41 To reach consensus,
one must create an environment that welcomes debate and supports disagreement. Bob
Stone echoed this when he discussed his time working with Vice President Al Gore:
I can’t recall any substantial issue where we didn’t end up with a consensus deci-
sion. We would go into a conversation and we would not always agree before
we started. Examples included, “What do we do about retirement reform?”
“What do we do about Congress?” “What do we do about immigration?” We
saw these issues as huge opportunities. By the end of our meetings, we would
usually have a consensus.42
Some issues at the strategic level are so complex that no one individual can
formulate a strategy or make a decision that will encompass or address all of the
difficulties presented. Kevin Cox, Executive Vice President of American Express,
suggested the benefits of consensus: “The sustainability of the decision is higher
if you have a chance to involve more people in the creation of the decision.”43 The
process, if it is to be successful, is not simply that of involving “more” participants
in the decisionmaking process. Rather, typically success correlates to the enriched
participation and support of those who “own” the processes needed to implement
the decision.
The consensus approach to decisionmaking has many critics. For example, Mar-
garet Thatcher writes in her memoir, The Downing Street Years:
To me consensus seems to be the process of abandoning all beliefs, principles,
values, and policies in search of something in which no one believes, but to which
no one objects; the process of avoiding the very issues that have to be solved,

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merely because you cannot get agreement on the way ahead. What great cause
would have been fought for and won under the banner “I stand for consensus”?44
Many believe that a consensus decisionmaking process requires “settling” for
the lowest common denominator that everyone can agree with rather than striving
for value-added solutions. In addition, while all may agree to the decision and agree
to support it, that does not necessarily mean they are committed to it—they may
give lukewarm attention and energy to fully ensuring the execution of the decision.
Should the decision not achieve expectations, some members of the team who initially
compromised on their positions may say that they “knew it wouldn’t work, but they
didn’t listen to me.”
Others believe seeking “consensus” in a decisionmaking process is not as effective
at the strategic level as seeking “alignment.” They argue that with alignment comes
commitment. Although the team, in achieving alignment, may use many of the col-
laborative and facilitative skills applied during the seeking consensus approach, seek-
ing alignment reinforces the point that the strategic leader has the ultimate decision
authority.
Those seeking alignment argue that consensus falls between agreement and align-
ment—as noted below:
Agreement: Everyone supports the final decision because it is their first choice (e.g.,
marriage).
Consensus: Everyone accepts the final decision although it may be no one’s first choice.
At times, consensus may not work because someone has to make the tough decision.
Consensus is not necessarily commitment. It may only represent acquiescence.
Alignment: Everyone is prepared to support the final decision as if it were their first choice.
Finally, as Jacobs noted, “Of course, consensus is sometimes impossible . . . no
matter how skillful the team leader. Sometimes internal politics cannot be reined in.
Sometimes common values are hard to identify.” Furthermore, when the team consists
of representatives of organizations not under the authority (control) of the leader (e.g.,
agencies in government, partners and alliances, outsourced supply chains, etc.), Jacobs
explained, “A unilateral decision by the team leader may well not be support­ed by
the others. When consensus fails, the team has no choice but to turn to quid pro quo
negotiations.”45 (Note: Chapter 8 examines strategic negotiations.)

Dialectic Inquiry (DI) and Devil’s Advocacy (DA)46


Dialectical Inquiry. This approach requires the team to divide into two subgroups
of equal size. The first subgroup develops a detailed set of recommendations, and
provides a brief oral presentation of its decision to the other subgroup. This pre-
sentation includes a description of the key assumptions, facts, and data supporting
their position. The subgroups then separate, and the second subgroup develops a

C h a pte r 7   2 6 5
reasonable set of opposing recommendations. The subgroups then meet to debate
the two alternative proposals.
Devil’s Advocacy. Similar to DI, this approach requires the formation of two
subgroups of equal size. The first subgroup develops a set of recommendations and
presents its decision to the other subgroup, along with the key assumptions, facts, and
data supporting their position. The second subgroup then develops a logical, plausible
critique of the recommendations and provides a brief summary of this critique to
the other subgroup. The subgroups separate and the first subgroup revises its initial
proposal in light of the second subgroup’s criticisms. The process of revision-critique-
revision cycle continues until both subgroups can agree on a reasonable course of
action. Or, realistically, run out of time or patience.
Both the DI and DA are appropriate for non-routine and unstructured decisions
that strategic leaders operating in a VUCA environment are more likely to encounter.
Additional suggested advantages include reducing the chances for groupthink; reducing
the chances for a quick agreement without considering alternatives; and often generating
constructive debate on the alternatives and supporting assumptions. A possible downside
to using DI and DA is that they are typically unknown processes to most team members,
thereby requiring education and training to use these techniques effectively.

Decision Support Systems (DSS)


There are a number of groupware and decision-support software programs that can
help brainstorm ideas, develop courses of action, and support decisionmaking. For
example, a DSS can permit decisionmaking at the same time (decision team mem-
bers engaged at the same time all together in a room or via the Web or teleconference
can be anywhere in the world); or they can “meet” at different times (decision team
members can respond, for example, over a 24-hour period).
Some of the identified benefits include:
• r educes meeting times
• g enerates more ideas in less time (everyone can talk at once)
•m  oderates the effect of talkative persons
• g enerates input from the silent types
• r educes the effect of people who influence by personality or position
• levels the playing field through anonymity, thus encouraging candid responses (can
take the politics out of the equation).
Some of the techniques available for decisionmaking include:
• c an use a variety of rating, ranking, and allocating scales to prioritize items
• c an compare two lists for impact of one on the other (Cross Impact Analysis)
• c an assign weights to criteria (Multiple Criteria Analysis)

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• c an show results and degree of consensus graphically
•p  rint reports
• s how decision trail.
However, as with all the decision-supporting processes, there are some drawbacks to
using a DSS. Some leaders erroneously discount the value of quantitative techniques
and models used in many DSS systems. Further, using a DSS system effectively requires
significant planning and preparation.
In summary, there are a number of strategies, techniques, models, and technol-
ogy supported decision-support systems—each has its advantages and disadvantages.
When selecting which method to potentially use, strategic leaders should heavily weigh
their choice based on such factors as the importance and expected consequences of
the decision; who will be making the decision; the skill sets of those participating in
the decisionmaking process; and the specific organizational situation and context.
The skill of the strategic leader in deciding which to use and in managing conflict is
essential for successful decisionmaking. It is also important to recognize that each
member and the team collectively will have many non-cognitive influences (e.g.,
emotions, personality) that will have a major impact on the decisionmaking process.47

Additional Decisionmaking Issues


In addition to the concerns previously identified, the following are examples of other
issues the strategic leader would be wise to consider while managing the decisionmak-
ing process.
From the Naval War College:48
• What may seem at first to be a familiar type of problem may turn out to be quite
different—may erroneously conclude that the lessons of the past can be applied to
the present.
• Even if the leaders’ experiences are relevant and current, they may unintentionally
distort or misremember their memories of those experiences and, therefore, their
lessons from them, in significant ways. Consequently, the conclusions drawn may be
faulty. They noted that in studies involving recollections of the past, some leaders could:

• be overconfident about their memories and the lessons they draw from them
•o  verestimate the importance of the factors they remember most clearly
• believe that events occurring at about the same time are probably related to each
other—whether they actually were or not
• believe that events had to have occurred in the way that they did and, therefore,
that they could have been predicted
• do a poor job of estimating and using probabilities
• be too slow to revise their lessons and, when they do, they tend to change existing
lessons incrementally rather than to create entirely new substitutes

C h a pte r 7   2 6 7
• distort their recollections of experiences and their lessons depending upon the
current context in which they apply them.
From Harvard Business Review, “The Hidden Traps in Decisionmaking”:49
• Th
 e Anchoring Trap: When considering a decision, the mind gives disproportionate
weight to the first information it receives. Initial impressions, estimates, or data tend
to anchor subsequent thoughts and judgments.
• Th
 e Status-Quo Trap: Decisionmakers carry biases toward alternatives that favor
the status quo.
• Th
 e Sunk-Cost Trap: Decisionmakers tend to make choices that justify previous
choices.
• Th
 e Confirming-Evidence Trap: Seeking out evidence that supports the decision-
maker’s instinct or point of view, while avoiding or ignoring information that
contradicts it.
• Th
 e Framing Trap: The way a problem is framed can profoundly influence the choices
made or alternatives considered.
• Th
 e Estimating and Forecasting Trap: The inherent difficulties facing our reasoning
power as we attempt to make estimates in the face of uncertainty.
• Th
 e Overconfidence Trap: Overconfidence in our ability to estimate and forecast
decision outcomes.
• Th
 e Prudence Trap: Overcautiousness in the face of high-stakes decisions.
• Th
 e Recall-ability Trap: Overly influenced by past events that leave a strong impression.
Mini Case Studies
The following two case studies offer different perspectives on strategic-level decisionmak-
ing. The OnStar case study illustrates some of the key aspects identified in the previous
chapters, especially chapter 4. The second case study represents amplification to the
case study presented in chapter 6, “Building and Leading a Strategic Leadership Team.”
This case study illustrates how a specific strategic leadership team approached strategic
decisionmaking.

The Rise of OnStar—A Mini Case Study50


The tyranny of this business is that today’s distractions will become tomorrow’s
killer app. . . . Every time I think I have a handle on the edges of this company,
something gets added and—holy cow!—I realize that it isn’t three dimensional,
it’s four dimensional.51—Chet Huber

Out of the Box


“Disciplined Imagination—offering cutting edge services to mass-market customers
and pressing for growth without losing sight of profits.”52 That is how Chet Huber,

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OnStar President from its beginning in 1995, until his retirement in 2009 paved the way
for OnStar to become the leader in the telematics industry.
An entity of General Motors (GM), OnStar was the brainchild of Harry Pearce (GM’s
former Vice Chairman) and a group of engineers from Hughes Electronics and Electronic
Data Systems (EDS)—both owned by GM at that time. Pearce explained, “The tele-
communications and computer industries had started with the office and gone to the
home—the logical next step was the motor vehicle.”53 With Hughes bringing the satel-
lites, EDS bringing the systems development, and GM bringing the vehicles,54 Pearce
tasked the engineers to consider how to make this work.55 After reviewing the idea, they
suggested GM simply use the cell phone network already in place in the United States.56
Knowing the auto industry missed opportunities both in the 1970s to develop small,
energy efficient cars, and in the 1990s to put cell phones in vehicles, telematics seemed
like an opportunity not to miss.57 Pearce continued, “My vision from the get-go was that
this technology was not simply another vehicle feature. . . . It was a unique opportunity to
get into the telecommunications services business, where you get downstream revenue,
better margins, and, most significantly, great growth potential for General Motors.”58
Initially, “There wasn’t any huge, brilliant strategy,” according to GM CEO Rick
Wagoner. The idea just seemed timely, interesting, and possible. Wagoner and Pearce
discussed the idea, and in 1995, Pearce tasked Chet Huber to lead the program and
devise an implementation strategy.59 Wagoner agreed Huber was the right person for
the job, saying, “Chet was wired to think differently.”60
Huber spent 23 years with GM selling locomotives,61 but worked in the Electro-
Motive Division (EMD) in Chicago—not in the company core of Detroit. This benefited
Huber as the General Motors establishment respected him, yet he was far enough
removed from the internal culture to think outside of the GM box.62 Additionally, in
1994, Huber was the first civilian chosen to attend the Industrial College of the Armed
Forces (ICAF), which is now known as the Eisenhower School for National Security and
Resources. Huber credits his time at ICAF with helping him take on the task of building
OnStar, saying, “OnStar would have felt overwhelming if I hadn’t gone through the
strainer of the War College . . . every day, we were learning how to navigate and lead in
a world where everything around us was white water.”63
Thinking outside the GM box, Huber put together a team consisting of experts
qualified to identify and assess the many facets involved in integrating telematics into
GM vehicles. He chose Fred Cooke from the Inland Fisher Guide Division of GM, Greg
Payne from GM Vehicle Engineering, Walt Dorfstatter from Ford’s RESCU program
(the first telematics system to market in the United States), Bruce Radloff from IBM,
and Rod Egdoff from Sprint PCS.64 Each member could provide unique perspective,
expertise, and experience. Huber would need all of this, and more, to develop a busi-
ness model and implementation plan that would move OnStar from a concept to a
billion-dollar business.

C h a pte r 7   2 6 9
—Pause—Take a moment to reflect on the following questions and capture your
initial thinking and insights.
1. Have you or someone in your organization had an “A-ha” moment? Had an
innovative idea, such as putting GPS, cell phones, electronics, and automobiles
together? What inspired it?
2. How does your organization inspire employees to “think outside the box”?
3. How does your organization go about making up teams to develop new business?
What are the risks of bringing in outside experts? What are the rewards? How do
you balance those?
4. How do you keep up with an ever-changing external environment?
5. When do you know your organization missed an opportunity?

OnStar’s Organizational Structure


OnStar was an entity of GM, yet Huber felt strongly that the project needed to be an
independent endeavor. As rapidly as the electronics industry changes, OnStar needed
the freedom to develop as a business that could move and change quickly without the
bureaucracy of a large corporation.65 He felt the venue needed its own metrics, culture,
and strategy.
Telematics’s business focus was short product-cycle electronics rather than long
product-cycle automobiles. With 6 months being a typical electronics generation and
5 years being an automotive generation, and blending the two being necessary in the
finished product, it was clear they could not develop them at the same pace. Huber
noted, “I told them that if they made me conform to car cycles, we’d be selling eight-
track tapes when our competitors would be selling CDs.”66
For GM, having OnStar as a vehicle option was a safe strategy, as they knew cars
and new car features. However, Huber and his team felt this approach would limit the
reach of the OnStar concept to potential customers, and that it was less likely a customer
would opt for a costly dealer install of OnStar later, if they could initially order the service
as a vehicle option. Huber believed the business would be more successful if viewed
(framed) as a service, rather than a vehicle option. GM’s senior management had no
real experience in the subscriber (service) business and limited intuition on which way
to go with this decision. Consequently, when Huber and his diverse and experienced
team recommended the service business approach, GM agreed.
After Huber got “full-fledged backing” from GM headquarters, he knew he needed
support from the factories. Therefore, he put OnStar engineers in the GM factories and
had them working alongside the line. Through this effort, the OnStar team won over
the GM factories.67 In fact, the idea of installing OnStar buttons in the rear-view mirror
came from collaboration between the OnStar engineers and the GM line workers. Huber
won buy-in from inside GM—now they had to move outside GM.68

2 70  L e a d in g a t t h e S t r a te g i c L eve l
—Pause—Take a moment to reflect on the following questions and capture your
initial thinking and insights.
1. W hen has a new program been introduced into your organization? Was it as
diverse as the OnStar combination of automobiles, electronics, satellites, and cell
phones? If so, how did they incorporate the diverse divisions? How did that work?
2. How did the leadership achieve buy-in?
3. What do you do when you don’t have enough information for a “gut” instinct?
What resources do you rely on?
4. Where do you start when formulating a strategy?

Roll It Out
In 1997, Huber knew Ford took a conservative approach with its telematics business. This
was a reasonable approach, as the telematics industry was new and no real experience
or historical data was available for them to use to build a business model. However,
Huber’s team anticipated that if GM preempted the market, they could build a large
base with a cost advantage and establish name recognition before competition set in.69
This was, however, a significant risk. The potential existed for GM to make a significant
investment only to have to write off the costs as losses, as Motorola did when they lost
billions with their Iridium’s satellite launch leading to its bankruptcy in 1999. Yet, as
Huber says, “Nothing is risk free.”70
As OnStar began, initial services were limited to safety and security. General market
research indicated a consumer desire for safety and security, but with no real previous
data on telematics, it was difficult to determine if those desires would translate into sales.
Therefore, GM began by rolling out options with the mindset of going slow and keeping it
simple. This allowed the corporation to monitor the emerging success from one step to the
next, giving them the option to stop the next step if the previous one proved unfavorable.71
As the service continued its rollout, they found that customers were generally receptive
to the OnStar concept. One senior analyst at Allied Business Intelligence remarked, “It’s
GM’s market to lose, because they are defining all the rules.”72
In 2000, Ford announced that in collaboration with QUALCOMM, it was going to
offer a similar service called Wingeast. However, despite a good value proposition and
customer interest, Ford dropped the project in 2002. Consequently, with the failure of the
Ford experiment (and others attempting to enter the market), coupled with the bursting
of the Internet bubble, Huber felt it was time to reevaluate OnStar’s strategy. Clearly, the
business was becoming very complex—and challenging—as Huber needed to lead and
manage the interrelationships of various partners (e.g., automotive, consumer electron-
ics, telecommunications, and entertainment). Huber explored a number of strategic
issues with his leadership team, for example:

C h a pte r 7  2 71
•H
 ow would OnStar create ongoing value to GM?
•H
 ow should OnStar position itself to gain high acceptance and subscription renewal
rates?
•W
 hat further strategic partnerships should OnStar develop to maintain its leadership
position and have a generational lead over its competition?
•H
 ow should GM leverage the continuous stream of vehicle and customer data it
received from OnStar to advance its product development, improve its manufacturing,
distribution, and service operations, better manage the lifetime value of its vehicles,
and provide greater service to its customers?73

As the OnStar service entered the automotive market, the team realized that just
offering safety and security would not be enough for OnStar to achieve widespread
market penetration. Huber and his team needed to develop additional applications the
consumer would find useful—and be willing to pay to have available. They decided to
rely heavily on feedback from their customer call centers to determine exactly what the
customer wanted and what applications to install next. This decision turned out to be
golden, with feedback suggesting a desire for such things as real-time traffic updates,
location services, and calling features, to name a few.
Ironically, the call center is one area where most companies look to cut costs. They
can keep a minimal staff and pay lower wages. OnStar didn’t view their call center that
way. Huber felt this was not an area to cut costs. He kept the call centers overstaffed
with well-trained, well-educated employees who could multitask, doing such things
as reading maps, contacting appropriate rescue units, and maintaining composure in
stressful situations while offering great service at the same time. In fact, Huber referred
to his call centers as “killer apps.” He believed they would pay for themselves over the
long run, with great customer service providing positive word of mouth, which would
increase brand recognition and keep drop rates low.74 That same call center personal
interaction provided more insight as to additional OnStar application services—often
better than the “really cool, high-tech” suggestions offered by the Information Technol-
ogy folks. As Huber said, “We can put dancing holograms on the dashboard. . . . That
doesn’t mean that our customers want those things.”75
In addition to identifying customer wants, OnStar and GM needed to establish
strategic alliances to help penetrate the market.76 GM reached out in search of partners
from the investment and vehicle insurance company arena. These businesses would
not only reach a large potential customers base, but also have a value interest in the
OnStar service. Huber reached out to other automakers for an alliance, offering the
OnStar systems for installation in their vehicles.77 This offer was logical. The options
for the other auto manufacturers were limited: offer no telematics service, start their
own service, join OnStar, or join another service. It was more cost effective for the
manufacturers to join a service already proven and recognized than to start their own.
Though GM would lose a competitive edge in selling GM vehicles, they would still profit

2 7 2   L e a d in g a t t h e S t r a te g i c L eve l
from the licensing fees collected. As for OnStar, this partnership would mean a greater
customer reach—and market share.

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. How do you assess the risks when you do not have any data? Do you play it safe
or take the risk? At what point do you consider the risk too great?
2. How do you know when your customer needs require review and/or update? What
sources do you consider for feedback?
3. When reviewing areas in which to cut costs, how do you assess whether something
is worth a short-term loss if it enables a long-term gain? How do you allocate your
resources? How do those considerations fit into your strategic plan?
4. Just because something looks good on paper or in theory does not mean it is a
good idea for the long-term viability of the organization. How do you decide if a
seemingly good idea is good for your business/customer base?
5. What guides your decisions on strategic alliances? How do you assess the business
environment and determine where to reach out?

Extending the Reach


Other innovative steps taken to increase OnStar in the market included OnStar’s deci-
sion to become an open platform. This allowed OnStar to capture entrepreneurial ideas
from thousands of independent technical developers, reaching even further “outside the
box” for ideas.78 Another was GM’s decision to sponsor AMIC (Automotive Multimedia
Interface Consortium), which established standards for connecting to vehicle electrical
systems,79 facilitating the addition of aftermarket electronics and upgrades on vehicle
electronics.80 Third, by making the installation of the OnStar system easier and more
cost effective, GM was able to branch out and allow third-party retailers to install OnStar
on those vehicles already equipped with the OnStar hardware.81

Decisionmaking
Overall, Huber and his leadership team were few in number, with mostly engineering
and technical backgrounds. A significant percentage of the leaders came from GM.
Therefore, they were predisposed to want to use data and objective criteria in their
decisionmaking, and to think in terms of having a “process” through which to manage
it rationally. Huber continued, “To say we were unprepared to lead in a world full of
unknowns, with no existing templates and risks and opportunities that none of us had
any experience with, was an understatement.” “The culture that we started with,” he
says, “was much closer to a default GM culture, not because it fit (because it didn’t), but
because that’s all most of us knew. What we quickly learned through the school of hard
knocks was that aspiring to launch a disruptive innovation within a hundred-year-old

C h a pte r 7   2 7 3
car company was much harder than it looked on paper.” Furthermore, “We had become
stuck between GM’s world of deliberate strategy and the real world’s need for us to be
following an emergent strategy.” Huber acknowledged that he “only learned that our
strategic decisionmaking process was ‘emergent’ when an old friend, Professor Clay
Christensen, from Harvard Business School told me so. I thought it was ‘make it up as
you go’; emergent sounded so much more sophisticated.”82
Huber noted that they “ultimately became comfortable with a decisionmaking
process that was probably one part deliberate/data driven, one part intuition/gut, and
one part placing a premium on consciously maintaining the flexibility to be wrong or
to quickly adjust to unforeseen opportunities that might pop up.” They operated with
the knowledge that there were things they did not know. Consequently, they were
committed to avoiding the “bet the business” decisions by “trying to keep as many
back doors open as possible.” In addition, they were “thankfully able to harness the
growing assertiveness of our brand itself to act as a compass to help simplify a lot of
the direction setting.” A key point to their decisionmaking was keeping the vision and
mission constantly at the forefront of their strategic thinking. As Huber explained, “We
were blessed to have a mission that was ultimately about saving people’s lives.” This
mission “acted as a wonderful tiebreaker on tough issues, and an emotionally powerful
force-multiplier in getting our culture headed in the right direction.”83

Strategic Leadership Team


Huber explained that each member of his leadership team had functional responsibili-
ties, but when they routinely met as the OnStar Strategy Board, where all of the mem-
bers were helping to make the key decisions and set the direction for the enterprise,
they functioned as a leadership team. Again, being relatively small (by GM standards
at least), and having a “save lives” mission imperative, Huber stated, “We really didn’t
have a major conflict between individual objectives/incentives and enterprise incen-
tives.” However, “When we did,” Huber asserted, “it was usually pretty clear that the
problem was having a mismatch between an individual’s personal agenda and that of
the business.”84
Asked if he had to change members of his leadership team, he responded:

There were a number of occasions over the fourteen years I held the CEO role
that I had to remove people from their senior roles. That is hard to do at first,
and takes longer than it should, but ultimately it becomes a natural part of the
accountability that I felt to my team. I was lucky enough to connect with an
unofficial mentor who had held a number of top roles with Kodak, Cray, and Sun
Microsystems, among others. He administered a “loving size 10D” to the seat
of my pants when he felt it was taking me too long to react to tough personnel
issues—which was very helpful until it became more instinctive.85

2 74   L e a d in g a t t h e S t r a te g i c L eve l
Leading and Managing Collaboration
As noted earlier in this case study, OnStar had a multitude of alliances that required
dedicated leadership and management to gain and sustain effective collective energy
and synergy. Huber emphasized, “Alliance management was an incredibly important
part of our business.” OnStar interactions with its partners and alliances required out-
standing interpersonal, collaboration, and negotiation skills. This leadership approach,
he noted, was “Quite unlike the general approach of the automotive industry, where
the sheer volume allows the OEMs [original equipment manufacturers] to exert their
will on suppliers, we were small and dealing in areas [where] GM had no real lever-
age.” These areas were, Huber explained, “Wireless carriers, consumer electronics
companies, call center providers, the emergency response community . . . all groups
that were critically important to create alignment with, but not generally folks we
could coerce into playing nice.” Huber indicated that he was very fortunate to have
a very important individual on the OnStar leadership team early in their history who
had very good instincts regarding alliance management, and incredible negotiating
skills. In addition, Huber’s job prior to joining OnStar was selling locomotives for GM.
His selling experience gave him “a pretty good sense for negotiating and managing
high-stakes relationships with key constituents.”86

Conclusion
Boasting over five million subscribers in 2010, OnStar came a long way in a short
amount of time. Even as the company grew at a tremendous rate, Huber never lost
sight of the vision, keeping his finger on the pulse of the organization. He ensured that
the business changed when and where it needed to—with technologies to keep up
with market demand—and not when and where it did not—in the culture that defines
who it is: a trusted, customer-focused organization. Once just a pilot program, Huber
concluded, “OnStar is firmly a part of the new GM and is an integral part of GM’s
future strategy.”87

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. How do you keep a pulse on your organizational needs? How do you know when
something needs to change? How do you keep the things that are working going
strong?
2. When do you know your new entity is successful and needs to be a part of the
organizations for the long-term strategic plan?

C h a pte r 7   2 7 5
Choosing the Right Decision Level for the Situation: An
Addendum to the Strategic Leadership Team Case88
Recall the case of John, the SVP of the Fortune 500 Company, from the strategic lead-
ership teams outlined in chapter 6. There was an important decision moment in that
meeting. John asked the team to weigh in on the intent behind the organizational
structure, and the respective roles of the region and global VPs. The responses were
widely distributed:

Given the purpose of the meeting, the team needed a decision before it could move
further. Now John needed to determine the right decision level for this scenario. Earlier,
this chapter presented a framework with the following options:89

a. Decide and Announce


b. Gather Input from Individuals and Decide
c. Gather Input from the Group and Decide
d. Facilitate Consensus
e. Delegate with Constraints.

Given John already had gathered input in the form of the continua above, decision-
level “A” was not an option. Because the group was already together, “B” wasn’t really
an option. However, options “C–E” were still available. If he were to choose “C,” he
would now simply make the call and ask the team to align. Alternatively, he could choose
“D” and take whatever time needed to facilitate the conversation until the group reached
a consensus. Finally, he could choose “E” and delegate the decision by giving the team
a few hours in which to reach a conclusion and then leave the room. (In this case, the
constraint would be a timeframe.) Each option had pros and cons.

2 76   L e a d in g a t t h e S t r a te g i c L eve l
—Pause—Take a moment to reflect on the following question and capture your ini-
tial thinking and insights. What would be the pros and cons for the various levels of
decisionmaking in John’s case?
1. Gather Input from the Group and Decide
2. Facilitate Consensus
3. Delegate with Constraints

To reach the right conclusion, John asked himself the following questions:

• Does the team have a strong enough trust relationship with me that if I choose “C”
they will authentically align and support it? He knew that if there was not sufficient
trust or relationship, he ran the risk of inauthentic alignment. That would mean that
their heads would nod “yes,” but their hearts would say “no,” and the underlying ten-
sions that provoked this meeting in the first place would persist.
• Do I have a strong point of view on the right answer, or am I open to the group’s
consensus? Given that they were at a multiday offsite, they could dedicate the time
required to facilitate the group to a consensus decision. However, if he were to do
that, he would need to be prepared to support the decision of the group, even if it dif-
fered from his own opinion. To facilitate a group toward a foregone conclusion just to
“make them feel part of the process” is disingenuous and not in keeping with a great
strategic leader’s character.
• Will using this as an opportunity to develop team decisionmaking capabilities result
in a strengthened team? This team was in the “forming” stage and John knew that
opportunities to work through issues together would accelerate their journey toward
becoming a high-performing team. Delegating to them would provide that opportunity.
On the other hand, was this the right topic? The issue at hand came down to who would
hold power and authority among themselves. Of all issues to take on as a team, that
is the most difficult and provocative and might be beyond their current capabilities.

—Pause—Take a moment to reflect on the following question and capture your


initial thinking and insights. Based on what you have read in this and in the prior
case, if you were John, what would you do?

John chose level “C,” Gather Input from the Group and Decide. After hearing from
the group, he asserted the decision: The Region VPs were to be more like GMs (General
Managers) and the Global VPs were to be more like resources. The primary reason he
chose this decision level was that he had a strong point of view on what the decision
needed to be. He knew the intent of his organizational structure. It seemed very clear
to him that in order for the organization to come to life as he had envisioned, the team
would need to operate with a fair amount of regional autonomy, but with a service-
oriented global organizational focus and structure bringing new levels of consistency
and efficiency to their operations. He also knew that his Global VPs had strong per-
sonalities and if he facilitated a group-consensus process or delegated the decision to

C h a pte r 7   2 7 7
the team, the Global VPs would dominate the group and reach a conclusion that might
well differ from his own. In which case, he would have to overturn their decision, an
even worse outcome than simply asserting the decision up front. He believed that he
had the necessary trust and relationship levels, but even if he did not, the outcome was
important enough to take the risk.
Though the Global VPs were disappointed, they respected John’s authority and
supported the decision. In subsequent decisions, John consciously facilitated group
consensus whenever he could, resulting in a healthy balance of “command decisions”
and “consensus decisions.”
A good leader’s approach to decisionmaking should vary from one decision to
another. Good strategic leaders will examine each decision and determine the method(s)
they use to reach that decision on a case-by-case basis. Overuse of one decision method
could cause a leader to lose credibility or demotivate their direct reports. For example,
if a leader always uses “Decide and Announce” to make decisions, that approach will
demotivate direct reports and not allow them to think for themselves or grow in their
roles. Alternatively, if a leader always facilitates to “Consensus,” he or she could be
viewed as wishy-washy and without a clear opinion. John is an effective leader in his
organization due in part to his ability to mix his decisionmaking method based on the
circumstances and constraints of each individual case.

In summary, this chapter examined the role of the strategic leader as a decision-
maker and reviewed models and techniques often used to reach decisions that will
enhance the SL’s ability to achieve the organization’s collective goals. Often influenc-
ing these decisions will be, or directly involve, other organizations. This requirement
demonstrates the need for strategic leaders to be adept negotiators. The next chapter,
“Strategic Negotiations—A Strategic-Leader Decisionmaking Competency,” examines
the important competency of negotiation within the decisionmaking process and
reviews useful techniques used to prepare for and conduct successful negotiations.

Notes
1
Jeffrey Pfeffer, “Understanding Power in Organizations,” California Management Review (Winter
1992), 37.
Personal interview with H. Ross Perot, 1992.
2

3
Personal interview with Michael Lawrence, National Security Agency Chair at ICAF; NSA Chief of
the Legislative Affairs Office; former Director, Office of Strategic Communications, Business Plans and
Operations, National Reconnaissance Office (NRO).
T. Owen Jacobs, Strategic Leadership: The Competitive Edge (Washington, DC: National Defense
4

University, 2005), 97.


5
Dan Lovallo and Olivier Sibony, “The Case for Behavioral Strategy,” McKinsey Quarterly (March
2010), 3, available at <https://www.mckinseyquarterly.com/The_case_for_behavioral_strategy_2551>.

2 7 8   L e a d in g a t t h e S t r a te g i c L eve l
David Garvin and Michael Roberto, “What You Don’t Know About Making Decisions,” Harvard
6

Business Review (September 2001), 108–116.


7
Jacobs, 98.
8
Ibid., 115.
9
Ibid., 116.
Personal interview with General Chuck Krulak, USMC (Ret.), President, Birmingham-Southern
10

College; Board of Directors for Union Pacific and non-executive director for Aston Villa British Soccer
Club; former USMC Commandant; former Vice Chairman of MBNA and Chairman & CEO for MBNA
Europe Bank.
Donald Hambrick, “Guest Editor’s Introduction: Putting Top Managers Back in the Strategy Picture,”
11

Strategic Management Journal 10, special issue (Summer 1989), 5.


12
Gerald Smith, “Teaching Decisionmaking,” in The Oxford Handbook of Organizational Decisionmak-
ing, ed. Gerard Hodgkinson and William Starbuck (New York: Oxford University Press, 2008), 461.
13
Ibid., 457.
Gerard Hodgkinson and William Starbuck, “Organizational Decisionmaking: Mapping Terrains on
14

Different Planets,” in The Oxford Handbook of Organizational Decisionmaking, 6.


15
Gerald Smith, 458.
Eugene Sadler-Smith and Paul Sparrow, “Intuition in Organizational Decisionmaking,” in The Oxford
16

Handbook of Organizational Decisionmaking, 306.


17
Ibid., 308.
Personal Interview with Cynthia Valles, Industry Chair and Visiting Professor for ICAF from Ameri-
18

can Express; Executive Vice President, Customer Service, AMEX Europe.


19
Personal interview with Peter Schlote, CEO of Tesat-Spacecom GmbH & Co. KG, Backnang, Germany.
Personal interview with General Richard Myers, USAF (Ret.), Holder of the Colin Powell Chair of
20

Leadership, Ethics, and Character, NDU; Former Chairman, Joint Chiefs of Staff.
Daniel Kahneman, “Maps of Bounded Rationality: Psychology for Behavioral Economics,” The
21

American Economic Review (December 2003), 1450.


For more in-depth information regarding the Vroom-Yetton-Jago model, see Victor Vroom and
22

Arthur Jago, “The Role of the Situation in Leadership,” American Psychologist 62, no. 1 (January 2007),
17–24; Victor Vroom, “Educating Managers for Decisionmaking and Leadership,” Management Decision
41, no. 10 (December 2003), 968–978; Victor Vroom, “Leadership and the Decisionmaking Process,”
Organizational Dynamics 28, no. 4 (Spring 2000), 82–94; Victor Vroom and Arthur Jago, The New
Leadership: Managing Participation in Organizations (Englewood Cliffs, NJ: Prentice Hall, 1988); Victor
Vroom and Arthur Jago, “On the Validity of the Vroom-Yetton Model,” Journal of Applied Psychology
63, no. 2 (April 1978), 151–162; and Victor Vroom and Philip Yetton, Leadership and Decisionmaking
(Pittsburgh: University of Pittsburgh Press, 1973).
23
Vroom, “Educating Managers,” 971.
24
Richard Kidder, How Good People Make Tough Choices (New York: Harper, 1995), 18.
25
Ibid., 154–163.
26
Gerard Rossy, “Five Questions for Addressing Ethical Dilemmas,” Strategy & Leadership 39, no. 6
(2011), 37–40.
For additional information on the Ultimatum Game, see Alan Sanfey, “Social Decisionmaking:
27

Insights from Game Theory and Neuroscience,” Science 318 (October 26, 2007), 598–602; Gardiner

C h a pte r 7   2 7 9
Morse, “Decisions and Desire,” Harvard Business Review 84, no. 1 (January 2006), 42–51; Alan Sanfey,
James Rilling, Jessica Aronson, Leigh Nystrom, and Jonathan Cohen, “The Neural Basis of Economic
Decisionmaking in the Ultimatum Game,” Science 300, no. 5626 (June 13, 2003), 1755–1758.
The information regarding Wang Laboratories was developed from Sydney Finkelstein, “When Bad
28

Things Happen to Good Companies: Strategy Failure and Flawed Executives,” The Journal of Business
Strategy 26, no. 5, 2005.
29
Ibid., 20.
Notes taken from PowerPoint slide presented by Colin Powell to new command selects following his
30

retirement as Chairman, Joint Chiefs of Staff, n.d.


Dimitris Chorafas, Rating Management’s Effectiveness (New York: Palgrave Macmillan, 2004), 21.
31

Sharon Begley, “I Can’t Think!” Newsweek, February 27, 2011, available at <www.newsweek.
32

com/2011/02/27/i-can-t-think.html>.
33
Ibid.
34
Ibid.
35
Ibid.
This case study was related to the author during a personal interview with Ted Leonsis, Chairman
36

and CEO of Monumental Sports & Entertainment, who owns and operates the Washington Capitals
(NHL), Washington Wizards (NBA), Washington Mystics (WNBA) and Verizon Center; former AOL
senior executive; venture capital investor; filmmaker and digital entrepreneur; philanthropist; and
author of The Business of Happiness.
The approach taken by the graduate student represents a form called “Appreciative Inquiry.” Defining
37

Appreciative Inquiry, David Cooperrider stated, “[It] is about the coevolutionary search for the best
in people, their organizations, and the relevant world around them. In its broadest focus, it involves
systematic discovery of what gives ‘life’ to a living system when it is most alive, most effective, and most
constructively capable in economic, ecological, and human terms.” In other words, rather than attempt-
ing to solve what is wrong in the organization, identify what is working right in the organization and
then attempt to duplicate it in other areas of the organization. David L. Cooperrider and Diana Whitney,
“A Positive Revolution in Change: Appreciative Inquiry,” available at <http://appreciativeinquiry.case.
edu/uploads/whatisai.pdf>.
Randy Komisar, “How We Do It: Three Executives Reflect on Strategic Decisionmaking,” McKinsey
38

Quarterly, March 2010, available at <www.mckinseyquarterly.com/Strategy/Strategy_in_Practice/


How_we_do_it_Three_executives_reflect_on_strategic_decision_making_2541?pagenum=4>.
39
Jacobs, 126–127.
40
Ibid., 119.
Personal interview with VADM Conrad Lautenbacher, USN (Ret.), Vice President for Science,
41

Computer Sciences Corporation. Former Director of NOAA, president and CEO of the Consortium for
Oceanographic Research and Education (CORE), and Deputy Chief of Naval Operations (Resources,
Warfare Requirements and Assessments) in charge of Navy programs and budget.
42
Personal interview with Bob Stone, author and speaker. Former Director for Reinventing Government
for VP Gore; former Deputy Assistant Secretary of Defense for Installations; coauthor of the book The
Ethics Challenge: Strengthening Your Integrity in a Greedy World and author of Confessions of a Civil
Servant: Lessons in Changing America’s Government and Military.
43
Personal interview with Kevin Cox, Executive Vice President for HR at American Express.
44
Margaret Thatcher, The Downing Street Years: 1979–1990 (New York: HarperPerennial, 1993), 167.

2 8 0   L e a d in g a t t h e S t r a te g i c L eve l
45
Jacobs, 129.
The information presented regarding the DI and DA approaches were from Michael Roberto,
46

Decisionmaking Exercise (A), (B), and (C): Teaching Note 5-398-100 (Boston: Harvard Business School,
February 23, 2000).
47
Gerald Smith, “Teaching Decisionmaking,” 467.
Charles Murray, Executive Decisionmaking, 6th ed. (Newport, RI: Naval War College, February 1,
48

2002), 5–6.
John Hammond, Ralph Keeney, and Howard Raiffa, “The Hidden Traps in Decisionmaking,” Harvard
49

Business Review (January 2006), 120–126. Reproduced with permission of Harvard Business School
Press—All Rights Reserved.
The author expresses appreciation to Chet Huber, President and CEO of OnStar and ICAF graduate,
50

and to Nicki Dover, Management Case Study Writer, for their collaboration in the development of this
case study.
Fara Warner, “Detroit Muscle,” Fast Company, May 31, 2002, available at <http://www.fastcompany.
51

com/magazine/59/gm.html?page=0%2C0>.
52
Ibid.
Todd Lappin, “The New Road Rage,” available at <http://www.wired.com/wired/archive/7.07/
53

gm_pr.html>.
54
Vince Barabba, Chet Huber, Fred Cooke, Nick Pudar, Jim Smith, and Mark Paich, “A Multimethod
Approach for Creating New Business Models: The General Motors OnStar Project,” Interfaces 32, no.
1, January–February 2002, available at <http://interfaces.journal.informs.org/cgi/reprint/32/1/20.pdf>.
55
Lappin.
56
Ibid.
57
Barabba et al.
58
Lappin.
59
Warner.
60
Ibid.
Lappin.
61

62
Warner.
63
Ibid.
64
Ibid.
65
Ibid.
66
Ibid.
67
Ibid.
68
Ibid.
69
Barabba et al., 29.
70
Warner.
71
Ibid.
72
Lappin.
Peter Koudal, Hau Lee, Barchi Peleg, Paresh Rajwat, and Seungjin Whang, OnStar: Connecting to
73

Customers through Telematics—Case GS-38 (Palo Alto, CA: Stanford Graduate School of Business,
October 13, 2004), 11.

C h a pte r 7  2 81
Barabba et al., 29.
74

75
Warner.
76
Barabba et al., 26.
77
Warner.
78
Lappin.
79
Barabba et al., 27.
80
Lappin.
81
Barabba et al., 27.
Quotes in the paragraph from personal communication with Chet Huber, former CEO OnStar (May
82

2011).
83
Ibid.
84
Ibid.
85
Ibid.
86
Ibid.
Michael Harley, “OnStar Not for Sale, Expanding into China,” September 9, 2009, available at <www.
87

autoblog.com/2009/09/09/onstar-not-for-sale-expanding-into-china/>.
88
This case study was the result of continued collaboration between the author and Renee Cullinan,
Meredith Mohr, and Julie Walker of Atalanta Partners, experts in building strong strategic leadership
teams for their clients.
89
See chapter 7, figure 7-1, “Vroom-Yetton-Jago Levels of Involvement in Decisionmaking.”

2 8 2   L e a d in g a t t h e S t r a te g i c L eve l
CHAPTER 8 | Strategic Negotiations—
A Strategic Leader Decisionmaking
Competency

Everyone has experience in negotiating, and the use of power and politics (chapter 5). Most
people negotiate every day with one or more important people in their lives, for example,
their boss, supplier, banker, real estate agent, spouse, child, or parent. Clearly, negotiation is
an activity people use every day to influence others as a means of achieving personal goals
and objectives. Today, even leaders at the tactical and operational levels must understand
and often use the art of negotiating and the intuitive use of power and politics.
As reflected in the views of the interviewed senior leaders, the art and skills of
strategic negotiations are essential for success at the strategic level. Most decisions at
the strategic level are the result of some form of negotiations, especially in govern-
ment. Strategic-level negotiations are complex, requiring cognitive and interpersonal
competencies for leading successful teams at the negotiation table (and behind the
scenes) to assure that leaders protect critical interests, make agreements that reduce
conflict, and establish the foundation for long-lasting relationships.
Examples from the business world include concluding mergers and acquisitions,
building alliances and partnerships, winning union agreement, and gaining favorable
decisions from government regulators. NGOs often have to negotiate the terms of their
operations in an area of conflict or even entry into a foreign country. Internationally,
governments negotiate base access rights, trade agreements, measures to stop prolif-
eration of weapons of mass destruction, and sanctions on regimes operating outside
international norms. Internally, to achieve cooperation among government agencies
requires effective use of negotiation strategies and skills. Ineffective skill at negotia-
tions can undercut the overall strategic competitive advantage of the organization,
leading at a minimum to inefficiencies and at worse to the demise of the organization.

Definition of Negotiations
Fundamentally, negotiation is a decisionmaking process in which the parties control
both the process and the outcome—it involves two parties deciding to decide (more
about multilateral negotiations later).1 “Through negotiation, we decide how to handle
our differences in power, resources, perceptions, needs, interests, wants, facts, person-
alities, expectations, assumptions, and values.”2 A successful negotiation ends with an
exchange of promises and commitments to implement a set of decisions that, if car-
ried out, leaves all parties better off. As negotiation expert James Sebenius explained:

Chapter 8 283
In any negotiation, each side ultimately must choose between two options:
accepting a deal or taking its best no-deal option—that is, the course of action
it would take if the deal was not possible. As a negotiator, you seek to advance
the full set of your interests by persuading the other side to say yes, and mean
it—to a proposal that meets your interest better than your best no-deal options
does . . . [and] the deal meets [the other side’s] interests better than its best no-
deal option. So, while protecting your own choice, your negotiation problem is
to understand and shape your counterpart’s perceived decision—deal versus no
deal—so that the other side chooses in its own interest what you want.3
Ultimately, strategic negotiations are a balance between achieving an immediate
goal and preserving and building a more enduring relationship to help achieve long-
term goals. Most strategic negotiations do not focus totally on the written agreement,
which in the end is merely a piece of paper. A significant contributor to the agreement’s
functional importance is in what it represents—a vehicle through which to implement
the desired outcome. Moreover, at the strategic level there is rarely an “enforcement”
mechanism: the most successful strategic agreements are those in which both sides
find it in their interest to implement the agreement. It is possible for the more powerful
side to force its conditions on the other during a negotiation. Frequently, however, the
weaker party will often find ways to subvert the intent of the agreement, rendering it
all but useless. Passive aggressive behavior works for governments and organizations
just as well as it does for individuals. The value and latent power of an agreement is
the willingness of both parties to abide voluntarily by its provisions and to implement
the promises and commitments.

Dimensions of Negotiation
Negotiating expert Thomas Colosi emphasized that there are several dimensions
involved in any negotiating process. He concluded there are always at least three
dimensions inherent in the process that requires managing:
1. Horizontal (negotiations with the other team—face-to-face, at the table or during
informal discussions)
2. Internal (negotiations within own team)
3. Ratification (negotiations with the people within one’s organizational hierarchy who
have the power to say “yes” to the proposed final agreement).
Of the three dimensions, the last two will often occupy the most energy and time at
the strategic level. There are few government-to-government agreements, for example,
that involve only one agency, and all of them will want a seat at the table—if only to
protect their own interests. Business/industry may well have different viewpoints
between the development, manufacturing, distribution, and marketing divisions.
The key for a strategic leader will be to harness all of the disparate elements of his side

2 8 4   L e a d in g a t t h e S t r a te g i c L eve l
into an aligned team with a unitary purpose. Moreover, it is rare that the negotiator
will have final say on the acceptability of a proposed agreement. It is even rarer for
a proposed agreement to meet every one of the original negotiating aims without
modification. Thus, the negotiator will have to convince his or her own hierarchy
that the proposed agreement does in fact meet the original negotiating instructions.
Indeed, the more complex and difficult the horizontal negotiations, the more difficult
the internal and vertical negotiations are likely to be.

Managing Negotiations
Colosi offers five basic principles regarding negotiations management:
• Th
 ere are no rules, only those that the parties establish themselves.
• The relationship between parties is key; the more difficult the negotiation, the more
essential a positive relationship.
• Trust is vital: lack of trust inhibits commitment, impairs communication, and inter-
feres with efforts to achieve/sustain a positive relationship.
• Effective negotiators are doubt creators, because uncertainty developed in the coun-
terparts’ negotiating position opens them to new ideas/different perspectives, and
allows the negotiating team to change the way they think.
• Managing expectations is vital to gaining agreement, so we must educate ourselves
about expectations of other parties.4
Colosi’s principles apply across all levels of negotiation, from buying a car to reducing
nuclear arsenals. However, they grow in importance and complexity the higher up the
strategic ladder one moves. Moreover, the importance of other strategic leadership
attributes like social and emotional intelligence, framing, and scanning the environ-
ment loom larger as well.
Probably the most important of Colosi’s principles is his observation that there are
no pre-established rules for negotiation. This is critical to understanding that negotia-
tions begin long before the parties meet formally across a table. It means the parties
themselves establish the terms and rules under which they will negotiate; without
agreed ground rules the negotiations will flounder. Moreover, these “pre-negotiations”
almost always establish the shape of the personal relationship between the negotiating
teams. This is why there are negotiations about negotiations.
For example, near the end of the Vietnam War, at the Paris peace talks, there were
several years’ worth of argument about the shape of the table. Most people would think,
“What an asinine waste of time. Why are they doing this?” Yet there was a purpose
to this. The North Vietnamese were using the table shape to test the resolve of the
American negotiating team and the relationship between the United States and its
South Vietnamese ally. Ambassador Robert Loftis, an experienced negotiator for the
U.S. State Department, described it like this: “The pre-negotiations establish whether

Chapter 8 285
you are a man of your word. If you insist that some small issue is a redline item for
your team, but then immediately collapse under pressure, the other team will draw
the appropriate conclusions: your purported redlines are not real and they will have
every incentive to push hard on real issues in the expectation you will collapse again.
Similarly, if you agree that there will be only anodyne joint statements to the press and
then start leaking information to the local papers, it will be hard for the other side to
trust you.”5 Pre-negotiations are also an opportunity to gain insights into what the
other side considers important, and to judge how personal and cultural differences will
play out in the “actual” negotiations. By framing what is to come, these “negotiations
over negotiations” set the conditions for success or failure.

Preparing to Negotiate
“Prepare, prepare, prepare” is the consistent message from all negotiation scholars
and practitioners. Amazingly, many negotiators conduct negotiations with only a
vague concept of what a particular party is attempting to achieve, thereby leaving
the unprepared at the mercy of the prepared. Preparing for a negotiating session is
analogous to what the discussion in previous chapters about scanning the environ-
ment, sensemaking, formulating strategy, and executing that strategy. There are four
key steps in preparing for negotiations, which are often undertaken simultaneously.

The Team
The first step is to assemble the team; clarify interests among the entities represented;
and based on the needs of those involved, define negotiating objectives. At that point, the
discussion about prioritizing objectives (because they offer paths to satisfying interests)
is important. The ultimate metric, however, is having a clear understanding of the set
of values, needs, and interests that serves as the baseline for any given negotiation. This
avoids the trap of thinking it is all about “achieving objectives” rather than “meeting
and satisfying interest/values.” In this step, it is important to clarify values and needs as
broadly as possible. For example, there may be many ways to satisfy a team’s interests—or
opportunities to meet some interests that did not seem relevant until one enters discus-
sions with the other parties. A smart negotiator goes in with a lot of thought about what
the other side cares about also—strengthening that team’s ability to craft an option or pro-
posal that helps satisfy some of the other party’s (or parties’) interests or values or needs.
The more deeply both sides understand the needs, values, and interests of all parties, the
more creative and resourceful they can be about finding mutually acceptable agreements.

Define Objectives
The second step is to define clearly its objectives. The team must identify the dif-
ference between the essential, the desirable, the tolerable, and the unacceptable.
This is why negotiations with one’s own side are so critical—at the strategic level,

2 8 6   L e a d in g a t t h e S t r a te g i c L eve l
the outcome of negotiations rarely affects only one organization or part of an
organization. Identifying negotiating objectives may be time consuming, but it
is absolutely necessary for the team to know its priorities and where it can make
trade-offs without affecting vital interests. In many instances, the lead negotia-
tor may not have complete control over team members (especially in interagency
teams); therefore, reaching agreement on negotiating objectives before sitting
across the table becomes even more critical in these instances.

Negotiating Objectives of the Other Side


The third step is to identify, as much as one can, the negotiating objectives of the
other side. The negotiating team cannot assume that their counterparts’ objectives
are a mirror image of their own. What seems to be a minor issue to your team may be
critical to them and vice versa. As Colosi stressed, “We must educate ourselves about
our counterparts’ positions, interest and expectations by listening and observing.
They’ll help us do it; they’ll even appreciate us for taking the time to listen. We must
ask appropriate questions and listen to their responses . . . and this is most critical, we
must look for the seeds of doubt they may have in their own expectations, perceptions
and assumptions.”6
Never overlook that the other party will be doing its research as well. They will
look at strategies that an organization or team used in the past. They may well look at
similar agreements to see what terms or conditions were offered to other negotiating
partners in analogous situations (precedents). Where can they find leverage? “Never,
ever, ever assume that the other side is stupid or ignorant.”7

Alternatives to Partial Goal Accomplishment—BATNA and ZOPA


Finally, the negotiator must answer the questions “What happens if we do not reach
agreement? What are my alternatives for reaching my goal?”
One of the most useful tools for answering these questions is the BATNA (Best
Alternative to a Negotiated Agreement). A team of experts coined this acronym many
years ago in their book Getting to Yes. As the name suggested, BATNA is not the low-
est deal one will accept. It articulates alternative means of reaching one’s goals if full
agreement is not possible. Ambassador Loftis states, “If you don’t identify your own
BATNA and have a reasonable understanding of the other side’s, you are forced into
a position where you must have the agreement—giving leverage to your negotiat-
ing partner. You always want to have alternatives and you need to know what those
alternatives are before you walk in the door. If you don’t, you are far more likely to be
forced into a disadvantageous agreement because you have left yourself no way out.”8
Just as it is critical to identify one’s BATNA, the other end of the spectrum is iden-
tifying the ZOPA. The “zone of potential agreement” is the range of possible solutions
both parties can agree to with some sense of satisfaction. “It is the range between the

Chapter 8 287
least favorable agreement you would accept and the most favorable one you believe
the other negotiator would accept.”9 As illustrated in figure 8-1, the ZOPA identifies
areas of congruence among essential, desirable, tolerable, and unacceptable elements
and provides guidelines for fruitful negotiating tacks.

Figure 8-1. ZOPA—Zone of Possible Agreement

Their Interests ZOPA Your Interests

FIND OPPORTUNTIES FOR MUTUAL GAIN!

The Negotiation
In many ways, preparation is the most difficult part of the negotiation. Certainly, it will
often be the most time consuming. In the popular imagination, the term “negotiations”
conjures up formal exchanges of positions across a felt-covered table with delegates
sitting behind name placards and flags. These elements are important, but generally
they are not the most critical. There are many approaches to negotiation depending
on the issue under discussion, the relative power of the parties, and the personalities
involved. It is not within the scope of this chapter to describe all of them. Rather, it is
to provide some general principles for those engaged at the strategic level.
It is important to recognize that the most serious discussions often take place away
from the formal negotiation table—“off the record”—perhaps over the telephone, in a
corridor, or at a social event. Loftis explained, “Most negotiations, particularly inter-
national negotiations, do not take place across the table. They take place in the coffee
bar. They take place over dinner. This is where you are actually doing the exploring
and engaging in the give-and-take over your respective real bottom line positions.
Then you go to the table, and that is where you formalize things. This is where the
trust between you and your counterpart comes to the fore. Can each of you deliver
on those informal promises?”10
The strategic leader has to keep his or her team focused on the negotiating objectives,
and not get lost in the process. Negotiating teams often have a tendency to see reaching an
agreement, any agreement, as the measure of success and will have a hard time walking
away from negotiations, especially if they have been long and arduous. The team will seek
validation for its efforts by coming back with an agreement, even if the best outcome is

2 8 8   L e a d in g a t t h e S t r a te g i c L eve l
to admit that agreement is not possible at this time. This dynamic argues strongly for
keeping the ratifier11 at least one level removed from the negotiations.
Successful negotiations often use strategic alliances. “Strategic alliances can be
defined as developing a relationship with another individual(s), organization(s), or
company(s) to: a) bring pressure on another party or parties to negotiate; b) enlist other
parties to help the negotiations on your behalf; c) help you better identify the interests
of the party(s) [with whom you will be negotiating]; d) develop and bring more creative
options to the negotiating table; and/or, e) develop a stronger BATNA. . . . The point
to remember is that Master Negotiators are Master Networkers.”12
Loftis stressed the point that the negotiating team must control its communica-
tions with their ratifiers. He suggested, “You are not just negotiating with the people
across the table, you are also negotiating with the people who you are working for. You
are taking points that the other side is making, and you are modifying your position.
Your task then is to review your position, ensure that you’re not agreeing for the sake
of agreement, and then persuade your boss that the proposed agreement meets all of
your negotiating objectives.”
Moreover, on an interagency team many members are going to have separate
channels of communication to their own ratifiers who, even if they do not have the
final say, can insist upon peripheral issues that derail the overall effort. Thus, the lead
negotiator needs to recognize and use those separate channels to best effect. Loftis
offered, “One of the best ways to do that, I have found, was to hold a group meeting
at the end of every day for a negotiation ‘hot wash’ and get a common perspective on
what was accomplished, new and unresolved challenges, and a suggested way forward.
Following this, I would send a ‘shotgun’ report to all the key actors in Washington.
That way, I knew I had a single message and that private, backchannel messages would
not undercut the overall position.”13
For those negotiating in the international arena, Loftis stressed that “While
the primary negotiations are usually conducted in one working language, there are
usually two equally valid final documents in the national language of each party.
Consequently, it is really important to watch the translations, because the things that
you thought you agreed to all of a sudden get changed. Sometimes it is inadvertent,
other times it is an attempt to get by translation what was unobtainable at the table.
Be careful with that.”
The discussion to this point has centered on negotiations involving two parties.
At the strategic level, negotiations are far more likely to involve multiple parties. Even
a bilateral international negotiation will involve multiple agencies on the U.S. side:
with rare exception, American negotiators face an interagency team across the table
as well. The rules that apply to bilateral negotiations apply to multilateral as well: the
dance simply becomes much more complicated.14 There are some additional points
to bear in mind, however. It is important not to focus solely on the biggest players in

Chapter 8 289
the room. Smaller players often develop a particular expertise that makes them the
de facto spokesperson for a much larger bloc of players, and it is worth discovering
and cultivating those experts. Furthermore, delegations, like people, want primary
negotiators to ask for their support. Never take it for granted. Look for those issues of
high importance to smaller players. A negotiator may be able to accommodate them
at little cost to his or her core objectives, with great return.
“Master Negotiator” Brad McRae recommends that all negotiators be fully
prepared prior to any negotiation. He developed the Master Negotiators Prepara-
tion Form to help negotiators master the key elements deemed important to suc-
cessful negotiations. Table 8-1 is a modified presentation of these key elements.

Table 8-1. Preparing for Negotiations


SUBJECT IMPORTANT TO ME IMPORTANT TO THEM
Interests My Interests Their Interests
The Prize: The Ultimate My prize Their Prize
Outcome from the Negotiation
Options at the Table My Options Their Options
Set Standards/Objective Criteria Evaluate Evaluate

High Yield Questions Might Ask Me Need to Ask Them


BATNA (Best Alternative to a My BATNA Their BATNA
Negotiated Agreement)
WATNA (Worst Agreement to a My WATNA Their WATNA
Negotiated Agreement)
Leverage My Leverage Their Leverage
Possible Trade Offs/ My Trade Offs/Concessions Their Trade Offs/Concessions
Concessions
ZOPA Aspire to? (Best result you Their ZOPA
(Zone of Possible Agreement) could get)
Content with? (Satisfactory)
Live with? (Acceptable minimal
settlement)

Type of relationship I would like to — —


have during and after the negotia-
tion
Negotiation Style My Negotiation Style Their Negotiation Style
Opening Statement My Opening Statement (short and —
to the point)

Table 8-1 is a modification of figure 4 from the Master Negotiators Preparation Form. See Brad McRae,
“The seven strategies of master negotiators,” Ivey Business Journal (May/June, 2005), 6–8. Reproduced
with permission by Brad McRae—All Rights Reserved.

2 9 0   L e a d in g a t t h e S t r a te g i c L eve l
Table 8-2 provides modified versions of Colosi’s “10 Commandments of Negotia-
tion,” and Michael Watkins’s “Ten Propositions for Negotiations.”

Table 8-2. Skilled Negotiators


THOMAS COLOSI’S 10 MICHAEL WATKINS’S
COMMANDMENTS OF NEGOTIATION “TEN PROPOSITIONS FOR NEGOTIATIONS”
1. Appreciate that the essence of negotiation is 1. Know that negotiations rarely have to be win-
an opportunity to exchange promises and com- lose, but neither are they likely to be win-win.
mitments … (and that this promise exchange is
conducted in an environment devoid of rules of
engagement)
2. Use active listening skills…to arrive at the 2. Seek to learn and to shape perceptions through
“real” issues. . . only after negotiating the rules orchestrated actions taken at and away from the
of engagement. negotiating table.
3. A ppreciate the complexity of the negotiation 3. Recognize most negotiations involve existing or
process…across the table, internal to the team, potential sources of conflict that could poison
internal to the organization, between the team efforts to reach mutually beneficial agreements.
and their ratifiers [bosses].
4. Understand that their job is to create doubts in 4. Find opportunity in the fog of negotiation.
their counterparts.
5. A lways avoid surprised unless they can predict 5. K now that structure shapes the strategy and
with deadly accuracy the reaction of the other work to shape the structure.
side.
6. A ppreciate that an ethic in negotiation is to 6. K now most negotiations are linked to other
tell the truth, nothing but the truth, but not negotiations, past, present, and future.
necessarily the whole truth since the manage-
ment of information is essential to a negotiation
strategy.
7. Recognize their counterparts are not their 7. Channel the flow of the process and work to
opponents but rather potential advocates for build momentum in promising directions.
one’s own interests as they negotiate with their
ratifier [boss].
8. Recognize a key part of their role is to build trust 8. A re aware that just as leaders often are called
while managing the expectations of the other upon to negotiate, so too are negotiators called
parties. upon to lead.
9. A ppreciate that a “win/win” outcome is an ideal 9. K now that organizations often are represented
but rarely possible. by many negotiators . . . and success in setting
up organizational learning processes contrib-
utes to increased effectiveness.
10. A
 ppreciate that the implementation of the 10. R
 ecognize that negotiation skills can be learned
negotiated agreement is paramount. and they can be taught.

The above table developed from Thomas Colosi, On and Off the Record: Colosi on Negotiation, 2nd ed.
(New York: American Arbitration Association, 2001), 111–112. Reproduced with permission of Ameri-
can Arbitration Association; and Michael Watkins, “Negotiating in a Complex World,” Negotiation
Journal, July 1999, 15, 3, 245–269. Reproduced with permission of Blackwell Publishing, Inc., in the
format Journal via Copyright Clearance Center—All Rights Reserved.

Chapter 8 291
Two case studies are discussed: one international government case study regarding
actual negotiations between the United States and Iceland; and the other case study
reflecting the business case regarding the actual negotiations between parties in con-
trol of Internet browsers—Netscape and Microsoft.

Best Alternative(s) to a Negotiated Agreement (BATNA)


Mini Case Study—True Account
U.S./Iceland Cost-sharing Negotiations—200515

Situation
The United States has had a treaty obligation making it responsible for the defense of Iceland
since World War II. This is over and beyond the mutual defense language of the NATO Alli-
ance. Iceland has no military forces, although it maintains a small coast guard and internal
police force. The United States maintained Keflavik Naval Air Station (KNAS) as a key base
against the Soviet fleet and as a watch post to track Soviet ballistic submarines during the
Cold War, but its importance had diminished significantly by the end of the 1990s.
As of mid-2005, the base was primarily used as a rest/refueling stop for troop trans-
ports. Withdrawn were the P-3 anti-submarine aircraft, U.S. Navy ships no longer home-
ported out of Iceland, and the number of personnel assigned to KNAS was dramatically
reduced. The only remaining “combat forces” were four U.S. Air National Guard F-15s on
90-day rotational assignments, plus a Combat Search and Rescue helicopter squadron
(a “low density, high value” asset). Iceland and the United States disagreed over the
role of the F-15s: the United States saw them as little more than symbolic of its commit-
ment to Iceland, while Iceland expected them to actively defend the island; for example,
intercepting and if necessary destroying rogue aircraft like the ones that attacked the
World Trade Center and the Pentagon. (Note: The F-15s flew without armament and the
United States explicitly rejected the mission of shooting down civilian aircraft.)
The United States was paying approximately 90 percent of the costs of running
Keflavik airport, a joint military/civilian airfield, although over 90 percent of the traffic
was commercial and Iceland earned significant landing fees from that traffic. The United
States also paid 100 percent of the costs of KNAS. The cost structure reflects the histori-
cal relationship stemming from the postwar period when Iceland was an extremely poor
country and there was little commercial traffic. In recent decades, however, Iceland’s
economy has grown dramatically and the country has been increasingly successful in
attracting foreign tourists and investment. Moving away from its traditional reliance on
fishing and small farming, Iceland has embraced services, pharmaceuticals, and medi-
cal technology as important exports. Iceland’s abundant hydrothermal energy makes

2 9 2   L e a d in g a t t h e S t r a te g i c L eve l
it an attractive and cost-effective producer of aluminum. Iceland has been a small but
steady ally of the United States, voicing political support for Operation Iraqi Freedom
(OIF) and Operation Enduring Freedom (OEF) in NATO and UN councils and sending
personnel to Afghanistan.

U.S. Desires
Divisions within the administration complicated the U.S. side. All agreed that we should
negotiate a cost-sharing agreement. The U.S. proposal would have Iceland pay up to
90 percent of the costs of running and maintaining the Keflavik airport, and assume
responsibility for power, sewage, building maintenance, and local labor costs of Kefla-
vik Naval Air Station. At the same time, the United States would significantly downsize
KNAS but keep it open for NATO purposes and continue to use it as a refueling point.
This would also involve changing Keflavik Naval Air Station to Keflavik Air Force Base,
moving lead responsibility from the Navy to the Air Force. Secretary Rumsfeld wanted
to remove the F-15s and CSAR squadron, replacing them with periodic deployment of
NATO aircraft. However, both the White House and the State Department disagreed,
and argued that “stiffing” a small ally while we are trying to keep the coalitions in Iraq
vibrant would introduce unnecessary conflict into Alliance councils.

Iceland’s Desires
Iceland was willing to assume responsibility only for costs directly and solely attribut-
able to civilian operations, which would not include “dual use” assets such as runways,
aprons, etc. They argued that the United States should remain responsible for all costs
associated with KNAS, including labor, power, and maintenance of U.S.-occupied build-
ings. They insisted that the F-15s and CSAR squadron remain in Iceland, as counters to
rogue terrorists and tangible symbols of U.S. defense commitment. They did not accept
transfer of air patrol responsibilities from the United States to NATO (as conducted in
the Baltic countries). The United States continues responsibility for defense of Iceland.

—Pause—Take a moment to reflect on the above case study, the previous discus-
sion on negotiation, and personal experience, and note your thoughts and insights
regarding the following questions:
1. What do you believe might be among U.S. interests? (Speculate!)
• Realize savings in operation of overseas bases
• Align military obligations with new strategic global situation
• Assumption: U.S. air combat capability is not needed in Iceland.
• Maintain Iceland’s friendship and alliance, including its support for the war on
terror
• Maintain refueling/rest stop benefits of Keflavik.

Chapter 8 293
2. What are Iceland’s interests? (Speculate!)
• Maintain friendship and Alliance with United States
• Retain U.S. commitment to Iceland’s security, even if symbolic
• Retain a U.S. military air presence at Keflavik
• Retain priority of U.S. military operations over NATO ones in Iceland
• Assumption: U.S. military presence on its soil enhances Iceland’s security.
3. Alternatives
• What are some Iceland alternatives? Select the best one (the BATNA):
• Iceland could offer to host periodic/regular U.S. military activities
• Iceland could offer to host Coast Guard units
• Iceland could propose within NATO, a training facility at Keflavik
• Iceland could sell all buildings and installations at KNAS to NATO
• Iceland could offer to forego billing the United States for Keflavik costs in return
for offering it a 99-year lease for $1 to all buildings and installations in KNAS
(use unspecified).
• What are some U.S. alternatives? Select the best one (the BATNA):
• The United States could announce its plans to “upgrade” Keflavik to an Air
Force Base as a sign of its commitment to Iceland
• T he United States could affirm its commitment to Iceland’s security, but
announce a plan to shift air patrol units and refueling from Keflavik to Green-
land for better service to all its allies
• The United States could stop using Keflavik and quit paying costs.
4. What should be the U.S. negotiating strategy? (Suggested Points)
• Stress common interests and U.S. firm commitment to Iceland’s security
• Press the case that other items in DOD spending require cuts elsewhere
(Consider that most likely it will be better to make these agreements with Iceland
than let Congress unilaterally choose to cut back current commitments.)
5. What should be the Icelandic negotiating strategy?
• Stress common interests, Iceland’s loyalty, and the benefits of Iceland’s strong
commitment and of Keflavik
• Suggest Iceland’s reps establish some wiggle room on the cost issues.
6. What, if any, is their ZOPA? U.S. presence of some kind, probably reduced, for
some additional Iceland cost-share?

Outcome
When the Icelanders responded to our first overture with a hard-line refusal to even
consider our terms, Secretary Rumsfeld pulled the plug on the negotiations and ordered

2 9 4   L e a d in g a t t h e S t r a te g i c L eve l
the closure of Keflavik (technically, he ordered the Comptroller not to obligate any funds
for 2007). (Iceland offered to pick up about 15 percent of the cost of maintaining the
airport [except the civilian terminal] gradually over 7 years, and refused to consider
any contributions toward the costs of the military side of the facility. Iceland assumed
that the United States would neither risk a rupture with a small but vocal ally, nor risk
losing access to Keflavik.)
Once the United States decided to close Keflavik, intense discussions ensued over
the nature of the relationship. For example, the United States delayed the withdrawal of
the F-15s and helicopters by several months to allow a smoother transition. In addition,
the United States offered to help find and train appropriate civilian search and rescue
helicopters (the U.S. CSAR never had to rescue U.S. pilots, but had saved a number of
Icelandic fisherman and an injured Russian sailor who fell through an open hatch on a
warship). Furthermore, to help the Icelandic government shift to a homeland security–
centric posture, the United States helped them to focus on potential terrorist threats.
The decision prompted a significant review of Icelandic defense policy views—mired in a
Cold War mentality of focusing on the Russian bear. The Icelandic government removed
“Old guard” Icelandic government officials and replaced them with officials with a more
forward-looking outlook. The mayor of Keflavik successfully courted a major investment
by a U.S. aluminum manufacturer. The Alliance remains strong.
Note: In choosing this as an example, it provides the opportunity to illustrate how a
strategic leader on one side of a negotiation can fundamentally change the whole terms
of the debate. Before Secretary Donald Rumsfeld changed the terms, the original para-
digm was “how much should Iceland pay?” Rumsfeld’s decision changed the questions
to: 1) is this base necessary? and 2) if not, how does the United States continue to meet
its treaty obligations to Iceland? In other words, it is critical to any negotiation strategy
that the first task is to understand clearly one’s true strategic objectives.

Dominating the Internet—Strategic Negotiations—


A Mini Case Study16
“Many negotiators focus too intently on the parties, interests and options
that are immediately evident ‘at the table.’ The struggle involving Netscape,
Microsoft and AOL over Internet browsers reveals why successful negotiators
must view both ‘the other side’ and of their own deeply held assumptions.”
—James Sebenius, Gordon Donaldson Professor of Business Administration
at Harvard Business School and a member of the executive committee for the
Program on Negotiation, based at Harvard Law School17

There are three basic components of the online industry business: software,
content, and Internet access. Businesses operating in this industry are often better off

Chapter 8 295
directing their focus on one of these areas. This single focus tends to make companies
stronger in that area of expertise. However, it can also limit their vision. Likewise, focus-
ing on multiple areas can be risky too. A company can spread its resources across
multiple venues and never achieve its full potential in one or more of those focus areas.18

The Players
Netscape entered the browser market with Netscape Navigator in 1994. Because
Navigator was technically advanced and easy to use, by the end of 1995, Netscape
controlled about 75 percent of the market. Consumers loved it.19 Concerns were
mounting over the growing “free” browser market, and Netscape had to consider how
to remain viable, since they charged for their browser server. 20 Therefore, Netscape
also entered the software applications and specialized servers business as a means
to sustain revenue.21
AOL grew at a tremendous rate in the mid-1990s. Between the beginning and the
end of 1995, AOL doubled its members, reaching almost five million users; adding new
members at a rate of 250,000 new users a month.22 AOL realized they needed a premium
browser with which customers would easily navigate the Web and search beyond the
confines of AOL.23 Additionally, “AOL and Netscape both feared Microsoft’s growing
power, and by October 1995, they had come close to concluding an alliance.”24 So, when
AOL needed to find a browser, Netscape seemed the obvious partner. In fact, one AOL
executive said, “The deal was Netscape’s to lose.”25
Enter Microsoft—during the early to mid-1990s, Microsoft thought the future was
in interactive cable television, but with the success of Netscape’s Navigator, Microsoft
re-evaluated that thinking.26 Microsoft realized if Netscape dominated in the browser
market, it would be possible for software developers to create applications that did not
have to be compatible with Microsoft products. This would strike a major blow to the
Microsoft empire, as users would no longer be dependent on Windows.27 This was so
significant a threat to Microsoft that one high level executive said, “If there were ever a
bullet with Microsoft’s name on it . . . Navigator is it.”28
In 1995, Microsoft released Internet Explorer 1.0 as part of the Microsoft Windows 95 Plus
Pack. Within 3 months of that release, Microsoft released Internet Explorer 2.0. The competi-
tion had begun.29 Internet Explorer was free, with Bill Gates saying, “We are priced to sell.”30
It was included in the Windows software, but it was inferior to Navigator in ease of use and in
functions, and by early 1996, Internet Explorer held only a 3 percent market share.31
Simultaneously, Microsoft was developing the Microsoft Network (MSN). This
network icon, placed on the Windows desktop, allowed Microsoft to “drive a wedge
between AOL and Netscape.”32 Because of this new threat, “AOL’s priorities shifted from
teaming up against Microsoft to finding a way to negotiate a presence on the Windows
desktop.”33 After all, most business folks recognized the Windows desktop as “the most
valuable desktop real estate in the world.”34

2 9 6   L e a d in g a t t h e S t r a te g i c L eve l
Microsoft was now fully engaged in the Internet game, competing with AOL for
online services and with Netscape for browser dominance.

—Pause—Take a moment to reflect on the above case study, the previous discus-
sion on negotiation, and personal experience, and note your thoughts and insights
regarding the following questions:
1. How do you determine who the players are in your negotiations?
2. How do you decide which players are really worth watching?
3. How do you know if there are players who are not “at the table”?

The Race Was On


Netscape knew it had the edge in an AOL deal, but Microsoft was not going to lose
without a fight; and Microsoft knew it had AOL issues it had to overcome. In addition
to Netscape being technically superior in the browser field, there was a hostile history
between Microsoft and AOL. In 1993, both Paul Allen and Bill Gates, Microsoft cofound-
ers, met with AOL CEO Steve Case in an attempt to take over AOL. Case blocked the
attempt and reportedly, Gates responded, “I can buy 20% of you or I can buy all of
you. . . . Or I can go into this business myself and bury you.”35 From there the animosity
between the two companies became legendary.
In November 1995, vying for the opportunity to be a browser contender, Bill Gates
approached Steve Case and asked him to consider Internet Explorer as an option. Case
flatly said no.36
Microsoft earned more money in interest from their cash on hand than Netscape
did in total revenue and Gates was not going away that easily. 37 He used that power
and announced, though the media, that Microsoft was entering the Internet arena.
Gates explained that Microsoft would like to reach a 30 percent market share with
its Internet Explorer browser. This announcement puzzled some, as Microsoft was such
a giant, and this modest goal did not seem characteristic. Gates’s previous statements
regarding other Microsoft strategies explained, “We look for businesses where we can
garner large market shares, not just 30 percent to 35 percent.”38 However, Gates knew
if Internet Explorer could reach that 30 percent goal, one of Microsoft’s worries would
be averted: Web masters and programmers would have “to design applications and
websites compatible with Internet Explorer as well as Navigator.”39 The stock market
recognized this strategy and plunged.40

—Pause—Take a moment to reflect on the above case study, the previous discus-
sion on negotiation, and personal experience, and note your thoughts and insights
regarding the following questions:
1. When have you been the underdog in the negotiations? What did you do?

Chapter 8 297
2. When have you been the top contender? How did you secure victory? Or, why did
you lose?
3. If you were in AOL’s seat, how would you have handled Microsoft, based on the
history between the two companies?

Emotions Run Deep


Still, Case “didn’t trust Microsoft’s motives” and he preferred a deal with Netscape. 41
Therefore, in January 1996, he met with Netscape’s Jim Barksdale to discuss what it
was AOL wanted. AOL wanted Netscape:

• t o create a special Navigator version just for AOL


• t o take over Netscape’s underexploited Web site
• t o cross-promote as partners, which included giving AOL a seat on the Netscape Board.
When Barksdale took these back to the Netscape “table,” Netscape engineers and man-
agers opposed AOL’s proposal. They did not want to revise Navigator specifically for
AOL consumer use since Navigator was the leading browser. They felt AOL really had
no better alternative for meeting their browser needs. Consequently, Barksdale declined
AOL’s terms but countered by offering to provide the Navigator browser to AOL at a
reduced cost and, upon receiving a “deal,” would work to create some changes to the
browser to make it more compatible with AOL.42
Therefore, Case went back to his AOL team to discuss. An executive new to AOL,
David Colburn, who had joined the company only a few months prior, was in charge
of closing the browser deal. Colburn took the viewpoint, “Who’s got what we need?”43
Colburn brought a fresh perspective to the negotiations and later reflected, “Netscape
thought we had nowhere else to go. . . . It was like, ‘AOL has to deal with us.’”44 With
Colburn being able to disconnect from the negative emotions most AOL executive
members associated with Microsoft, he was able to see that the best option was in
considering what Microsoft also had to offer.

—Pause—Take a moment to reflect on the above case study, the previous discus-
sion on negotiation, and personal experience, and note your thoughts and insights
regarding the following questions:
1. When have you found emotions driving your negotiating decision?
2. How do you know if they are serving you well or hindering your vision?
3. How do you know when you need a fresh perspective?
4. Who do you trust/consult for that unbiased perspective?

The Door Opened


Microsoft saw an opportunity. They offered their browser free to AOL and promised
to roll out quickly technical adaptations to Explorer. Additionally, Microsoft agreed

2 9 8   L e a d in g a t t h e S t r a te g i c L eve l
to bundle AOL in with its Windows package, putting the AOL icon right alongside the
MSN icon on desktops across the world.45 Since Microsoft Windows was “the domi-
nant operating system software for personal computers . . . controlling more than 100
million computers, [this] was a bargaining chip that Netscape could not match.”46 This
offer was significant in that it took the fear of MSN as competitor out of play for AOL.

—Pause—Take a moment to reflect on the above case study, the previous discus-
sion on negotiation, and personal experience, and note your thoughts and insights
regarding the following questions:
1. How do you keep your eyes and ears open for opportunities when you are the
underdog in a negotiation deal?
2. How do you find areas to “sweeten” a deal?

The Deal
March 11, 1996—AOL and Netscape announced a deal:

•A
 OL had reached a licensing agreement with Netscape to adopt the Navigator software
for Web browsing.47
•A
 OL would pay a discounted fee to Netscape every time a customer downloaded
Navigator.
•N
 etscape would work on implementing Navigator into the AOL software.48
The REAL Deal
March 12, 1996—Microsoft and AOL announced a deal:

•M
 icrosoft would license its browser for no cost to AOL.
•A
 OL would make Microsoft’s Internet Explorer the primary default software for Web
browsing.
•A
 OL would offer Navigator as an option, but not integrated directly into the software
packages AOL distributes to its customers.49
•M
 icrosoft Explorer secured exclusive/primary marketing and distribution status from AOL.
•M
 icrosoft would place the AOL icon in the Windows system, next to Microsoft’s own
MSN icon, on desktops everywhere.
•N
 avigator would remain on the AOL site50—available for those who asked for it51—but
there would be “numerous restrictions on how AOL could promote the Netscape
browser to its members.”52

Following the announcement of the real deal, Netscape stock dropped and AOL
stock soared.53

—Pause—Take a moment to reflect on the above case study, the previous discus-
sion on negotiation, and personal experience and note your thoughts and insights
regarding the following questions:

Chapter 8 299
1. When have you seen an open door opportunity and taken it?
2. Upon reflection, when have you missed an opportunity?

What Happened?
Microsoft was paying close attention while Netscape assumed they were the only
option for AOL in the browser war. Then, when an initial deal was reached on March
11, Netscape again erred by not securing themselves as the “exclusive” browser for
AOL. Netscape never worried that any other company was a viable supplier of browser
services for AOL.
Microsoft saw the full scope of the deal potential. AOL wanted more than just a
top-notch browser; they wanted a partnership. They also wanted to have some of their
competition fears quelled. Recall:

1. AOL offered to take over Netscape’s under-utilized Web site as a way to reach the
millions of users who were hitting that site daily, but also to redirect that high traffic
from Netscape to AOL.54
2. AOL wanted a seat on the Netscape board, a partnership of cross-promotion, and a
vested interest in each other’s successes.

Netscape had said no. They viewed AOL as a customer, rather than a partner. Microsoft
was able to devise options that offered AOL just what they wanted, and more.55
By putting the AOL icon on the Windows desktop, right next to the MSN icon,
Microsoft had taken some of the competition threat from MSN to AOL out of the pic-
ture. They had shown they were willing to cross-promote and even sacrifice their own
MSN exclusive reach. AOL’s David Colburn said, “Microsoft’s priority was promoting its
browser, so much so that it was willing to sacrifice MSN.”56 For Microsoft, they saw this
as sacrificing for the short- to medium-term in order to reach their long-term strategic
goal of Internet dominance.57
Essentially, Microsoft was able to change the game. They were also able to reach
beyond the negotiating table. They were inferior on the technical side for the Web site
browser, but instead were able to offer a broad range of business advantages that
demonstrated to AOL that Microsoft was the better partner. Microsoft engaged the long-
term business-oriented side of the AOL negotiating team rather than just the technical
team members. Microsoft recognized that if they could not win on one battlefield, they
needed to shift to a different one.

—Pause—Take a moment to reflect on the above case study, the previous discus-
sion on negotiation, and personal experience and note your thoughts and insights
regarding the following questions:
1. When has your organization changed the game?
2. How do you know when the game/battlefield needs to be changed?

3 0 0   L e a d in g a t t h e S t r a te g i c L eve l
3. How do you determine your BATNA?

Reviewing the AOL-Microsoft-Netscape negotiations process, Professor James


Sebenius suggests considering the following core elements:58

The Players
1. Netscape dismissed Microsoft as a competitor: Microsoft controlled 3 percent of the
market to Netscape’s 75 percent. Engineers from Netscape viewed the integration of
a new Navigator browser as an unnecessary waste of resources and time; Navigator
was the best and Netscape was going to focus more on corporate systems rather
than individual users.
2. Microsoft knew they were technically inferior, but winning was necessary to ensure
future viability of the company.
3. AOL needed a browser to remain competitive. They hated Microsoft but David
Colburn removed the emotion and looked objectively at who could provide what
AOL really needed.

What’s at Stake
1. Netscape saw an AOL deal as having incremental benefits only and missed the stra-
tegic advantage of keeping Microsoft from winning.
2. Microsoft saw winning as a way to preserve their edge by forcing software program-
mers to write programs compatible with Explorer and other browsers.
3. AOL wanted to partner with a company that could provide them the best path to
future viability.

The BATNA Factor


1. Netscape assumed that AOL had no BATNA.
2. Microsoft viewed a no-deal with AOL as catastrophic; a threat to the Microsoft Win-
dows empire.
3. Netscape saw its BATNA as minor, perhaps just some loss of revenue. Netscape never
considered the Microsoft BATNA.
4. AOL took advantage of the BATNA situation and kept Microsoft “warm” while talking
to Netscape.

Getting to YES
AOL & Netscape
1. Netscape viewed a deal with AOL as a short-term business transaction.
2. Netscape viewed its relationship with AOL as one of customer-supplier.
3. Netscape believed AOL was desperate for something only Netscape could provide.

Chapter 8 301
Microsoft & AOL
1. Microsoft saw this as a long-term partnership that was necessary for Microsoft’s
future viability.
2. Microsoft put together a deal with value-ads and on multiple dimensions that
addressed and alleviated many of AOL’s business concerns.
3. Microsoft was willing to sacrifice the short term—their MSN—to secure the longer
term goals of browser dominance.

—Pause—Take a moment to reflect on the above case study, the previous discus-
sion on negotiation, and personal experience, and note your thoughts and insights
regarding the following questions:
1. Consider a negotiation situation in which you have been involved. Outline the
parties, interests, no-deal options, and the deal. What do you notice? What do
you think you might have missed?
2. How do you evaluate the other teams BATNA? Whom do you take inputs or sug-
gestions or ideas from on your team? What influences those members and their
ideas?

Avoid Arrogance
Be wary of what seem like probable, logical, obvious—but potentially inaccurate—
assumptions when negotiating. Review these previously discussed facts and consider
Netscape’s inaccurate assumptions:59

• T he issue with AOL was simply price and if Netscape came down, just a little, that
would be enough for AOL to feel like it was getting a deal.
•N
 etscape was dominating in the field and therefore they and AOL were the only rel-
evant parties in this negotiation.
• T his was a short-term business deal that was set to produce, or only lose, a small
amount of revenue.
•A  OL would never reach agreements with more than one company.
•A  OL had no BATNA, so they had to go with Netscape.
•M  icrosoft and AOL were archenemies and would never do a deal together.
•M  icrosoft would never promote AOL as it might harm the MSN business.
• T here was no need for anything more ironclad in the deal than simply a preferred
status with AOL—after all, AOL had no other viable options.

At the time of the deal, Netscape’s perceptions seemed reasonable, but had they
more thoroughly scanned the environment, reviewed who the players were—what
they wanted and stood to lose—they would certainly have concluded that many of their
assumptions were simply wrong.
Arrogance and overconfidence are important variables in negotiations, which
teams need to consider—and avoid. In fact, some speculate Dave Colburn favored

3 0 2   L e a d in g a t t h e S t r a te g i c L eve l
Microsoft because of Netscape’s arrogance.60 Supporting this assumption were docu-
ments that would later reveal most leaders at “AOL found Netscape . . . arrogant and
difficult to deal with.”61 Even in the immediate aftermath of the AOL/Microsoft deal,
Netscape’s marketing head, Mike Homer, was still proclaiming victory, saying, “Our
expectation is that a vast majority will download Navigator. . . . [AOL’s] customers
are demanding Netscape. . . . That is the reason they are licensing from us and pay-
ing us a lot of money [the publicity over this Microsoft/AOL deal] is just a bunch of
marketing hype.”62

Bottom Line
Netscape failed to consider that not everyone at AOL shared the same view. Colburn,
as an outsider, was able to view the situation without the negative emotions toward
Microsoft felt by most on the AOL executive team. Without those emotions influencing
his “gut” instinct, he was able to consider the situation objectively on what was best
for the business. In the end, it was not the Netscape offer.
Simply put, Netscape was wrong, and it was a very costly assessment for them
and their stakeholders.

—Pause—Take a moment to reflect on the above case study, the previous discus-
sion on negotiation, and personal experience, and note your thoughts and insights
regarding the following questions:
1. In those areas where your organization is strong/successful/an industry leader,
how can you be sure you are not falling victim to overconfidence?
2. A s an underdog, how could you use an opposing player’s overconfidence
against them?

Change the Battlefield


Failure to consider all aspects of AOL’s needs caused Netscape to lose the strategic
competitive advantage. Microsoft took advantage of this and in turn was able to change
the game. “First, they [went] beyond tactics ‘at the table’ to change the game favorably.
Second, they . . . [altered] perceived or actual BATNAs in ways that [did] dramatically
shift the balance in a negotiation.”63
Microsoft effectively found an option to calm AOL’s worries over competition from
MSN and, at the same time, was able to offer AOL an almost no-cost marketing of
its online network. While AOL did not express either of these concepts in their initial
search for a browser, Microsoft looked beyond the surface of AOL’s needs and was
able to create a sweeter deal that ultimately, AOL could not afford to dismiss.
Though Internet Explorer was, at that time, technically inferior to Navigator, the
willingness of Microsoft to find deal-sweetening options bought them precious time
to improve on Explorer’s technical abilities. They put “on the table” options that made

Chapter 8 303
the deal with Netscape, which at one time seemed like a “no brainer,” a deal that was
simply not in the best interest of AOL.
AOL’s Colburn said, “The willingness of Microsoft to bundle AOL . . . with the Win-
dows operating system was a critically important competitive factor that was impos-
sible for Netscape to match.”64 This was also critical in that it created circumstances
where AOL was willing to agree to an “exclusive”—rather than “preferred”—status
with Internet Explorer, in order to secure the Microsoft deal. In fact, Colburn is on
the record stating, “AOL was willing to agree to virtual exclusivity with Microsoft—
something to which AOL would not otherwise have agreed—because AOL believed
that inclusion in the Windows operating system . . . was essential to mitigate, at least
partially, the adverse competitive effects of Microsoft’s bundling of MSN with its
operating system.”65
In an article written in 1996 about this deal, Kevin Savetz stated, “In the end, ‘stra-
tegic alliance’ is the name of the game. It does not matter which browser is better. Most
internet users will use the browser that is handed to them.”66 In truth, AOL now confined
Navigator to a small area of the AOL site—available only upon request. Whereas Internet
Explorer was the default AOL browser and the AOL icon appeared on every Windows
desktop. The strategic alliance formed between AOL and Microsoft—literally—buried
Netscape. After losing the browser edge, AOL acquired Netscape in 1999, and by 2008,
Netscape closed its business for good.

—Pause—Take a moment to reflect on the above case study, the previous discus-
sion on negotiation, and personal experience and note your thoughts and insights
regarding the following questions:
1. Upon review of these two case studies, what insights did you gain?
2. What do you consider the three most important factors for successful strategic
negotiations? Why did you choose these three?

Conclusion
These two case studies demonstrate the essential need for strategic leaders to be adept
at negotiations—be they government or nongovernment leaders. Both examples illus-
trate the complexity of negotiations and the importance of understanding ZOPA, the
various parties’ BATNA, interests, potential alliances or other interested parties, and
to challenge one’s own assumptions prior to any negotiation.
This and the preceding chapter examined strategic decisionmaking. At the
strategic level, it is not sufficient just to make a decision and expect it implemented
without a concerted effort to explain the decision to stakeholders, customers, and
organizational members. Buy-in and an engaged, enthusiastic response to the deci-
sion require effective strategic communications—the subject of the next chapter.

3 0 4   L e a d in g a t t h e S t r a te g i c L eve l
Notes
1
George Woods, “The Strategic Leader as Negotiator,” in Strategic Leadership: The General’s Art, ed.
Mark Grandstaff and Georgia Sorenson (Vienna, VA: Management Concepts, 2009), 223–268.
Thomas Colosi, On and Off the Record: Colosi on Negotiation, 2nd ed. (New York, NY: American
2

Arbitration Association, 2001), 1.


3
James Sebenius, “Six Habits of Merely Effective Negotiators,” Harvard Business Review 79, no. 4 (April
2001), 87–95.
4
Colosi, 5–13.
5
Personal interview with Ambassador Bob Loftis, Acting Coordinator for Reconstruction and Stabi-
lization; Former Leader for Pandemics and Status of Forces Negotiations, Department of State.
6
Colosi, 13.
7
Personal interview with Loftis.
8
Ibid.
T. Owen Jacobs, Strategic Leadership: The Competitive Edge (Washington, DC: National Defense
9

University, 2005), 170.


10
Personal interview with Loftis.
The person with the authority to make the decision regarding acceptance or rejection of the negoti-
11

ated agreement.
Brad McRae, “The Seven Strategies of Master Negotiators,” Ivey Business Journal, May/June 2005,
12

available at <http://proquest.umi.com/pqdweb?index=0&did=872087641&SrchMode=1&sid=1&Fmt=
3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1306191592&clientId=3921>.
13
Personal interview with Loftis.
For an example of multiple parties and issues, see John Matheny, “Emerging Issues in Conventional
14

Arms Control,” appendix E, written when he was Director, European Security Negotiations.
The author thanks Ambassador Loftis (one of the interviewed strategic leaders) for developing this
15

mini-case study. Ambassador Loftis led the U.S. negotiation team during the Iceland negotiation process.
The author expresses appreciation to Nicki Dover, Management Case Study Writer, for her research
16

and drafting this case study.


17
James Sebenius, “Negotiating Lessons from the Browser Wars,” MIT Sloan Management Review 43
no. 4 (Summer 2002), 43.
Kevin Savetz, “The Browser Wars, 1996,” New Jersey Star-Ledger, available at <www.savetz.com/
18

articles/browserwars.html> .
Samuel Bodily and Sanjay Vakharia, “Browser Wars: Microsoft Versus Netscape,” Darden School of
19

Business, Case Study (Charlottesville: University of Virginia, July 13, 1998), 1–6.
Mary Kwak and David Yoffie, “The Browser Wars, 1994–98,” Harvard Business Review (January 22,
20

2001, revised), 4.
21
Kenneth Corts and Deborah Freier, “A Brief History of the Browser Wars,” Harvard Business Review
(June 9, 2003), 2.
22
Kara Swisher, There Must Be a Pony in Here Somewhere (New York: Crown, 2003), 48.
James Sebenius and David Metcalfe, “Double Dealmaking in the Browser Wars (A),” Harvard Busi-
23

ness Review (September 30, 1999), 5.


Andrew Zajac, “AOL Exec Unwavering,” The Chicago Tribune, October 30, 1998, available at <http://articles.
24

chicagotribune.com/1998-10-30/business/9810300301_1_aol-and-netscape-msn-internet-explorer-browser>.

Chapter 8 305
David Lax and James Sebenius, “3-D Negotiations: Playing the Whole Game,” Harvard Business
25

Review (November 2003), 4.


26
Ian Peter, “History of the Internet—The Browser Wars,” available at <www.nethistory.info>.
27
Kwak and Yoffie, 7.
28
Dr. Michael Benoliel, “Master Negotiators: Intelligences and Competencies,” available at <www.cen-
terfornegotiation.com/assets/Master_negotiators_intelligence_and_competencies.pdf>, 26; a variation
of this quotation is also found in Sebenius and Metcalfe, 2.
29
Peter.
30
Kwak and Yoffie, 6.
Ibid., 11.
31

32
Zajac.
33
Ibid.
34
Lax and Sebenius, 5.
35
Swisher, 35–37.
36
Sebenius and Metcalfe, 4.
37
Peter.
38
Kwak and Yoffie, 5.
39
Sebenius and Metcalfe, 3.
40
Corts and Freier, 3.
41
Swisher, 37.
42
Sebenius and Metcalfe, 4–5; and Rajiv Chandrasekaran, “AOL Outlines Its Deal with Microsoft,” The
Washington Post (October 28, 1998), A10, available at <www.washingtonpost.com/wp-srv/business/
longterm/microsoft/stories/1998/witnessa102898.htm>.
43
Swisher, 46.
44
Ibid., 47.
45
Lax and Sebenius, 4–5.
Peter Lewis, “Microsoft Gets Big Boost on Internet,” The New York Times, March 13, 1996, available
46

at <http://besser.tsoa.nyu.edu/impact/w96/News/News9/0313online.html>.
47
Ibid.
48
Sebenius and Metcalfe, 5.
49
Lewis.
50
Zajac.
51
Savetz.
52
Zajac.
53
Lewis.
54
Sebenius and Metcalfe, 5.
55
Ibid., 4–5.
56
Zajac.
57
Lax and Sebenius, 5.
Core elements summarized from those listed in Sebenius, “Negotiating Lessons from the Browser
58

Wars,” 44–47.

3 0 6   L e a d in g a t t h e S t r a te g i c L eve l
59
Assumptions summarized from ibid., 48; and from Swisher, 45–48.
60
Swisher, 47.
61
Zajac.
62
Lewis.
63
Lax and Sebenius, “Negotiating Away from the Table: A 3-D Approach to Changing the Game,”
(January 29, 2003), 7, available at <www.people.hbs.edu/jsebenius/hbr/3-DNegotiation.pdf>.
64
Ibid., 9.
65
Chandrasekaran.
66
Savetz.

Chapter 8 307
CHAPTER 9 | Strategic Communication—
A Strategy Execution Imperative

The one skill-set that almost all leaders, managers, researchers, and scholars agree
is core to effective leadership (regardless of the organizational level) is the ability to
communicate—both orally and in writing. It is through communication that the
leader shares and disseminates information, communicates expectations, and gains
commitment. Key objectives in any organizational or personal setting are building
trust, respect, and collaboration, as well as influencing, motivating, encouraging,
and inspiring others. In general, effective communication has both a cognitive and a
social element.
The cognitive element relates to the ability to think about what one wishes to
communicate (the content and desired outcome), and with whom to communicate of
many potential audiences/publics. It is the ability to identify the strategic audiences
and to gain an appreciation for their values, objectives, and willingness to listen. It
is also understanding how to plan and deliver written and verbal communication,
as well as knowing what media to use to send the message. The social element of
interpersonal communication relates to the ability to understand the recipient of
the communication—how best for the listener to not only receive the information,
but also understand the message. It is the ability to use active listening techniques to
enhance receipt and understanding of the message and employ the interpersonal skills
necessary to build report. The social element also includes the ability to demonstrate a
willingness to continue the dialogue for mutual understanding. The important point
here is that effective communication becomes a two-way dialogue. In fact, unless there
is a meaningful, two-way exchange of meaning, it is not communication, but rather
information dissemination.
Written communication is primarily cognitive, requiring the writer to have the
ability to crystallize his or her thinking to enhance clarity of the written message. It is
important that the text is in a style, reading level, and format that is understood by the
reader (e.g., if the writer is a Ph.D. and the audience is sixth graders, the writer must
simplify the written message so it will be understood and embraced by sixth graders).
Selecting the specific distribution of written communication is a major consideration
in determining desired outcomes. The avenues by which to convey written commu-
nications continue to grow exponentially (for example, e-mail, Facebook, Twitter,
brochures, blogs, websites, texting, or LinkedIn).

C h a pte r 9   3 0 9
For strategic leaders, written communications are important in corresponding with
key stakeholders, constituents, and shareholders, to “tell their story,” promulgate poli-
cies, develop and gain support for strategic planning, establish ethical standards, etc.
Staff associates of strategic leaders must be able to provide concise, meaningful written
analyses and evaluations. These skills are necessary for things like forecasting scenarios,
writing speeches as well as position and briefing papers, and relaying government or
nongovernment intelligence. In addition, written materials often serve as documenta-
tion within the organization and are useful when searching for historical precedents,
institutional history, or just as a reference source to anyone who might need it.
Oral communication, as the counterpoint to written communication, is somewhat
of a misnomer. In reality, nonwritten communication can occur not only orally, but
also through body language, images, symbols, and artifacts. While written commu-
nication is especially important for strategic leaders in communicating policies and
direction, it is through nonwritten communications, such as face-to-face meetings,
that leaders can position themselves to exert their influence and achieve their goals.
Discussing a senior leader’s efforts in information gathering and sharing, Henry Mint-
zberg noted, “Much of an informed manager’s information is not even verbal so much
as visual and visceral—in other words, seen and felt more than heard. Effective manag-
ers pick up tone of voice, facial expression, body language, mood, [and] atmosphere.”1
An interesting example of using video to communicate change occurred in a
company that was concerned about strained relationships between employees. The
company’s leadership noticed decreased engagement between supervisors and employ-
ees, both in their work and in their personal relationships. To solve this polarization
problem, the company decided to have an all-company picnic during a workday in an
attempt to build esprit de corps (team spirit). A few weeks prior to the picnic, one of
the staff suggested that they make a short video of each employee at his workstation
indicating his or her key responsibility to the company. Once these video segments
were complete, they were consolidated into a company video as a way to “tell the story”
of the people who comprised the core of the company. During the picnic, management
showed the video, and, to their surprise, it was a huge success. Families were able to see
what their father, mother, brother, or sister did at the company, resulting in enhanced
respect for their family member. Others began to see the value in the contributions of
their coworkers, as well as how they contributed to the success of the company. Fol-
lowing the picnic, the use of the employee video collage created a new sense of pride,
professionalism, and effort by all involved parties.
Finding a method to reach employees or subordinates successfully in order to
share information is an important, challenging responsibility for strategic leaders.
Discussing the flow of information within an organization, Mintzberg reported that
five executives he studied “spent about 40 percent of their time simply communicating
in one way or another.” He noted that Tengblad’s study of Swedish corporate senior

310  L e a d in g a t t h e S t r a te g i c L eve l
executives found they devoted “23 percent of their time at ‘getting information’—‘the
single most frequently recorded activity’—plus another 16 percent, ‘informing and
advising.’” Having access to, and monitoring information and knowledge regarding
both the external environment and the organization as a whole, the strategic leader
becomes the nerve center of the organization.2 Mintzberg concluded that “The job of
managing is significantly one of information processing, especially through a great
deal of listening, seeing, and feeling, as well as a good deal of talking.”3
General Michael Hayden, former Director of the CIA, provided an illustrative
example of a strategic leader’s efforts to communicate, persuade, and gain influence.
In that capacity, General Hayden met with President Bush every Thursday morning.
These weekly meetings gave General Hayden the opportunity to communicate the
work and findings of the CIA to his client, President Bush. General Hayden recalled:
Every Thursday morning I had at least 30 minutes with President Bush,
designed to follow the PDB (President’s Daily Brief), but we got in the habit of
going in front of it. Sometimes it went so long they just said, “Is there anything
important in the PDB? No? OK, Mike, keep talking.” It was all operational activ-
ity and covert operations. The intent was to keep the President apprised, to make
him feel good about what we were doing as well as to say, “OK, a lot of the work
that an agency like CIA does works like one of those invisible dog fences. How
do you know you have gone outside the boundaries? When your collar starts to
shock you?” You want to have these dialogues with the President so you get him
into your space. President Bush was very interactive. It was always intensely
conversational and very good for the Agency and me.4
General Hayden’s example of upward communication demonstrated the impor-
tance of communicating with stakeholders when attempting to validate the organiza-
tion’s role and its contributions to mission fulfillment. His ability to bring President
Bush into the culture of the CIA established buy-in from the President—allowing the
CIA to operate in a more purposeful manner.
Communicating internally, strategic leaders add value to their organization
through the ability to inform and motivate every employee and help align the values
of the workforce with the vision of the organization. The leader must tap into people’s
emotions and provide them with clear and unmistakable objectives. Ron Iverson,
CEO of LGS Innovations, emphasized, “Communication is the only way you can go
about achieving this. The strategic leader must have the capacity to communicate
because it allows them to gain the trust and confidence of key individuals within your
organization.”5
The key point is to recognize that all leadership actions (changes) are the result of
communications, the primary purpose of which is to inform, explain, influence, and
motivate the behavior and direction of others (routine or urgent). This influence may

C h a pte r 9  311
need to be in a one-on-one or in a group setting, or it may be through articulating
an inspiring vision, mission, idea, strategy, plan of action, or offering performance
feedback or informal counseling. Or, it could simply be needed as a means to collect
and share information for its own sake.
This chapter defines strategic communication as the persuasive narrative char-
acterizing and/or explaining an organization or government with respect to its values,
purpose, policies, and actions. In today’s global, viral information environment, it is
the last category that most often poses the greatest challenge. The use of the word
“persuasive” is meant to indicate that the source for organizational communication
(for example, the President or CEO) is a key factor in the extent to which the com-
munication is accepted by important stakeholders. This point exemplifies why all
strategic leaders need to understand communication is such a crucial issue. Research
concluded long ago that people tend to accept and/or act on information based on the
presumed authority and credibility of the spokesperson.

Communications for Strategic Leaders


The primary objective of the strategic leader is to establish and/or maintain organiza-
tional viability and vitality. Perceived organizational viability is a collective determina-
tion of attitudes and views held by external stakeholders, constituents, and customers.
One of any strategic leader’s responsibilities is to assess and shape organizational
viability. There are three additional rhetorical questions strategic leaders should con-
tinuously answer while establishing organizational viability:
• Who the organization is? —its credibility, reputation, legitimacy and trustworthiness
• What the organization does? —its purpose, function and mission (reason for being)
•W  here the organization is going? —its vision (future) and strategic objectives.
To accomplish this primary objective—viability—the strategic leader must under-
stand and be directly involved in developing communication strategies that are aligned
with and support the strategic plan. (Note: The terms strategic communication and
strategic corporate communication do not refer to communication planning in support
of organizational change initiatives. Chapter 11: “Leading and Managing Transforma-
tional Change” addresses this important communication planning process.)
There are a number of descriptors for strategically focused communication, for
example, “strategic communication,” “strategic corporate communications,” “public
relations,” and “crisis communications.” Strategic corporate communication, a term
not used as much in corporate sectors, is growing in acceptance. Public affairs, pub-
lic relations, marketing communications, and crisis communications are subsets of
strategic communication.

312   L e a d in g a t t h e S t r a te g i c L eve l
Broad Reach of Strategic Communications
In government, the President and his executive leadership team represent the country
(and their respective agencies) to both the American public and the international
community. Similarly, the strategic leaders of nonprofits or corporations serve as
spokespersons for their respective organizations. In all cases, these leaders are attempt-
ing to influence their audiences regarding the legitimacy of their organizations and
actions—building credibility for themselves and their organizations, while gaining
trust and commitment from stakeholders and constituents. Paul Argenti, Robert How-
ell, and Karen Beck define “strategic communication” as “communication aligned with
company’s overall strategy, to enhance its strategic positioning”6 (italics in original). Tod
MacKenzie, senior vice president of corporate communications at PepsiCo, explained
that “The communication function supports the businesses and brand-building
efforts. . . . It moves the organization. The messages articulate the strategic direction
of the company and motivate people to move behind it.”7
Strategic Corporate Communications (SCC) now typically groups a growing
number of management activities. This includes public relations (PR); public affairs
or government relations; investor relations (if applicable); community relations, cor-
porate social responsibility and citizenship (reputation management and community
involvement); marketing communications (branding, introduction of new products
and increasing sales); and, internal communications (newsletters, mission and vision
statements, and policy and planning documents).
A related communications association, the Public Affairs Council, explained SCC
as representing “an organization’s efforts to monitor and manage its business environ-
ment.”8 Its primary focus is on messaging to external stakeholders (clients, prospects,
media, investors, regulators, etc.). Examples of typical activities include corporate
reputation and identity; corporate branding and supporting media activities (websites,
media relations, interviews, press releases, and brochures); community relations activi-
ties; scheduling organization-wide events; and perhaps, depending on how organized,
addressing investor relations. In addition, the public relations function is the first staff
responder for the strategic leader should the organization face a crisis—termed crisis
communication. In essence, SCC includes the organization’s strategic communication
efforts and initiatives to build and maintain a positive reputation, generate public
support, and to influence and manage information exchanges and relations between
the organization and its various stakeholders and publics that enhance and sustain
the organization’s viability.

Organizational Reputation
In gaining and sustaining organizational viability and vitality, the strategic leader
should be aware of his or her perceived reputation as a leader, both within and out-
side the organization. Personal reputation as well as the organization’s reputation

C h a pte r 9  313
(or branding) can have significant influence on decisions made by stakeholders,
customers, and the public. For all sectors, organizational reputation can positively
or negatively affect the leaders’ and the organization’s credibility and trustworthi-
ness—and vice versa. It also can influence the recruitment and retention of talent,
drive customer behavior, affect and effect transactions and strategic partnerships,
support (or undermine) strategic public initiatives, and help mitigate (or exacerbate)
crisis impact.
In recent studies, strategic leaders acknowledged the importance of reputation
management to personal and organizational effectiveness and success.9 For example:
• Business leaders stated that reputation represents more than 60 percent of a com-
pany’s market value.
• Global business executives report that reputation risk is considered most problematic
to their organizations—twice the risk posed by terrorism, foreign exchange rates,
natural hazards, and political risk.
• I n 2009, reputation management was the number one priority of Fortune 500 chief
communication officers.
• A study of 205 CEOs revealed that organizational reputation is becoming a much
more important performance measure than in the past, and the majority manages
their organizational reputations by having informal discussions with key business
stakeholders. Regarding their personal reputations within the organization, 75 per-
cent track their personal reputations through employee surveys.10

Strategic Communication Support


Many organizations rely on their public relations or strategic communication staffs
to formulate communication strategies, as well as to make specific tactical decisions
necessary to achieve agreed-upon results. Some examples of related tasks include
gaining a detailed, nuanced appreciation for the targeted audience(s) (values, culture,
desires, flashpoints, history), and identifying relevant organizational successes that
might influence favorable impressions and perceptions regarding the organization.
If facing stakeholder issues, they could provide clarifying information, suggest posi-
tive expectations and steps the organization is taking, and/or provide status reports.
However, organizations can get into trouble when their senior leaders lead and manage
strategic communication through surrogates. To be successful in a changing, dynamic,
uncertain, complex external environment, the strategic leader should be directly involved
in the strategic communication planning and execution process.

Strategic Communication—A Government Viewpoint


The Department of Defense acknowledges the importance of this function. In the 2006
Quadrennial Defense Review Execution Roadmap, DOD defined strategic communica-
tion as “Focused United States Government processes and efforts to understand and

314   L e a d in g a t t h e S t r a te g i c L eve l
engage key audiences to create, strengthen or preserve conditions favorable to advance
national interests and objectives through the use of coordinated information, themes,
plans, programs, and actions synchronized with other elements of national power.”11
In many respects, strategic communication is an overarching term that can include
public diplomacy.
In 2010, President Obama defined strategic communication(s) as “(a) the synchro-
nization of words and deeds and how they will be perceived by selected audiences, as
well as (b) programs and activities deliberately aimed at communicating and engag-
ing with intended audiences, including those implemented by public affairs, public
diplomacy, and information operations professionals.” He explained “synchronization”
as the coordination of “words and deeds, including the active consideration of how
our actions and policies will be interpreted by public audiences as an organic part of
decision-making.” He emphasized that effective strategic communication “is driven
by a recognition that what we do is often more important than what we say because
actions have communicative value and send messages.” Regarding Deliberate Com-
munication and Engagement, he noted that “The United States Government has a
wide range of programs and activities deliberately focused on understanding, engag-
ing, informing, influencing, and communicating with people through public affairs,
public diplomacy, information operations and other efforts.”12
President Obama insisted that “The most senior levels of government must advo-
cate and implement a culture of communication that is reinforced through mecha-
nisms and processes.”13 Similarly, the Defense Science Board emphasized that effective
strategic communications is an “integrated process.” Moreover, as noted above, the
effort is to develop and coordinate consistent and credible messages and actions that
support the Nation’s interests, policies and long-term objectives. “This challenging,
senior-level management responsibility spans complex organizational capabilities,
broad geographies, diverse audiences, collaborative partnerships, and timeframes.”14
Consequently, the President and senior leaders of government agencies make a
concerted effort to understand and be involved in the strategic communication pro-
cesses to ensure the sharing of ideas and information. They also need to ensure that
the supporting networks meet the essential needs of American interests both at home
and in the international arena.
While it is not within the scope of this chapter to discuss strategic communica-
tions in all sectors, the following observations illustrate the difference in complexity,
uncertainty, and context of strategic communication in government from that found
in the nonprofit and corporate sectors.
On the surface, government strategic communication (SC) appears much the same
as corporate SC. It would be logical to assume that similar strategies and tactics will
work in both sectors. However, that would be a risky assumption. Certainly, the con-
ceptual framework and strategic goals behind SCC and SC are similar. The execution

C h a pte r 9  315
and results, however, are often significantly different. For example, the most significant
constraint to a truly integrated governmental strategic communication strategy is the
vast size of the U.S. Government, its dynamic scope, and the often-global span of the
environments and audiences involved. It has many agencies, each of which has multiple
missions with worldwide reach, and with often-conflicting messages and tactics. For
example, the U.S. military (nearly 3 million people in 2010) is a third larger than the
world’s largest company, Wal-Mart (nearly 2 million employees in 2010).15 In short, the
U.S. Government—in comparison to large industry/business organizations—operates
with a significant difference of scale, as well as global diversity.
Creating a coordinated, integrated, consistent message with a singularly articu-
lated governmental viewpoint is difficult to achieve. Different agencies and sub-
agencies with differing missions, goals, and objectives often have conflicting tactical
strategies and actions. In general, each agency, combatant command, and organization
develops strategic communication capabilities as it feels best suits its mission, goals,
and objectives.16
Clearly, the President, supported by his administration, is the key leader, face, and
spokesperson for the country. The State Department, through U.S. Ambassadors, is
the country’s spokesperson to individual nations. However, many government agencies
are in continuous interaction (dialogue, visits, negotiations), representing that specific
agency or even sub-department views, and are viewed by those with whom they interact
as de facto representatives of the United States. Further impacting perceptions of the
United States (positively or negatively) are the vast array of media (television, video
games, Internet, movies, radio, etc.), as well as the individual actions of high-profile
celebrities, government officials, and business leaders who spread collective American
values, policies, and institutions. In many cases, the collective views and actions do
not mesh with the overall U.S. Government’s strategic actions. Admiral Mike Mullen,
former Chairman of the Joint Chiefs of Staff, called this the “say-do” gap; he agreed
that actions speak louder than words.17
Consequently, in order to accomplish what corporations and nonprofits do
with SCC, the U.S. Government needs to influence the international community
(as well as those within the United States) positively with compelling messages
and images. To do so requires leadership awareness, planning, and allocation of
appropriate resources.

Strategic Communications—Organizational Structure


The effectiveness with which strategic leaders address all aspects of leadership and
management, will determine the extent to which he or she accomplishes their objec-
tives. Organizational structure heavily influences effective strategic management.
Regarding this structure, the Defense Science Board’s Task Force on Strategic Com-
munication offered:

316  L e a d in g a t t h e S t r a te g i c L eve l
Presidents shape the nation’s strategic communication in powerful ways, and
they require permanent structures within the White House that will strengthen
their ability to understand and communicate with global audiences. Coordina-
tion committees may occasionally work well, but they are not a substitute for
strategic direction that is durable and empowered. Leaders in departments have
full-time management responsibilities that limit their ability to direct and coor-
dinate at the interagency level. Departments and agencies have constraints that
make it difficult for them to think and act in interagency terms. Ad hoc “czars”
and incremental changes to national security structures designed generations
ago are not the answer. There is no such thing as a “perfect” strategic direction
model. Talented, competent leadership will determine success, but good leaders
function best in good structures.18
Organizations must be structured to support this critical communications
function. Major General Mari Eder, USA, argued that “Strategic communica-
tion will be ineffective if buried under an existing public affairs structure. . . . The
function must be able to integrate actions, build consensus across stovepipes, and
establish clarity of direction as well as unity of action.” She summarized that “It will
take leadership and legislation, from the White House, Congress, and the Depart-
ments of State, Defense, and Homeland Security to create a unified, comprehensive
strategic communication capability. Understanding and harnessing this capabil-
ity and its power to unify strategy and policy will move America’s vision forward
to the future. . . . But it must be developed. Soon, for the shore grows closer. And
tomorrow is here.”19

Admiral Mike Mullen and Strategic Communication—A


Mini Case Study
In September 2009, then Chairman of the Joint Chiefs of Staff, Admiral Mike Mullen,
expressed his concerns about the frequent disconnect between the intent of strategic
communication and what the country’s actions communicate.20

—Pause—In reading this mini case-study, reflect upon strategic communications


efforts by your organization. Do Admiral Mullen’s comments resonate with you?
Why or why not?

“Say-Do” Gap
Admiral Mullen argued, “Most strategic communication problems are not communi-
cation problems at all. They are policy and execution problems. Each time we fail to
live up to our values or don’t follow up on a promise, we look more and more like the

C h a pte r 9  317
arrogant Americans the enemy claims we are.”21 As he emphasized, “To put it simply,
we need to worry a lot less about how to communicate our actions and much more
about what our actions communicate.” For example, addressing the “say-do” gap,
Admiral Mullen stated that “We hurt ourselves more when our words don’t align with
our actions. . . . When they find a ‘say-do’ gap—such as Abu Ghraib—they drive a truck
right through it. So should we, quite frankly. We must be vigilant about holding ourselves
accountable to higher standards of conduct and closing any gaps, real or perceived,
between what we say about ourselves and what we do to back it up.” Citing examples
of the Marshall Plan in Europe, containing the spread of communism, and the recent aid
and support provided because of natural disasters, he noted that America established
credibility through its actions more than its words. “No other people on Earth have
proven more capable at establishing trust and credibility in more places than we have.
And we’ve done it primarily through the power of our example.”22

Relationship-building
Similar to the importance of developing relationships to enhance reputation building or
branding, Mullen indicates that building relationships with key stakeholders is a critical
factor in the success of any strategic communications strategy. Mullen points out that
“Our messages lack credibility because we haven’t invested enough in building trust
and relationships, and we haven’t always delivered on promises.”23

Communicating the Message


“As someone who ‘tweets’ almost daily, I appreciate the need to embrace the latest
technologies,” Mullen says. However, he argues it is important to “know the context
within which our actions will be received and understood.”

—Pause—Take a minute and reflect on how you would respond to this question: If
you were the President of the United States, what would be your approach to rec-
onciling the frequent disparities between acting in our own perceived best interests
as a superpower and our oft declared values of democracy, the rule of law (habeas
corpus), and the rights of the individual with respect to the state?

Strategic Corporate Communications (SCC) and Strategic


Communications (SC)
In crafting strategic communication strategies and messages, the following thoughts
and concepts are offered as items for consideration and reflection:
• People expect strategic leaders to be the persona of their organizations and should
participate directly in the SCC or SC planning.

318  L e a d in g a t t h e S t r a te g i c L eve l
• Strategic leaders should clearly recognize that with today’s communication technolo-
gies, all stakeholders, investors, shareholders, employees, competitors, adversaries,
family members, key constituencies, as well as the public have increasing access to
organizational information. Contradictory, conflicting, or inconsistent messages
leave the organization vulnerable.
• There is the need for coherent, consistent ongoing messages over time that are both
credible and that address issues of the organization (government or nongovernment) as
they arise. The combination of aligned actions, words, and images over time will help
shape global, regional, and local perceptions of the organization’s motivations, inten-
tions, and aspirations. Messages should be persistent as well as consistent over time to
avoid leaving the messaging space to others—being absent from the dialogue either
allows competitors or advisories to fill the void, or it can lead to skepticism within the
targeted audience or doubt regarding organizational intentions. The strategic com-
munication process must be alert to changes in the strategic environment and be agile
and adaptive enough to respond rapidly to evolving conditions and crises effectively.
• Strategic leaders can shape specific messages for targeted audiences. In doing so,
they should take into consideration such variables as audiences values and culture;
ability to communicate and understand; history and biases; the unique conditions
of social, political, religious, linguistic, and economic environments; and, opposing
viewpoints. One-size-fits-all messaging rarely achieves desired outcomes.
• Regarding U.S. Governmental efforts, there are existing laws and regulations that
may create organizational and informational silos, resulting in fragmented efforts
to coordinate and integrate strategically focused messages. Given today’s global
information environment, leaders should identify those laws and regulations that
prevent effective cross-government strategic communication and, if necessary, initi-
ate efforts to repeal or amend them.
• Leaders should develop an appreciation for the timing and sequencing of commu-
nications—in many cases the timing is as important, if not more important than
the content.
• Subordinate organizations may not necessarily understand their roles and respon-
sibilities regarding the overall organization’s strategic communication initiatives
or goals. In such cases, it is common to see strategies that appear to be misaligned
resulting from conflicting messages. For example, if every organizational sub-unit
or agency in the U.S. Government distributed and promoted its own strategic com-
munication messages, these messages could convey individual organization or
agency information. However, to be truly strategic, these messages must be aligned
and consistent across the organization or U.S. Government.
Christopher Paul suggested that answering the following question will help ascer-
tain if a particular goal or objective falls within the definition of strategic communica-
tion: “If we were to try to coordinate or synchronize our communication related to
this goal with a partner outside our organization (in the interagency, say), would they
share our goal? If not, the goal is probably below the objective threshold implied by
strategic communication.”24

C h a pte r 9  319
The Power of Storytelling
Researchers and those senior leaders who discussed communications in their interview
for this book stated that storytelling is critical to any important message. They argue
that people do not remember bullets from a PowerPoint presentation, or numbers
and facts. Consequently, when a strategic leader wishes, for example, to get buy-in
for a new vision for the organization, listeners will remember a compelling, inspiring
story that engages them emotionally. Giving mind-numbing numbers or pointing out
the logic of new strategy will not necessarily inspire the listeners. Nor will they be as
liable to remember the message. If the leader has an effective story, it is more likely
remembered and embraced (a caveat, if the story resonates with the values and beliefs
of the listener). Jack Harris and Kim Barnes noted storytelling works very well when
addressing choices and consequences, mistakes and failures, obstacles and challenges,
unexpected setbacks or opportunities.25

—Pause—Take a minute and reflect on how you would respond to these questions.
Make note of your initial thoughts and insights.
1. Consider yourself: take a moment to reflect on what you remember. Most likely,
a significant amount of the information you recall from memory involves a story
and has an emotional appeal to it.
2. How does your organization communicate strategically? What are the objectives
of its strategic communication efforts? How do you know they are effective? What
recommendations would you offer regarding communication strategy, desired
expectations, and metrics of effectiveness?
3. How would you evaluate your organization’s SCS or SC (strong, good, adequate,
poor, or no SCS or SC)?
4. What would be your recommendations for analyzing and evaluating the relative
importance of and strategies associated with: 1) the content, 2) the delivery vehicle,
and 3) receiver of strategic communication?
5. How would you approach crafting an important message to stakeholders, the
media, to your leadership team or workforce? Is there a personalized story you
can tell that will inspire and get buy-in?

Communication—Challenge of the New Media


A critical aspect of sustaining credibility, legitimacy, trust, and reputation is to have
a discerning appreciation for the convergence of information technologies and of old
and new media.
During the past decade, an explosion of new “go anywhere” communications tech-
nologies allows anyone in the world to become, as Nik Gowing of the BBC describes
them, “information doers.”26 With inexpensive, lightweight devices, these “informa-
tion doers” have the ability to bear witness anywhere in the world, including the

3 2 0   L e a d in g a t t h e S t r a te g i c L eve l
most remote places. Such a capability is a major challenge to any organization, be it
government or nongovernment. The impact can either create a crisis or a public rela-
tions nightmare by presenting information that puts a leader, organization, company,
or government in an unfavorable light or exacerbates an existing crisis by providing
information that appears to conflict with official statements and expectations. This
situation, if sustained by repeated references and not countered effectively, could
negatively influence the organization’s credibility, trust, reputation, relationships,
and legitimacy. Because of the proliferation of these mobile technologies, Gowing
explained, strategic leaders in government, companies, and nonprofit organizations
have lost significant power in crises to control the message, and shape stakeholder
and public perceptions.27
The classic “YouTube moment” was the video of Senator George Allen’s “macaca”
incident on August 11, 2006. Some may remember that in August 2006, Senator George
Allen of Virginia was coasting toward reelection. He also was a leading Republican
2008 presidential contender when he experienced the impact of the “new media.”
Speaking to supporters in Breaks, Virginia, near the Kentucky border, Allen spotted
20-year-old Virginian, S.R. Sidarth, an Indian-American. Sidarth, who was working as
a volunteer for Allen’s senatorial opponent James Webb, attended a number of Allen’s
campaign stops. Carrying a video camera, he recorded Allen’s speeches and off-line
comments hoping to catch Allen in a gaffe. Allen said to his audience, “This fellow
here, over here with the yellow shirt. Macaca or whatever his name is. He’s with my
opponent; he’s following us around everywhere.” He continued, “So welcome, let’s
give a welcome to Macaca here. Welcome to America, and the real world of Virginia.”
While most attendees and the press didn’t know the meaning of the word macaca, most
suspected it was a derogatory term. The press quickly ascertained that macaca meant
“monkey,” and in some parts of the world is an ethnic slur. Regardless of Allen’s intent
or the actual meaning of the word, its association with Allen’s campaign was a factor
in his ultimate defeat for reelection and probably killed any hope for state Republican
backing for the 2008 presidential race.
The Internet’s ability to share individual videos captured by cell phones, and
almost instantly disseminate this information by social media (including blogs and
“tweets”), is challenging strategic leaders around the world. These “information doers”
can record what they see and within minutes have their images transmitted in real time
by the Internet and other technologies.28 While it is true that strategic leaders can, in
theory, use the same media to “spread their message,” it is the unsolicited, and often
irrelevant, information from even the most remote places in the world that represent
significant new risks to organizational leaders. As Gowing explained:
Overall there is a new capacity for scrutiny and accountability way beyond the
assumed power and influence of the traditional media. The reasons are twofold.

C h a pte r 9  3 21
First, technical change has dramatically foreshortened the news and informa-
tion cycle from a few hours to often no more than a few minutes. Second, there
is now a proliferation of hundreds of millions of “information doers” who have
dramatically modified and broadened the assumed definition of the media in a
crisis. They shed light where it is often assumed officially there will be darkness.
Each of these two reasons has provided fundamental new challenges. But when
acting together their impact can be devastating.29
A major concern regarding new media is that the information is often without
context or explicit meaning, leaving it to the viewer, listener, or the reader to interpret
what is going on. While the information may be compelling, dramatic, and vivid, it
can also be misleading. Someone may attempt to manipulate or distort the view seen
to present a specific image as supporting a cause or political agenda, or to bias inter-
pretation by others in the wrong direction. A key consideration is that they are only
media doers—they record and transmit typically uncorroborated, unsubstantiated
information. They are not journalists, as they do not provide context and meaning
for what is transmitted. Furthermore, most traditional media are obligated to check
the facts, or obtain corroboration, before publishing—often delaying reporting of the
crisis or issue. In the same way, most strategic leaders are concerned about giving out
information, especially during a crisis, when they may not have adequate situational
awareness or enough verified facts.
Many corporations embrace social media and effectively use it to market and
communicate with their stakeholders and customers. However, as of this writing, the
effective use of social media and other forms of media exchange are at the embryonic
stage for most government agencies. For example, in discussing the conflicts in Iraq
and Afghanistan in 2006, then U.S. Defense Secretary Donald Rumsfeld argued, “Our
enemies have skillfully adapted to fighting wars in today’s media age, but for the most
part we—our country—our government, has not adapted.” Furthermore, he stated,
“Our federal government is really only beginning to adapt our operations to the 21st
Century. For the most part, the U.S. Government still functions as a ‘five and dime’
store in an E-Bay world.”30
Today, in a crisis, many people have sufficient access to various forms of media and
they use those to form an opinion as to what is going on before those in power are able
to give them the facts. Consequently, “The information transparency created by mobile
phones and all forms of digital connectivity immediately challenges the assumptions
of political, military and corporate leaderships that the public trust whatever actions
are undertaken in their name.”31
For example, during the immediate aftermath of Hurricane Katrina, FEMA chief
Michael Brown acknowledged his information was not current in relation to what was
on CNN and other national networks. This exemplified the additional burden facing

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strategic leaders regarding what to say, and when to say it. In times of crisis, stakehold-
ers, employees, key constituencies, and the public expect that if they are aware of what
is going on (from TV, blogs, Twitter, radio, etc.), then the government or company
should know “what they know” and be taking action to mitigate the crisis.
This creates a dilemma for strategic leaders, that is, should they be first or fast with
the message, recognizing that doing so may produce flawed information. Gowing
describes this as the F3 dilemma. He explains that F3 is, “[T]he core challenge for both
traditional media organizations and policy-makers alike in the minutes after a major
crisis hits. The F3 options are neither easy nor comfortable. Should they be first to enter
the information space? How fast should they do it? But how flawed might their remarks
and first positions turn out to be in ways that could eventually undermine both public
perceptions and confidence, and thereby rebound on institutional credibility?”32

—Pause—Take a minute before reviewing the below mini case study to reflect. Make
note of your initial thoughts and insights.
1. Based on the above reading and your personal experience, what are your percep-
tions of implications, dangers, and opportunities the strategic leader faces with
the exploding new media?
2. Think back to the BP Gulf Oil Spill, the Toyota recall controversy, the government’s
response to Katrina—how did the media impact decisionmaking? Were the 3Fs
at play in any of these crises?

London Tube Bombings July 7, 2005—A Mini Case Study


(In reading the below mini case study, reflect on the use of the F3s.)
On July 7, 2005, there were explosions in the London Tube (subway). Similar to the
U.S. remembrance of the attacks on the New York Trade Center buildings as “9/11,” the
British refer to this day as “7/7.” During the first 3 hours, the official statements from
the British government suggested that the explosions resulted from a power surge.
However, as Gowing reports, all the news outlets were inundated with eyewitness
reports. He notes, “Within the first 80 minutes in the public domain there were already
1,300 blog posts signaling that explosive devices were the cause. . . . The content of the
real-time reporting of 20,000 emails, 3,000 text messages, 1,000 digital images and 20
video clips was both dramatic and largely correct.” And, this was at a time when such
social media as Twitter, YouTube, Facebook, Second Life, My Space, Military.com, and
Web 2.0 did not exist.
However, in comparing the government’s capability to respond in this crisis, Gow-
ing points out:

The official government capability in that first three hours was well behind the
curve and inadequate. It took one hour to convene the government’s COBRA

C h a pte r 9   3 2 3
crisis management cell, then longer to review the torrent of data coming from
the various civil and security agencies. This included first urgent assessments
of whether there were chemical, biological, radiological or nuclear traces at
any of the four incident locations, three of them in appalling, almost inacces-
sible tunnel locations underground. . . . The official challenge was to have “a
discipline to say you do not know” at such a critical time when the “responsibil-
ity of government is to be factually correct.” This meant that the government
could not reliably fill the post-crisis information space anything like as fast as
the information doers. It also added to the concerns of a deeply nervous public
about the extent of official government grip on the crisis.33

Rejecting the cautious advice not to go public, within a couple hours Sir Ian Blair, the
Metropolitan Police Commissioner, took the risk of appearing live on TV networks to declare
that London was safe. “This was despite what could easily have been the reality of a second
or third wave of bombings that would have discredited instantly his reassurances.”34
It is also important to appreciate how to respond to an incident and by what medium.
For example, in August 2010, a JetBlue Airlines flight attendant, Steve Slater, quit his
job in an unusual manner. Following several issues with some passengers and cursing
out a passenger on the plane’s intercom, he activated the evacuation slide, grabbed
some beer, and slid down the slide. The media jumped on the story. Bloggers, Facebook
comments, and songs written about Slater circulated to the point he was becoming a
folk hero to many using the social media.35 Certainly, JetBlue was facing major heat
from the social media following the unauthorized slide into fame. Interestingly, JetBlue
did not respond immediately. Questions began to surface as to why this social-media
savvy airline had not responded. Just 2 days later, rather than issuing a press confer-
ence, JetBlue responded on their blog—quoted below in full:

Blue Tales Blog on 11 August 2010


Sometimes the weird news is about us . . .
It wouldn’t be fair for us to point out absurdities in other corners of the industry
without acknowledging when it’s about us. Well, this week’s news certainly falls
into that category. Perhaps you heard a little story about one of our flight atten-
dants? While we can’t discuss the details of what is an ongoing investigation,
plenty of others have already formed opinions on the matter. Like, the entire
Internet. (The reason we’re not commenting is that we respect the privacy of
the individual. People can speak on their own behalf; we won’t do it for them.)

While this episode may feed your inner Office Space, we just want to take this
space to recognize our 2,300 fantastic, awesome and professional Inflight Crew-
members for delivering the JetBlue Experience you’ve come to expect of us.36

3 24  L e a d in g a t t h e S t r a te g i c L eve l
In the days later, questions regarding its initial silence, and why they did not use the
incident to build its brand, began to fade. In fact, many media and advertising profes-
sionals felt that JetBlue’s lighthearted response using its Blog rather than official news
response was the perfect approach.37
The importance of understanding the new media, the need for strategic leaders to enter
the information space quickly (as Gowing noted, “however incomplete the official under-
standing of the enormity of what is happening”), is a significant challenge for today’s strategic
leaders.38 In the end, the new media will affect all strategic leaders sometime in the future.
In summary, the successful strategic leader must be appreciative, knowledgeable,
and adept at communications (written and oral), especially strategic communications.
It is through communication that the leader shares and disseminates information, com-
municates expectations, and gains commitment. Having both cognitive and social ele-
ments, effective communications enhances trust-building, respect, collaboration, and
motivation—creating energy and encouraging commitment. From the strategic leader’s
viewpoint, strategic communications is essential to getting acceptance and support for
formulated strategies and strategic objectives. In addition, the strategic leader should
have an acute awareness of the new media and its impact both on policymaking and
decisionmaking—both positively and negatively.

Notes
1
Henry Mintzberg, Managing (San Francisco, CA: Berrett-Koehler, 2009), 56.
2
Ibid., 54.
3
Ibid., 56.
Personal interview with General Michael Hayden, USAF (Ret.), Principal, The Chertoff Group; former
4

Director of the Central Intelligence Agency; Principal Deputy Director of National Intelligence; Director
National Security Agency (NSA).
Personal interview with LTG Ron Iverson, USAF (Ret.), CEO of LGS Innovations (subsidiary of
5

Alcatel-Lucent and the classified portion of Bell Labs); former 7th Air Force Commander and Deputy
Commander of United States forces in Korea.
Paul Argenti, Robert Howell, and Karen Beck, “The Strategic Communication Imperative,” MITSloan
6

Management Review 46, no. 3 (Spring 2005), 83.


7
Ibid., 84.
8
Public Affairs Council FAQ, available at <http://pac.org/faq>.
9
ReputationRX, available at <www.reputationrx.com/Default.aspx/HOME>.
ReputationRX, available at <www.reputationrx.com/Default.aspx/REPUTATIONCARE/BUILD-
10

INGREPUTATION>.
Gordon England, 2006 Quadrennial Defense Review (QDR) Strategic Communication (SC) Execution
11

Roadmap (September 25, 2006), available at <www.defense.gov/pubs/pdfs/QDRRoadmap20060925a.


pdf>, 3.

C h a pte r 9   3 2 5
Barack Obama, “White House Strategic Communications report to Congress,” (March 16, 2010),
12

available at <www.fas.org/man/eprint/pubdip.pdf>, 2.
13
Ibid.
14
“Defense Science Board: Task Force on Strategic Communication,” Council on Foreign Relations
(January 2009), available at <www.cfr.org/publication/19347/defense_science_board.html>.
For example, some of the largest companies in 2010 are United States: Wal-Mart stores—2,100,000,
15

U.S. Postal Service—667,605, UPS—408,000, IBM—399,409, and McDonald’s—385,000; China:


China National Petroleum—1,649,992, State Grid—1,533,800, and Sinopec—633,383; France:
Carrefour—475,976; Britain: Tesco—468,508; and Germany: Deutsche Post—424,686, Sie-
mens—405,000. See <http://money.cnn.com/magazines/fortune/global500/2010/performers/
companies/biggest/>.
16
Mari Eder, “The Missing Element: Strategic Communication,” United States Naval Institute, Proceed-
ings 135, no. 2 (February 2009), 28.
Michael Mullen, “From the Chairman: Strategic Communication: Getting Back to Basics,” Joint
17

Force Quarterly 55 (4th Quarter 2009), 4, available at <www.ndu.edu/press/lib/images/jfq-55/1.pdf>.


18
William Schneider, “Report of the Defense Science Board Task Force on Strategic Communication”
(January 4, 2008), xiii.
19
Eder.
20
Mullen, 2–4.
21
Ibid., 4.
22
Ibid., 3.
23
Ibid., 3.
Christopher Paul, “Strategic Communication” Is Vague: Say What You Mean,” Joint Force Quarterly
24

56, (1st Quarter 2010), 12.


Jack Harris and B. Kim Barnes, “Leadership Storytelling,” Leadership Excellence 22, no. 4 (April
25

2005), 8.
Nik Gowing, “Skyful of Lies” and Black Swans: The New Tyranny of Shifting Information Power in
26

Crises (Oxford, UK: Reuters Institute for the Study of Journalism, 2009).
27
Ibid., 9.
28
Ibid., 13.
29
Ibid., 10.
Donald Rumsfeld, Speech to the U.S. Council on Foreign Relations, February 17, 2006, avail-
30

able at <www.defense.gov/utility/printitem.aspx?print=http://www.defense.gov/speeches/speech.
aspx?speechid=27>.
Gowing, 10.
31

32
Ibid., 2.
33
Ibid., 27.
34
Ibid., 27.
To view some examples of videos and social media responses, see <www.cnn.com/video/#/video/
35

offbeat/2010/08/10/moos.flight.attendant.snaps.cnn>.
36
JetBlue, “Sometimes the weird news is about us . . . ,” available at <http://blog.hellojetblue.com/blog/
index.php/2010/08/11/sometimes-the-weird-news-is-about-us/>.

3 2 6   L e a d in g a t t h e S t r a te g i c L eve l
MarketingVOX, “JetBlue’s Social Media Strategy Survives Steve Slater,” August 13, 2010, available at
37

<www.marketingvox.com/jetblues-social-media-strategy-survives-steve-slater-047539/>.
38
Gowing, 2.

C h a pte r 9   3 2 7
SECTION IV: Preparing the Organization for
Success
CHAPTER 10a | Organizational Climate and
Culture: Strategic Determiners, Part I—
Shaping Organizational Climate and Culture

Referring to the Strategic Leadership Model (figure 2-1), “Shape Climate and Cul-
ture” is the next sector of strategic leader work. Each of the interviewed senior leaders
expressed the importance of having a keen understanding of the organization’s climate
and culture and the knowledge needed as to how to shape and use them to enhance
organizational performance and long-term vitality and viability. Clearly, as strategic
leaders formulate their visions and strategies, they must take into account the organiza-
tion’s culture—will it impede or facilitate the organizational and behavioral changes,
performance, and outcomes needed to achieve sustained superior performance within
a volatility, uncertainty, complexity, and ambiguity (VUCA) environment?
Organizational climate is often viewed as the personality of the organization. It is
the feelings, tones, moods, attitudes, etc., whereas the culture represents the collective
beliefs of the members, e.g., the assumptions, values, traditions, artifacts, and ethical
understandings/practices of a group/subculture or the organization as a whole. Stra-
tegic leaders can have a major impact on long-term organizational climate and culture
by what they emphasize, measure, and control. In general, strategic leaders can affect
organizational climate by their leadership behavior and policies, whereas changing or
influencing organizational culture takes significantly more time and effort.
Organizational culture is a powerful force and is critical for the organization’s
short- and long-term viability and success. Strategic leaders must recognize and have an
appreciation for the climate and culture in which their organizations operate. They must
also know how to recognize when culture needs to change, how it needs to be changed,
and the best way to implement that change. This chapter will consider what scholars
and prominent strategic leaders have to say about climate and culture and how some of
these leaders used, led, changed, and managed organizational climate and culture. Part I
examines the strategic leader’s role and responsibility for shaping organizational climate
and culture. Part II examines the importance of building and nurturing two specific
organizational climates and cultures, one ethical and the other innovative.
Kim Cameron and Robert Quinn, authors of Diagnosing and Changing Organiza-
tional Culture, explained that culture reflects “the prevailing ideology that people carry
inside their heads. It conveys a sense of identity to employees, provides unwritten and
often unspoken guidelines for how to get along in the organization, and it enhances
the stability of the social system that they experience. . . . [Often,] people are unaware

C h a pte r 10 a  3 31
of their culture until it is challenged, until they experience a new culture, or until it is
made overt and explicit through, for example, a framework or model.”1
Eighty percent of executives surveyed agreed, “Culture is as important as strategy
for business success.”2 Cameron and Quinn estimated that almost 70 percent of major
organizational change efforts fail.3 One of the main reasons is the organizational cul-
ture. Strategic leaders must have an understanding of and appreciation for the cultures
influencing their organizations. They must also shape the culture of the organization
as conditions warrant. When a strategic leader fails to recognize the need for cultural
change, most likely other types of initiated organizational changes will fail.4
Leadership scholar Owen Jacob stated, “Strategic decision makers must have a pro-
found understanding of culture—both organizational and societal—for two reasons.
First . . . they . . . need to operate effectively across cultural boundaries. Second, they
may need to effect cultural change in order to change either organizational or societal
behavior in a direction mandated by strategic vision.”5 According to John McGuire,
author of Transforming Your Leadership Culture, “If a strategy or directive doesn’t mesh
with the beliefs about ‘how things are done around here,’ then the culture will simply
reject it.”6 As former IBM CEO Louis Gerstner states, the “most important rules are
the ones that aren’t written down anywhere.”7
What is culture? How does it relate to organizational climate? Are they different?
Consider the following two examples:

Julie Roehm—10 Months at Wal-Mart


After Julie Roehm spent nearly 5 years at Chrysler, headhunter Spencer Stuart
approached her in September 2005 to head Wal-Mart’s marketing communications
department. At the time, Wal-Mart was struggling and Roehm saw an exciting oppor-
tunity to transform the company and its image. “Wal-Mart was promising to continue
paying the mortgage on her Detroit home until she sold it, and Roehm’s compensation
wasn’t half bad: a base salary of $325,000, a signing bonus of $250,000, plus restricted
stock of about $300,000, stock options valued at approximately $500,000, and an
annual performance bonus of up to $400,000.” Upon arrival at Wal-Mart in February
2006, “Roehm recognized that fitting in would be harder than she had imagined.” The
windowless offices and gray walls certainly were not inspiring and she immediately
painted her office chartreuse with chocolate-brown trim.
For much of the summer, Roehm jetted around the country visiting the 30 or so
advertising agencies that were bidding to win the $580 million Wal-Mart account. As
a result, she missed many of the Friday morning all-purpose meetings Wal-Mart’s
CEO Lee Scott held with the 300 executives and managers. Looking back, Roehm
realizes she could have played her politics more astutely. “Had I known,” Roehm
says, “I never would have been gone on Friday.” Moreover, although Roehm began

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pushing for merchandise to gain upscale customers and to unclutter store interiors,
the merchandisers were pushing for more in-store signage to show Wal-Mart was still
all about low prices. As Wal-Mart’s same-store sales continued to slide, by the end
of summer the merchants convinced Wal-Mart executives to refocus on low prices.
Therefore, once again, price was the dominant advertising theme.
Only 10 months after Wal-Mart recruited Roehm to help modernize their tired brand,
they fired her. Roehm offers some advice regarding taking a job to help a company or
organization reinvent itself. “In Wal-Mart’s case, she says, the concept of ‘Everyday Low
Prices’ was so deeply embedded that the retailer’s ambition of getting upscale shoppers
to buy more was a nonstarter. Roehm acknowledges mistakes, among them moving too
quickly and not adapting to her new workplace. But she also paints a picture of warring
fiefdoms and a passive-aggressive culture that was hostile to outsiders. Wal-Mart, she
says ‘would rather have had a painkiller [than] taken the vitamin of change.’ What has
she learned? ‘The importance of culture. It can’t be underestimated.’”8

Louis Gerstner—The Turn-Around of IBM


In 1993, IBM’s Board of Directors asked Louis Gerstner to serve as Chairman and CEO
and bring the company back from the brink of extinction. During the periods of his CEO
leadership (1993–2002), he led one of the most remarkable turnarounds in corporate
history, making IBM a dynamic, customer-focused, and value-driven company. While
there were many major strategies, decisions, and actions taken to transform IBM, Ger-
stner pointed out in Who Says Elephants Can’t Dance that:

I came to see, in my time at IBM, that culture isn’t just one aspect of the game—
it is the game. In the end, an organization is nothing more than the collective
capacity of its people to create value. Vision, strategy, marketing, financial
management—any management systems, in fact—can set you on the right path
and carry you for a while. But no enterprise—whether in business, government,
education, health care, or any area of human endeavor—will succeed over the
long haul if those elements aren’t part of its DNA.9

When Gerstner began as CEO in 1993, IBM reported the largest loss in the history
of corporate America, $8.1 billion after taxes; and 150,000 IBM members had left the
company. He noted that the media and the Wall Street analysts were already writing
IBM’s obituary, and many advised the company to begin selling off its businesses and
assets. Gerstner diagnosed the IBM workforce as demoralized, paralyzed, suspicious,
and hostile. Yet IBM had great talent, storerooms of vision, strategies, and a great source
of technical innovation. Gerstner determined that the root of IBM’s decline was what
he called the “success syndrome.” In the previous decades, IBM was extraordinarily
successful. Yet by the 1990s, it had become inward looking, insular, and locked into

C h a pte r 10 a   3 3 3
a rigid, suffocating way of thinking and behaving. So engrained were IBM’s internal
structures and culture that when the world changed they could not change to meet the
new demands and opportunities in the external environment.
Gerstner believed that IBM needed to transform every process in the company sys-
tematically. Furthermore, he strongly believed the most critical aspect of organizational
transformation is the role of corporate culture. Gerstner knew he needed to transform
the entrenched culture. That meant changing the attitudes and behaviors of employees
demoralized by the company’s failure. He cautioned that, “[C]hanging the attitude and
behavior of hundreds of thousands of people is very, very hard to accomplish. Business
schools don’t teach you how to do it. . . . You can’t simply give a couple of speeches or
write a new credo for the company and declare that the new culture has taken hold. You
can’t mandate it, can’t engineer it.” Rather than sitting in a corner office negotiating
deals and analyzing spreadsheets, he needed to convey his belief and passion through
hundreds of hours of personal appearances.
Gerstner said that changing culture “was not something you do by writing memos.
You’ve got to appeal to people’s emotions. They’ve got to buy in with their hearts and
their bellies, not just their minds.”10 Moreover, “What you can do is create the condi-
tions for transformation. You can provide incentives. You can define the marketplace
realities and goals. But then you have to trust. In fact, in the end, management doesn’t
change culture. Management invites the workforce itself to change the culture.”11
Julie Roehm was unsuccessful in her role with Wal-Mart because she did not under-
stand the culture and tried to lead a change that contrasted with the image that served
as Wal-Mart’s foundation. In contrast, Gerstner was successful at IBM because he was
able to diagnose the culture problem, adopt a successful process by which to guide a
change, and motivate the workforce to follow.

—Pause—Take a moment on reflect on the following two questions. Note your initial
thoughts and insights.
1. How would you describe your organizational culture? Take a moment to write
down some thoughts on the culture of your organization. At the end of this chapter,
come back and review these initial thoughts.
2. Have you attempted to change organizational climate or culture? Were you suc-
cessful? Why or why not?

It Is How We Do Business Around Here


Ultimately, culture reflects how the organization does its business; how it copes and
learns; and how it reflects on functionally effective decisions and actions in the past
while fulfilling the functions of providing stability, meaning, and predictability in
the present.12 In addition, an organization can have multiple subcultures and an
overarching culture. Sometimes the subcultures can be at odds, creating conflict.

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At other times, the subcultures may be useful to creativity and innovation.
The structure of the U.S. military provides a familiar example of subcultures
operating within and under an overarching culture. Though the charge to all military
Services is to support and defend the Constitution of the United States, the training
in each branch is by different processes and, therefore, the Services may not view situ-
ations in a similar way. Take the old military anecdote for how to secure a building:
In response to the order, “Secure the building!”
• The NAVY would turn out the lights and lock the doors.
• The ARMY would surround the building with defensive fortifications, tanks, and
concertina wire.
• The MARINE CORPS would assault the building using overlapping fields of fire
from all appropriate points on the perimeter.
 e AIR FORCE would take out a three-year lease with an option to buy the building.
• Th
While humorous, this example demonstrates how the interpretation of a single
word, command, or phrase can vary depending on an organization’s expectations and
experience. Two additional simple examples suggest responses to these two questions.
First, “How much is an expensive meal?” If one writes a response without knowledge
as to how others respond, people may be amazed at the wide-ranging diversity in dol-
lar amounts based on each individual’s worldview, culture, and habits. Second, when
a meeting is scheduled, “What does the term ‘on time’ mean?” Again, some cultures
expect participants to be at the meeting exactly when scheduled. Others may expect
everyone to be present at least 5 minutes prior to the meeting. Still others may believe
arriving within 15 minutes of the start is “on time.” Again, people will generally
respond based on the culture, expectations, and everyday practice and experience.

Figure 10a-1. Cultural Layers and Visibility

COL Mark Vaitkus, USA, Ph.D., PowerPoint Slide used in ICAF Strategic Leadership Course, 2011.
1

C h a pte r 10 a   3 3 5
Strategic leaders must understand the beliefs and assumptions operating within
their organizations before they can understand the values and norms, and certainly
before they can effect change.

Culture vs. Climate


Climate and culture are often confused or viewed as similar constructs. Both signifi-
cantly affect organizational effectiveness, but climate relates more closely to the tan-
gible actions and behaviors of the strategic leader in the near term. Thus, the strategic
leader can directly reflect the climate of an organization.
For example, the strategic leader can set the policy that everyone must change their
work schedule to arrive at the worksite no later than 7:00 a.m. rather than the customary
8:30 a.m. start time. Or the leader can adjust the dress code policy to require everyone
one to wear a particular uniform, shoe style, or hat. Some employees will embrace the
changes and others may become disenchanted, feel persecuted, and quit. These types of
policy changes will affect the climate of the organization but not necessarily the culture.
However, the responses that policy changes evoke will undoubtedly reflect the culture.
One can usually see or feel an organization’s climate in a relatively short time.
Such questions as, “Is there a sense that the people are self-absorbed or do they appear
collaborative and energetic? Do they seem happy in their work or disgruntled?” can
typically be answered fairly quickly.
However, because climate relates closely to leadership actions and the results of
those actions, sustaining a specific climate may become problematic in the absence
of the leader. This reflects the “When the cat’s away, the mice will play” syndrome.
When attempting to make a cultural change, the strategic leader needs to ensure that
new behaviors are truly rooted in the culture and not just the climate. The following
five questions can assist the strategic leader in identifying an organization’s climate.
Table 10a-1 provides a simple profile of organizational climate.

Table 10a-1. Organizational Climate


ACTIONS IMPACT AREAS
• L EADERSHIP Attitudes and Actions and Daily Routines • N ature of interpersonal
Behaviors relationships
• Policies (as lived out) ➡ • Role of authority
• Procedures and routines Drive Perceptions in these • Nature of work
• Goals (as lived out) Impact Areas • Focus of rewards and support

Daily Activities within an Perceived Working


Organization Environment
1
Climate depiction used by The Dwight D. Eisenhower School for National Security and Resource
Strategy faculty members.

3 3 6   L e a d in g a t t h e S t r a te g i c L eve l
Consider these questions to reveal CLIMATE:13
•W  hat is morale like around here? Are people happy to be coming to work?
•A  re people satisfied with their jobs here? Do they like the work they do?
• What do people here think about the leadership? Do they have trust and confidence
in those running the organization?
• What are the working conditions like in this organization? Is this a pleasant place
to work?
• How do people in this organization perceive their compensation? Is it commensurate
with the outside world? Is it fair in comparison to others’ pay in this organization?
Are the benefits (health care, retirement, etc.) attractive?
Culture is different. Climate can influence culture but will not change simply by
policy or leadership change. The extent to which climate will influence culture can
be related to the age and maturity of the organization. In new/start-up organizations,
climate will make a greater impact on the culture. For those the climate and culture
will both reflect what is taking place as the organization seeks the ability to survive
and prosper in its new strategic environment.
However, as an organization matures, the culture embeds into how the organiza-
tion does business. For example, if there are rules, policies, and/or procedures viewed
as bureaucratic or archaic, the organization may establish work-arounds to accomplish
the mission. As indicated by Gerstner in his efforts to turn IBM around, the more
embedded a culture becomes the more difficult it is to change. Consequently, strategic
leaders need to have an appreciation for the impact of climate and culture and what
approaches can be used to help shape them to enhance organizational change and
effectiveness. The following five questions represent considerations that can be used
to help the strategic leader identify an organization’s culture. Consider these questions
to help reveal CULTURE:14
• How are “facts” determined in this organization? How do leaders evaluate and test
reality? What are acceptable sources of information and how does the organization
import these sources?
• How do organizational leaders make decisions about the challenges of the “real
world?” Are decisions reached by consensus or are they dictated from above or from
an external source of expertise?
• How does this organization perceive its relationship to the outside world or envi-
ronment? Is it proactive, reactive, in harmony, in flux, or something else? How does
this reality align with the way this organization perceives human beings and human
activity (e.g., proactive, reactive/passive, or in harmony)?
•H  ow does this organization perceive its mission and the best way to accomplish it?
• How does this organization perceive its goals and the means by which to achieve them?

C h a pte r 10 a   3 3 7
Changing Direction—From Climate to Culture
[Note: The following example uses a metaphor comparing organizational change
initiatives represented by the “captain,” and resistance to changes of direction by the
“ship” (organization).] A ship’s captain places his hand on the helm as the ship steers to
the north. He then turns the helm 90 degrees to the right and changes the ships direction
to east. As long as the captain’s hand is on the helm, the ship continues on the eastern
course. Once he lets go, the helm automatically swings back north.
What the eastbound route illustrates is climate and the influence the leader can
have over the direction of organizational climate. As long as the captain keeps his hand
on the helm, he can forcibly make the ship go east. Yet when the captain lets go, the
ship returns to its northern course. Why? The ship’s autopilot (or the organization’s
culture) was not set to head east; it was still set to head north. Until an organization
heads “east” without the leader’s hand on the helm, the leader has not changed the
organization’s fundamental culture. As Harvard management scholar John Kotter
points out, “Until new behaviors are rooted in social norms and shared values, they
are subject to degradation as soon as the pressure for change is removed.”15
Brian Carney, author of Freedom, Inc., said “Companies can find ways to coerce,
or ‘bribe,’ their employees—and many do—into executing what they are ordered to do,
but corporate history is full of stories of how badly such workers accomplished their
appointed tasks.”16 Even if an organization has successes while the pressure to change
is still in place, the organization cannot realize its true potential until it can execute
those changes without pressure. The strategic (transformational) leader must energize
and excite the workforce, leading workers, to understand and embrace change. Make
change more than just part of the climate. Make it a part of the way the organization
gets things done; make it a part of the culture.

Short-term vs. Long-term Change


Though ultimately linked to culture, organizational climate in terms of such phe-
nomena as satisfaction or dissatisfaction, morale, and cohesion is highly susceptible
to leadership styles and actions. Many military and government leaders who are
only in their positions for a year or two are far more likely to affect organizational
climate than bring about authentic cultural change. That is because those leaders
are not in their organizational roles long enough for the workforce to disengage the
autopilot. In most cases, once a particular leader is no longer putting the pressure on
the organization to behave a certain way, the changes they initiated are difficult to
sustain. Further, military and government leaders are working within a much larger,
more institutionalized culture that typically transcends the efforts of individual
leaders to bring about lasting cultural change. The bottom line is that government
and military leaders may influence the measurable climate without significantly
altering the culture.

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Though influencing a culture during a short tenure is difficult, it is not impossible
if the leader has the right timing and approach. Vice Admiral Wally Massenburg led
a cultural change in Naval Aviation that was revolutionary. In the mid-2000’s, when
defense costs were skyrocketing due to the wars in Iraq and Afghanistan, Massenburg
developed a strategy to reduce costs and increase efficiency. He did that primarily
by changing the metrics for measuring success. The changes made a strong impact
financially and operationally and were implemented in a manner where both leader-
ship and subordinates could see the success, so buy-in by the workforce was relatively
easy and a cultural change thus followed.
Reflecting on the experience, Massenburg said, “Using the enterprise approach,
Naval Aviation changed its culture from one that spent money for the sake of spend-
ing to one that set goals and instituted business practices that balanced current and
future readiness—instead of sacrificing one for the other. We changed our behavior
and improved our processes to achieve the output we wanted, and in so doing, we
learned our business like never before, allowing us to make proactive, instead of
reactive, decisions from a more educated, empowered position, while substantially
reducing our costs.”17
Now, contrast Vice Admiral Wally Massenburg’s success in creating cultural
change in Naval Aviation in a relatively short time to the experience of General
Eric Shinseki when he changed the uniform policy regarding the Army’s black
beret. Years after initiating the policy change, many argue, the change still is not
part of the culture.

C h a pte r 10 a   3 3 9
The “Black Beret”—A Mini Case Study
In June 2001, following a directive by Army Chief of Staff General Eric Shinseki, all sol-
diers began wearing the black beret as standard uniform issue. The black beret was, to
that point, worn only by the elite Army Rangers.18 To become an Army Ranger, soldiers
must complete an extremely rigorous 8-week training program. The selection criteria
are very high and of those who enter the program only 20 to 30 percent actually gradu-
ate.19 Therefore, when Rangers who had “earned” their black berets learned the Army
authorized all soldiers to wear them, many felt disenfranchised.
General Shinseki announced his intent to implement the new uniform policy in
October 2000, stating the decision was “about change . . . [and would] . . . be symbolic
of our commitment to transform this magnificent Army into a new force—a strategically
responsive force for the 21st century.”20 The general added, “We are transforming this
most powerful Army from its Cold War-legacy force into an objective force that will be
strategically responsive and dominant for all the broad range of missions we are asked
to perform.”21 However, many current and former Army Rangers did not see it that way.
They became very vocal with their objections, resulting in the President asking DOD to
“review the Army’s decision” regarding this uniform change.22
Ultimately, Defense Secretary Donald Rumsfeld and Deputy Defense Secretary
Paul Wolfowitz supported Shinseki’s decision, with Wolfowitz stating, “The headgear
change is linked to the Army’s plans to transform from a heavy force to a lighter, highly
deployable force over the next 10 years.”23 Moreover, Shinseki added, “It is about our
excellence as Soldiers, our unity as a force, and our values as an institution.”24
Though the Army did agree—as a means of distinction—to allow Rangers to wear
tan berets, the decision regarding the black beret remains a sore spot for many current
and former Rangers. For example, in 2011, former Army Ranger and Procter and Gamble
CEO Bob McDonald said he still felt disenfranchised by the decision: “I was a Black Beret.
I was a Ranger. To give everyone a black beret is misguided.”25
At the time of the decision, Deputy Defense Secretary Paul Wolfowitz indicated that
he hoped the black beret decision would be a catalyst for change and would be ingrained
in the culture within 10 years. However, based on Bob McDonald’s emotional comments
regarding the black berets, and as current reviews of various Internet blogs indicate, this
issue continues to be controversial with both active and retired soldiers today.
While the black beret may be part of the Army’s climate, it certainly is not part of
its culture. It will not become part of the culture until it is widely accepted and no one
in the organization thinks about it anymore—as reflected in The New Yorker cartoon
above. This example shows that a leader must be mindful when making changes of
those things that hold an emotional connection and a long-standing, deeply engrained
identity for those in the organization.

3 4 0   L e a d in g a t t h e S t r a te g i c L eve l
—Pause—Take a moment to reflect on the following two questions. Write down your
initial thoughts and insights.
1. Shinseki felt the beret change would add value to the institution as a whole and
create a culture of unity. Ten years later, that culture change remained elusive. As
a strategic leader, what steps would you include while leading a culture change to
ensure the culture you want to create is taking hold?
2. How could Shinseki and other Army leaders use the Army culture to their advan-
tage? In your organization, what aspects of your organizational culture could you
use to foster achieving strategic goals? What aspects inhibit change?

Ways to Influence Culture


Understanding and operating within an organization’s culture is one thing—chang-
ing it is another. To change a culture is a complex endeavor. A group, a unit, or any
organization forms culture based on a shared frame of reference. Once an action
becomes part of the culture, everyone operating within that group goes about doing
things in the same way without question—sometimes for decades.26 Take the National
Aeronautics and Space Administration (NASA), for example. The NASA culture
remained basically unchanged for 30 years. It took a government-appointed investiga-
tion review board—after two space shuttle disasters—to convince the leadership that
their organizational culture was a significant underlying problem and that changing
the culture needed to be NASA’s top priority. Sean O’Keefe, who was head of NASA
at the time, knew he had to set steps in motion that would move NASA from a “prove
to me it’s unsafe to launch” culture to a “prove to me it is safe to launch” culture.27
Changing 30 years of “the way we do things around here” was a massive undertaking
involving power, politics, media scrutiny, and a good-ole-boy network, to name a few.
Jacobs says a strategic leader must know how to recognize when a cultural change
is required for continued organizational viability. Certainly two space shuttle disasters
are clear signs that things must change. Even though these NASA crises “were more
dramatic than many others, the cognitive shortcomings that led to these crises are
common to many other organizations and may in fact be the norm, not the excep-
tion.”28 Strategic leaders need to be able to recognize the necessity for change before
disaster strikes. Jacobs explained:
The strategic challenge is to make the right changes in the right way, balanc-
ing necessary change against the crucially important maintenance of stabil-
ity. . . . And, even though the strategic world is an untidy place, the process of
culture change still can be rational at least to some extent. Of course, subjec-
tive elements will always be involved. As examples, the emotional resistance
of members who fear change because it brings the unknown; the battles from
entrenched power holders who fear the loss of power; and the concern of more
senior members of the leadership who may have a legitimate concern about the

C h a pte r 10 a  3 41
length of time required for change in relation to the amount of time they have
remaining in the organization. All these are challenges to strategic leadership,
because, without revolution, only senior leaders can effect real culture change.
Effective leadership must include open dialogue, willingness to accept challenges,
frankness about the uncertainties of change, and realistic revelation of felt rea-
sons for the need for change.29
Leadership authors Marshall and Molly Sashkin suggested three basic methods
a leader can use to construct organizational culture:30
• Leaders define an explicit organizational philosophy—a clear and brief statement
of values and beliefs.
• Leaders determine policies and develop and implement programs and procedures
that enact the organizational philosophy.
• Leaders model the values and beliefs espoused in their organizational philosophy
through their daily actions and consistent practices.
Harvard Professor and leadership scholar John Kotter added, “Culture changes
only after you have successfully altered people’s actions, after the new behavior pro-
duces some group benefits, and after people see the connection between the new
actions and the performance improvement.”31
Jacobs posited, “Strategic objectives . . . must be clearly linked to strategic
vision. . . . Strategic vision must be developed as a joint product of the top leader-
ship . . . and its key members.”32 Recall VADM Massenburg’s cultural change in naval
aviation noted earlier. He led change by walking around, asking questions, getting
inputs, and ultimately changing the metrics for success. He clearly communicated
his vision and his goals when setting and implementing these new metrics. This
communication resulted in greater understanding of the expectations and thereby
greater buy-in.
Terry Terriff, now a professor at the University of Calgary, suggested that there
are three basic elements necessary for changing organizational culture. First, there
needs to be a change in the narrative (communication) that provides the vision of the
desired future and “furnishes a definition of the altered cultural attribute.” Second,
there must be a change in organizational members’ behaviors. And third, organiza-
tional members must “see that the change provides some group benefit, in terms of
performance improvement.”33
Also, recall Louis Gerstner’s cultural change at IBM. He created the conditions
for transformation by personal communication, providing incentives, defining goals,
and then inviting the workforce to change. Prior to Gerstner’s arrival, the existing
IBM leadership evolved to looking inward. These leaders were not paying attention
to their customers’ changing needs. As a result, the workforce followed this lead and
the development of new products and services stagnated, resulting in the IBM crisis.

3 4 2   L e a d in g a t t h e S t r a te g i c L eve l
General Charles Krulak: Changing the U.S. Marine Corps
Culture—A Mini Case Study
Making transformational change in a military organization is difficult when it is steeped
in tradition, unit and organizational symbols, rituals, and cultures that are often honed
in combat. Consider the U.S. Marine Corps.
Terriff pointed out that General Charles Krulak, U.S. Marine Corps Commandant
(1995–1999), “perceived that the United States, and hence the Corps, were in a ‘strategic
inflection point,’ that is, a time when, for the military, ‘emerging technologies coupled
with an agile mindset, if exploited, will fundamentally alter and substantially increase
our warfighting capability.’”34 Krulak argued that in the VUCA environment, the Marine
Corps must “take a ‘leap forward’ in the development of new concepts for the future
battlefields, that it should take a revolutionary rather than evolutionary approach to
preparing for the twenty-first century.” To be prepared for future warfare, Krulak was
convinced the Marine Corps needed to instill “a permanent mindset of creativity and
persistent innovation,” and his job as Commandant was to “jump start” the transfor-
mational process.35

Change Strategy
Krulak implemented a two-part strategy. The first was to “hit the ground running” with
his vision and rationale for a cultural change from maneuver warfare to innovative and
creative warfare. The second was to implement a number of initiatives to gain buy-in
and necessary behavioral change for future battlefield success, e.g., planning and
strategy laboratories and experiments to explore, test, and validate future concepts,
strategies, and tactics.

Change Execution
To implement the first part of his strategy, selling the vision and need, Krulak promul-
gated his vision the day he became Commandant via his Commandant’s Planning Guid-
ance. He was persistent in his effort to articulate that the Corps culture “must embrace
the winds of change, make them our ally, and make them our force multiplier.”36 Krulak
explained:

When I became Commandant, I knew I only had one year to make real “trans-
formational change” and three years to do all in my power to “institutionalize”
that change. I attempted to accomplish this by publishing the “Commandant’s
Planning Guidance” (CPG) on the day I assumed command of the Corps. Not
only did it spell out a “vision,” but also it established a timeline and assigned
individual accountability. It then became incumbent upon me as the “Strategic
Leader” to communicate the vision and get buy-in. This involved over 750,000

C h a pte r 10 a   3 4 3
miles of flight . . . going around the Corps. Unfortunately, communication is
easier said than done! Any “Strategic Leader” or change agent must be pre-
pared for the naysayers. He must be prepared to lay everything on the line to
drive his vision home.37

He stated, for example, that creativity and innovation were essential if the naval
force were “to anticipate events and win across the spectrum of conflict.”38 Moreover,
in the “Commandants Planning Guidance Frag Order,” he argued that the Corps must
institutionalize innovation and focus “efforts on creating a Marine Corps whose mate-
rial and human assets are versatile, agile, and adaptable to a wide range of operating
environments.”
To effect the desired behavioral change, Krulak implemented a number of major
initiatives. Examples included:

• Instituted what was termed the “Sea Dragon” process of Advanced Warfighting
Experiments (AWE). For example, the AWE “Urban Warrior” focused on what Krulak
envisioned as urban warfare—often referred to as the “Three Block War.”39
•C
 reated the Commandant’s Warfighting Laboratory (later renamed The Marine Corps
Warfighting Laboratory (MCWL)) to look into the future, e.g., 20 years out, and think
about warfare in the future and “to develop operational concepts of how to fight, to
investigate advanced technologies to support these operational concepts, and to
conduct concept based experimentation to test visionary ideas and technologies.”40
• E ncouraged all Marines to communicate their creative and innovative ideas and
insights directly to the Commandant by email (referred to as Marine Mail). Krulak
explained the process:

I had a strategic group that was associated with a specific e-mail address. The
Marine Mail would come right in to them. Marine Mail would help answer three
fundamental questions: (1) What are we doing today that we shouldn’t be doing
at all? (2) What are we not doing today that we should be doing? (3) What are
we doing today that we could be doing better, and how?

This communications option did not violate the chain of command; you had to
make sure of that. At the end of the day, the good comments would be farmed
out, whether it was manpower related or acquisition related or to the warfight-
ing lab or to [Marine Corps Combat Development Command]. The emails would
go to those people; they would look at the idea, and then give me a response.
We also placed a Marine Mail section in every base newspaper and we would
take four or five of the really good ones and put it in there, and give a response.
It got everybody in the Marine Corps believing, “Hey, the Commandant will
listen to what you have to say. He’s not always going to do what you want, but
he’s going to listen.” It made a huge impact.41

3 4 4   L e a d in g a t t h e S t r a te g i c L eve l
Results
Upon the end of his Commandant tour in June 1999, Krulak did not achieve full institu-
tionalization of his desired changes. For example, 4 years later (2003), the view of the
majority of Marine officers indicated the Corps was open to innovation, but they stated
there was no pressing need to innovate.42 Terriff posited:

These findings are consistent with the observation in the 2001 Marine Corps
Strategy 21 that, “he [General Officers Futures Group] concluded that the Corps
requires only marginal adjustments to successfully adapt [for the future]. We do,
in fact, have it right.” These opinions reflect a view that the Marine Corps had
no need to embrace relentless change and to strive for persistent innovation,
had no need to experiment so that it was prepared to operate and fight in an
unknown future environment.43

Reflecting this view, MCWL’s focus changed from experimenting with future warf-
ighting concepts to a more narrow one that provided usable products to the current
operating forces.
Compare Krulak’s strategy and actions to Terriff’s three basic elements to changing
an organization’s culture:

• T he need for a new narrative that reflects the vision and desired future: Krulak continu-
ously articulated a consistent message stressing the need for change.
•O
 rganizational members’ behaviors needed to change: Krulak implemented a number
of initiatives to change Marines’ behaviors, e.g., Sea Dragon Experiments, MCWL, and
Marine Mail. Terriff argued, “the initiatives instituted did not serve to alter the behavior
of Marines, or at least of enough Marines.”44
•O
 rganizational members must see benefits from instituting the change. While Marines
directly involved with the MCWL and Sea Dragon Experiments gained insights and
enhanced mental models and frames of reference for future warfare scenarios,
unfortunately, most Marines did not see any tangible, near-term results or benefits.
In essence, more Marines saw issues, vagueness, and concerns in adopting his initia-
tives rather than enough perceived tangible benefits.

Summary
Krulak may have failed in his efforts to reshape the Marine Corps culture during his
tenure. However, as evidenced in their combat experiences following 9/11 in Iraq and
Afghanistan, in 2004 the Marines Corps began engaging in combat as Krulak envisioned
back in the 1990s! One could conclude that the change in the Marine Corps warfighting
strategy and tactics not only vindicates Krulak’s vision, but also demonstrates that his
efforts to change members’ thinking and behaviors created a cadre of Marine Corps lead-
ers who were “versatile, agile, and adaptable to a wide range of operating environments.”

C h a pte r 10 a   3 4 5
—Pause—Take a moment to reflect on the following questions. Note your initial
thoughts and insights.
1. If you were General Krulak, are there additional strategies or different steps you
would take to enhance your chance for institutionalizing the necessary cultural
change?
2. What steps do you believe are necessary to transform an organization’s culture?
Would it work in your current organization? How do you know?

Reinforcing the Culture Needed by the Strategic Leader


Programs, systems, structures, and cultural forms can emphasize organizational
core values and beliefs that, in turn, help shape more effective (and lasting) behav-
iors and processes. Yukl notes that setting up appropriate rewards is essential to
behavioral change. “Failure to recognize contributions and achievements sends a
message that they are not important.”45 Jack Welch, former CEO of General Elec-
tric (GE), adds, “Clarity around values and behaviors is not much good unless it is
backed up. To make values really mean something, companies have to reward the
people who exhibit them and ‘punish’ those who don’t. Believe me, it will make
winning easier.”46
For example, Linda Washington, former executive at Xerox, said the Xerox val-
ues included respecting the opinions and suggestions of all employees. Washington
felt Xerox leadership did a good job of relaying and reinforcing those values to the
employees too. She recalled when a new product was coming down the assembly line
and one of the employees shut down the line in mid-production. Washington noted,
“An assemblyman stopped the manufacturing of a piece of equipment because he
knew there were issues. He knew it was wrong, so he stopped the assembly line! He
didn’t get in trouble for doing that because we were all taught to go slower to finish
faster—and to get it right the first time. He felt and was empowered. We would have
a terrible reputation if the product failed.”47
Although many scholars and practitioners suggest that symbols, rituals, cer-
emonies, stories, and team-building training that emphasize values are effective
in reinforcing a desired culture, Sashkin and Sashkin held a different view. They
argued, “these approaches don’t construct culture.” They posited, “Policies, pro-
grams, and organizational systems that carry out ‘standard operating procedures’
are what really build organizational cultures. These traditional aspects of organi-
zational operations may not be very exciting. They are, however, absolutely crucial
for constructing culture.”48

SAS—An Example
Jim Goodnight, CEO of SAS, a business analytics software and services company,
makes it his business to put his focus on his employees. It was ranked by Fortune as

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the number one place to work in both 2010 and 2011.49 Goodnight believes focusing on
people and relationships leads to more productive, satisfied, and dedicated employees.
Referring to his employees, he observed, “95 percent of my assets drive out the front
gate every evening. . . . It’s my job to bring them back.”50
As stated on the SAS website, with a section dedicated specifically to their cul-
ture, “The SAS culture is based on trust, flexibility and values. The company has been
recognized for its culture, which encourages creativity and innovation while helping
employees balance work and life. SAS believes happy, healthy employees are productive
employees.” SAS believes a balance between a healthy work-life and a healthy work-
place environment is critical to success for both employees and business.51 In addition
to a stellar benefits package and flexible work schedule options, SAS also “offers a wide
range of benefits, focused on reducing stress and distraction, letting employees focus
on their work. This approach creates an environment that integrates company values
with employee needs.”52
These policies and initiatives keep turnover low and job satisfaction and pro-
ductivity high. Says one manager: “People stay at SAS in large part because they are
happy, but to dig a little deeper, I would argue that people don’t leave SAS because they
feel regarded—seen, attended to and cared for. I have stayed for that reason, and love
what I do for that reason.”53 An employee added, “I just can’t imagine leaving SAS,
and I’ve felt that way for a very long time. . . . If somebody offered to double my salary,
I wouldn’t even think about it.”54

Embedding Culture
The things a strategic leader pays attention to are also powerful drivers in develop-
ing an organization’s culture. This is why most strategic leaders make the point to
repeat over and over the purpose of the organization and its vision. That helps to
embed those into the organizational psyche—to make it a shared assumption that is
no longer debated. This is not just true for the things the leader verbalizes publicly
on company direction and vision; it is true with everything the leader pays atten-
tion to—verbally and nonverbally. Even a leader’s silence on a situation can send
a message. Organizational members pay close attention to everything their leader
does. A.G. Lafley, when he served as Chairman and CEO of Procter and Gamble,
explained, “culture is about behavior; and believe me if you are in a leadership posi-
tion, your behavior is watched every second. And people watch what you do; they
don’t just listen to what you say.”55
Leading cultural scholar Edgar Schein says leaders exert influence with everything
they do. “This can mean anything from what they notice and comment on to what
they measure, control, reward, and in other ways deal with systematically. Even casual
remarks and questions that are consistently geared to a certain area can be as potent
as formal control mechanisms and measurements.”56 Take the following examples:

C h a pte r 10 a  3 47
• A leader verbally promotes an “open door” policy, yet spends the day with the office
door closed (“Open door, closed mind”).
• A leader states he or she values their employees, yet does not personally greet the
receptionist, file clerks, production workers, and janitors.
• A leader says customer relationships and service are top priorities and they want
employees to get to know customer needs, yet rewards sales teams for the number
of sales calls made rather than measuring and ensuring the quality of those calls.
• A leader says teamwork is important in the workforce, yet rewards team members
for individual performance rather than team performance.
• A leader states he or she values inputs and opinions, yet concludes meetings (or such)
with negative overtones and closed-ended questions such as “There aren’t any ques-
tions are there?” rather than open-ended ones like “What questions do you have?”
or “What are your thoughts or comments?”
Schein suggested that the following major considerations are important to stra-
tegic leaders while embedding culture:57

Primary Embedding Mechanisms


•w
 hat leaders pay attention to, measure, and control on a regular basis
•h
 ow leaders react to critical incidents and organizational crises
•h
 ow leaders allocate resources
•h
 ow leaders role model, teach, and coach
•h
 ow leaders allocate rewards and status
•h
 ow leaders recruit, select, promote, and excommunicate.

Secondary Articulation and Reinforcement Mechanisms


•o  rganizational design and structure
•o  rganizational systems and procedures
• r ites and rituals of the organization
•d  esign of physical space, facades, and buildings
• s tories about important events and people
• f ormal statements of organizational philosophy, creeds, and charters.58

Integrating Cultures
Strategic leaders should keep their focus firmly on the culture of their own organization but
also be very mindful of the cultures within any organization with which they might need
to interact. The leader should carefully consider the integration and alignment of the two
cultures (or more if subcultures are involved). Leaders should be vigilant and thorough,
making sure they understand the impact each culture may have on the strategic vision of
the other organization, and then deciding on how to proceed.

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Multicultural DHS—An Example
When the Department of Homeland Security (DHS) was created, 22 separate agencies
merged under one Federal Governmental umbrella. This was a massive reorganiza-
tion, bringing existing divisions, such as the Federal Emergency Management Agency
(FEMA), the Coast Guard, and the Border Patrol, under the new organizational umbrella
of DHS. Each of these divisions had their own culture—their own ways of doing things.
The DHS leadership allowed the existing cultures within those divisions to remain
unchanged. Some argued that this decision was the root of the failures seen during Hur-
ricane Katrina. FEMA did not learn to work effectively with the other organizations and
went about doing things its own way. Confusion resulted regarding who was in charge
and what the other components were doing. Others maintained that this DHS setup—
allowing each division to maintain its own identity, its own specialty, and its own way of
doing things—worked successfully. They conclude it allowed each division to perform
its own specific functions and focus only on specific areas of demonstrated expertise.
Indeed, a 2007 report by the Homeland Security Culture Task Force concluded that
a single DHS culture would be unwise. It stated, “given the diversity, history and strong
culture of many of its component organizations, there can be no hierarchically imposed
‘single culture’ within the Department . . . [however] an overarching and blended cul-
ture can be developed that is based on threads of common values, goals, and focus of
mission among DHS Headquarters and its component organizations.”59 Established in
2002, DHS suffered setbacks, failures, and leadership changes all before the 2007 report
offered guidance on the best way to move culturally forward with the organization. While
helpful to DHS, in the business world strategic leaders rarely have the luxury of this
extended period of time, or access to the resources of a federally appointed task force,
to advise them on the best way to manage culture in a merger or acquisition. Making the
decision to lead a cultural change, or keep an existing one, is a serious decision for the
strategic leader—and equally important is to consider the consequences of that decision.
In any merger and acquisition, the strategic leader should pay close attention to
the cultures of all of the organizations involved. They must acknowledge and operate
within each culture and find the best way to bring them together. Reaching these deci-
sions is critical for the strategic leader. One step in the wrong direction and things can
go bad—and fast. However, if the leader can identify and reinforce the right approach,
it can make for a stronger, more productive organization.

Wells Fargo Wins—A Mini Case Study


David Zuercher, Executive Vice President, International and Insurance Services,
Wells Fargo, knows this scenario all too well. Zuercher was at the helm of the merger
of Wells Fargo and Wachovia. Wachovia was struggling and on the verge of going out

C h a pte r 10 a   3 4 9
of business—and not known for its warm and friendly culture—before being taken
over by Wells Fargo. Understandably, the Wachovia employees were guarded and
cautious about the merger. Zuercher wanted Wachovia to develop the Wells Fargo
culture—one that was warm and had a strong desire to retain employees. He knew
the Wachovia people needed to feel welcomed and valued in the Wells Fargo family.
He knew he needed to say that, but he also knew his actions needed to convey that
message. In Zuercher’s words, “It required a lot of really personal touch.”60
Wachovia had a greater international presence than Wells Fargo. In fact, Wells Fargo
was a company that many viewed as not wanting to be too involved in the international
market place. Therefore, Zuercher knew he had to make sure he addressed that differ-
ence and strongly focus on retaining as many international Wachovia employees as
possible. He teamed Wells Fargo employees with Wachovia employees to learn from
one another, and Wachovia outnumbered the Well Fargo folks on the international busi-
ness side two to one.
Zuercher reinforced his word with actions. For example he:

• d elegated all his operational responsibilities to senior Wells Fargo executives and
set out to meet the people of Wachovia and their customers in person. He visited 29
countries in 9 months
• b uilt a website where Wachovia employees could message him directly from anywhere
in the world with questions or comments and responded to them personally
• u sed the website to send out continuous communication updates on the merger to
Wachovia employees
•m
 ade sure Wells Fargo invested money in booths specifically marketing toward an
International Market.

As a result, in four months Wachovia employees were asking if they could start
wearing Wells Fargo logos, shirts, and lapel pins. They began scratching out Wachovia
on their business cards and replacing it with the name “Wells Fargo.” Zuercher received
numerous emails to the effect, “I have had more communication from leadership in this
short time from Wells Fargo than I did in 20 years from Wachovia.” His efforts were pay-
ing off. The Wachovia employees believed Zuercher’s leadership message was genuine,
and therefore Zuercher had buy-in from them.
Alternatively, with such a significant effort to reach the Wachovia employees, how
did Zuercher get buy-in from the Wells Fargo employees on the merger?
In the weeks leading up to the closure of the merger, Zuercher met extensively with
Wells Fargo leadership. He went through the best solutions for a combined organiza-
tional chart, ran through options with his leadership teams, and made the final decisions.
He laid out the strategy and the vision of the combined company for all his Wells Fargo
leadership to see. Zuercher said, “Once everyone could see the facts and those were
articulated, folks came on board fairly quickly.”61

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The merger between Wells Fargo and Wachovia closed on December 31, 2009 at
11:59 p.m. as a symbolic measure of a fresh start with a new year. By the second week
of January, the new organizational chart contained some Wachovia employees working
for Wells Fargo employees and vice versa. Everyone was on the same page, everyone
understood the mission, everyone had buy-in, and everyone shared the same culture.62

—Pause—Take a moment to reflect on the following questions. Write down your


initial thinking and insights.
• Which of these stories, DHS or Wells Fargo, can you relate to more closely?
• When were you in a situation where cultures needed to be blended? What were
some successes? What were some challenges?
• What insights can you gain by comparing the facts in these two examples?

Empower Action
In 2004, Edgar Johnson conducted a workshop for the Institute for Defense Analyses
(IDA) on the implications of transforming the culture of DOD. In this, he said, “Behav-
ior often follows the principle of least effort. Especially in periods of rapid change,
existing organizational procedures and processes may inhibit rather than enable the
desired changes in behavior. Unless altered, the old procedures and processes signal
that the new behaviors may not be as important as stated. In fact, the old procedures
and processes may reward continuing the current behavior at the expense of the new,
transformational behavior.”63
In other words, change is difficult. When strategic leaders invite the organization
to change, they must be prepared to clearly articulate the vision and chart the course
for change. They must demonstrate in writing and in action the desired changes and
the reasons for those changes. They must also be prepared for resistance, sometimes
to the point where employees will leave the organization rather than change.
Resistance can also come in the form of employees deciding to take no action
rather than follow the new procedure. This choice is often due to a lack of trust. The
employee does not believe that the new procedures are in fact the new way of doing
business. Given that strategic leaders must earn trust, they must take care to display
actions, both verbally and nonverbally, that assure the employees that the new proce-
dure is the desired one. Doing this sometimes requires taking a risk. Often it requires
patience and continued positive reinforcement while inviting the workforce to change,
as profiled in the following examples.

IBM Example 1: Trust Is Earned64


Today, IBM is still in the process of changing its culture. Sam Palmisano, IBM CEO who
succeeded Lou Gerstner in 2002, initiated a number of virtual meetings over the Internet,

C h a pte r 10 a  3 51
e.g., determining the new values for IBM, which were called “culture jams.” During some
of these “jams,” it was revealed that “many people near the bottom of the hierarchy
were frustrated because they didn’t have the authority to make decisions on their own.
They needed to get prior approval for seemingly everything. They couldn’t book their
own airfares if they needed to travel on short notice to solve business problems.”
An advisor to Palmisano suggested that $5,000 be set aside for each of IBM’s
lowest-level managers to spend at their own discretion, no questions asked. Palmisano
said to do it. IBM’s financial people expressed concern. With 30,000 managers, IBM
was to allocate $150 million with no way of tracking where the money went—no proper
accounting controls. However, Palmisano stuck by his decision, saying, “This is trust.
This is a hundred and fifty million dollar bet on trust.”
Following IBM’s announcement of the new spending authority, the managers could
not seem to accept the fact that they were being trusted to spend this money without
approval. It did not yet fit their frame of reference. At the end of the first year on the new
plan, the managers spent only $100,000 of the $150 million.
IBM’s top executives gave the managers the power to change the way they did
things. “[T]hey didn’t just talk about pushing down authority; they put up the money
and officially changed the company’s policies to enable it to happen.” Yet, even though
the managers knew senior leadership heard their frustrations and took steps to counter
those concerns, they did not embrace the change right away.

—Pause—Take a moment to reflect on the following questions. Write down your


initial thinking and insights.
•A fter conveying frustration over the travel process and thenbeing given an option
that would alleviate their frustration, why do you think the managers were reluc-
tant to change the way they organized their travel?
•H ave you seen this type scenario in your organization? What happened?
•H ow could the strategic leader ensure the managers felt comfortable using the new
procedure while meeting their customer’s service needs?

Clearly, it takes a long time for a leader’s actions to change actions, attitudes, and
feelings in a mature organization. As Alan Deutschman explained:
After years or decades of experiencing the old ways, people aren’t going to believe
you when you tell them that things are different now, even if they really are dif-
ferent. People need to experience it first. . . . It’s not enough to say that you want
the frontline managers to spend money without asking for your approval. The
frontline managers need to see that someone down the hall made an indepen-
dent decision to charter a private plane to fly out to help a customer in an emer-
gency—and got promoted, not fired, for the move. Our beliefs—the frames [of

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references] embedded in our unconscious minds—are formed through repeated
experience over time, and usually they can be reshaped only by experience.65

IBM Example 2: Changing Leadership Role


Louis Gerstner brought IBM back from the brink of extinction by leading a radical shift
in the way the organization viewed creating and growing new business. The resulting
cultural changes saved the organization. However, even 5 years after the cultural shift
began, Gerstner’s successor, Sam Palmisano, knew he had to continue leading and
managing change. Palmisano’s 5- to 7-year strategic mission was to find and develop
new areas of business, which could grow into a billion-dollar operation. He knew these
endeavors would require star performers.
Senior Executive Rod Adkins, leading a team of 35,000 members that generated
$4 billion in revenue, was a superstar. Yet when he was approached about moving into
a new role, he was not thrilled. In fact, he thought the assignment was a demotion.
Operating in a culture that linked status to the amount of revenue generated and the
number of employees on the leader’s team, Adkins perceived the offer to head a start-up
division that had no revenue and no team, was IBM’s way of stripping him of his power
and status. Grasping the new culture, even 5 years into the making, was difficult for the
senior executive. It was not until Palmisano personally and repeatedly outlined why he
wanted Adkins to move and assured him that he was indeed a valued and needed IBM
member that he agreed to accept the new position.
Even after having successes in leading an organizational culture change, strategic
leaders need to keep their thumb on the pulse of the culture. They need to ensure that
all employees at all levels understand the strategic mission and why the leadership is
making changes to reach that mission. In this example of IBM and Rod Adkins, if Palmi-
sano did not take steps to reassure Adkins of his value (earn his trust) and to dispel
his initial perception as well as clarify why he was making the changes, Adkins might
have felt unvalued and disgruntled and eventually quit. Instead, 3 years following his
change in assignment, Adkins’ start-up division in wireless technology was producing
$2.4 billion in annual revenue.66
Additionally, Palmisano and Adkins reinforced to other IBM executives that focus-
ing on new ideas was not a career killer, as in the past, but in fact an opportunity to
enhance their standing within the operations of IBM as a whole. It demonstrated that
the company rewarded innovation. It demonstrated the new way IBM was going about
getting things done.

—Pause—Take a moment to reflect on the following questions. Note your initial


thoughts and insights.

C h a pte r 10 a   3 5 3
1. How can a strategic leader ensure valued team members KNOW they are valued,
especially when asking them to take on a new, risky proposition?
2. A strategic leader often cannot have conversations with every employee offered
a new position within the company. In the Adkins case, the dollar amount was
significant and Adkins was a high-visibility player. What if top leadership offered
a mid-level manager the opportunity to start up a new, smaller division? How
can the strategic leader know if those lower-level managers feel valued and do
not misinterpret a request for them to “change?” How do they gauge the level of
trust at all levels?

Aligning Culture
Lafley expanded on the idea of trust and its importance to organizational culture. He
explained, “Culture is all about behaviors. . . . In our company, culture is incredibly
important. . . . Our first two core values are integrity and trust; and I think one of the
things that makes the P&G engine go is that even if we have never met another P&Ger,
we trust him or her implicitly because we know we share the same purpose. We know
we share the same values. We know we are motivated by the same mission and we
know we are working on the same strategy and goals.”67
In fact, when Procter and Gamble acquired Gillette, another company with a strong
emphasis on trust, 96 percent of the shareholders of both companies supported the
acquisition. One large portfolio manager who owned stock in both companies said, “The
pair have similar cultures and have made strides in recent years positioning themselves
for the future.”68 It was the strength and similarity in both company cultures that made
each trust the other and that created conditions for a relatively seamless merger. However,
similar cultures and seamless transitions do not always happen in mergers and acquisi-
tions. Consider the merger of America Online (AOL) and Time Warner.

Failed Merger—AOL and Time Warner Mini Case Study


Taught by some business schools as the worst transaction in history, the AOL/Time
Warner merger is a classic example of what happens when diverse cultures attempt to
merge.69 Ted Leonsis, former AOL Vice Chairman, who opposed the merger from the
beginning, spoke at length about the disaster of the merger. On why the merger seemed
like a good idea, Leonsis explained, “The strategic rationale behind the merger has been
proven a hundred times.” Elaborating that, “Conceptually, if you were to merge the lead-
ing New Media organization with the leading traditional media company, it would not
be irrational to expect it to become the leader in this next-generation media platform.”70
However, Leonsis knew from years of working with Time Warner divisions that the
structure and cultures of the organizations were dramatically different.71 Table 10a-2
provides an overview of the two company’s misaligned structure and cultures.72

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Table 10a-2. Misalignment of AOL and Time Warner Cultures
AMERICA ONLINE (AOL) TIME WARNER
A single AOL culture, a single AOL vision— Multiple cultures with no real over-arching
each line of business was in service to the Time Warner culture. Lines of business vary,
AOL brand, not as individual P&L’s. each with its own CEO, brand, compensation
structure, and P&L.
Total commitment to AOL Commitment to the division where they work
Lower salary with high stock option (com- Higher salary + bonus without stock options
pensation increased as the AOL stock value (paychecks and bonuses remained regardless
increased) of Time Warner stock prices)
Centralized Organization Decentralized Organization
Divisions support one another and did not Divisions within Time Warner are sometimes
work in competition competitors
Employees say, “I work for AOL.” Employees say, “I work for HBO or Sports
Illustrated or Warner Brothers, etc.,” not “I
work for Time Warner.”

In the end, AOL stock prices collapsed.73 The fallout included countless executive
upheavals and job losses, retirement accounts wiped out, Justice and Securities and
Exchange Commission investigations, and about 85 percent value loss of the compa-
nies compared to the day they merged.74
Leonsis recalled, “Before the merger, AOL had total commitment to the mis-
sion. . . . There was total commitment. Post-merger, there was a little of this and a
little of that, culturally, depending on which manager won out, if you will. That was
the management style, and it is not endemic just to us. Most mergers fail because of
that.” In the end, Leonsis cited cultural clashes as the root cause of the merger’s fail-
ure, saying, “What I have learned is that complex misalignment of your goals, of your
financial incentives, of your culture are almost impossible to undo and get working.”75

—Pause—Take a moment to reflect on the following questions. Write down your


initial thinking and insights.
1. Given that blending these two organizations seemed logical from a business
operations perspective, how can you better ensure you (and your team) consider
all relevant information when looking to merge or align groups, divisions, units,
or organizations?
2. If you were advising Leonsis, what approach would you recommend?

Societal Cultures
Recall the Jacobs quote from the beginning of this chapter: “Strategic decisionmakers
must have a profound understanding of culture—both organizational and societal—

C h a pte r 10 a   3 5 5
for two reasons. First, they need to operate effectively across cultural boundaries. Sec-
ond, they may need to effect cultural change in order to change either organizational
or societal behavior in a direction mandated by strategic vision.”76
Throughout this chapter, various aspects of organizational culture were examined.
However, with the reality of globalization, it is important to point out that a strate-
gic leader needs to consider and understand the influence societal cultures have on
customers and employees, e.g., a country’s or society’s cultures—including (but not
limited to) language, ethnic groups, diversity, and Western culture versus Eastern cul-
ture. Today, government, nongovernment, military, business/industry, and nonprofit
organizations find themselves operating in more countries and with a more diverse
customer and employee base than ever before.
Accordingly, Bob McDonald says he tries to follow “The Platinum Rule”: “Treat
others the way THEY want to be treated.” This is different from The Golden Rule of
“Treat others the way YOU want to be treated,” and the difference is most important
when considering the impact various societal cultures may have on your organization.77
The Golden Rule reinforces a person’s own views, thereby limiting the individual’s
ability to communicate and collaborate with others. The Platinum Rule considers how
others view the way things are going. It forces the leader to understand and consider
the views of other people within the organization, thus allowing that leader to more
effectively lead and motivate employees.
General Casey provides another cultural perspective. He argues that at the stra-
tegic level, “leaders need to be attuned not only to the culture of the country they are
operating in, but to the impacts that the organizational cultures of their own organi-
zations can have on their ability to accomplish their missions.” As an example, when
he served as the Commanding General, Multi-National Force in Iraq, he “worried
that our ‘can do’ attitude would make it harder for us to get the Iraqis trained and
responsible for their own security—the precondition of our ultimate success. I saw
the impact of this attitude myself in Bosnia and Kosovo. In complex environments, it
is very difficult to get even simple things done, so the natural tendency is to do them
yourself [creating a dependency relationship]. I had to find a way to get our troops
to focus on Iraqi solutions without damaging the ‘can do’ spirit that sets American
servicemen and women apart, and that we would need to succeed.”78
Societal cultural differences can be significant or they can be subtle. Consider the
following scenario:
An American is driving down the road in a car. A dog runs out into the street in
front of the car. The car hits the dog and the dog dies. The dog’s owners, a Japa-
nese couple, come running towards the scene of the accident. They are crying.
What happens next depends on the cultural perspective. The American response
could be for the driver to apologize profusely for killing the beloved family dog and for

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causing this stress to the family. The Japanese response could be to apologize profusely
for their dog running in front of the car and causing the driver stress.
Clearly, societal cultures influence the way people may react in any given situation.
If a leader understands and embraces those other perspectives, the communication
throughout his or her organization will more effective. Neglect by the strategic leader
to recognize how this influence may affect the organization could have significant
consequences to the organization.

EuroDisney—An Example
Consider Disney’s EuroDisney. After Disney’s great success opening theme parks in
Japan, Disney’s CEO, Michael Eisner, moved forward with plans to open a Disney park
in Europe. After considering various locations, Eisner chose a site about 70 miles from
Paris79 and built EuroDisney. After costing more than anticipated to build, once opened,
EuroDisney’s revenues were disappointing. Tickets to the park did not sell and hotels
at the park operated at less than half capacity. Eventually, EuroDisney failed miserably
and the reason for that failure was Eisner’s neglect in considering the European culture.
In France—and Europe in general—drinking alcohol is widely accepted. Even chil-
dren are given watered-down wine during meals in some countries. Picnicking is also a
commonly enjoyed pastime. Disney’s decision not to sell alcohol or allow picnicking at
its theme park seemed to confront the European lifestyle.80 Additionally, the expectation
that park goers would spend large sums on meals was also inconsistent with European
customer expectations.81 Finally, with Europe having an exceptional, widely used public
transit system, it made a day trip from Paris to EuroDisney very easy. Guests could stay
in less costly Paris hotels rather than paying higher rates at the park’s hotels.82
Because Disney did not understand and consider these factors, EuroDisney lost
over $1 million per day for an extended period. Corporate earnings fell drastically. It was
only after making significant adjustments to the European operations that finally, after
10 years, the park began to break even.83 Strategic leaders must be aware and mindful
of organizational and societal cultures.

Finding the Winning Culture


Typically, an organization’s culture is the glue that provides its integrity and cohesive-
ness. Organizational culture makes an essential contribution to loyalty, teamwork,
motivation, and passion. Once an organization finds a winning culture, employees
will know the right things to do and why they should do them.84
As a strategic leader, it is extremely important to consider the current culture of
the organization carefully and whether that culture is what the organization needs
to reach its strategic vision. If it is, the leader must continue to nurture and reinforce

C h a pte r 10 a   3 5 7
the culture. If it is not, the leader must establish a process of modifying the culture.
However, before a leader attempts an organizational culture change, he or she must
determine the type of culture best suited to accomplish the organization’s mission. In
that, leaders must identify the required specific core values and attributes and then
ensure the steps they take to lead the changes actually inculcate or reinforce those
attributes.85 A strategic leader should never attempt to lead a cultural change just for
the sake of change.
After analyzing 200 companies and studying 36 cases of high-performing com-
panies, Paul Rogers and Paul Meehan published Building a Winning Culture. They
identified key attributes found in winning cultures including external focus; a feeling
of ownership in the company; placement of company and team needs before individual
needs; high energy, passion, and enthusiasm; and a willingness to learn.86 Further, they
outlined five key steps required to build a winning culture:
1. Set expectations about the necessity for change, the type of new culture required, and
how it will result in success. The organization needs to know both what is unique
and special in the company’s heritage and which performance attributes are missing.
2. Align the leadership team around a common vision and required behaviors. While
many factors influence culture, the single most important is leadership. What leaders
do and say, in that order, must be consistent over time.
3. Focus the organization on delivering the business agenda [achieving the organiza-
tional mission]. Actions speak louder than words. A culture of accountability and
delivery is best achieved through holding people accountable for actual delivery
rather than expending [considerable] energy [and funding] on a formal ‘culture
change’ program. The key is to emphasize that culture is a means to an end, not an
end in itself.
4. Manage the culture by managing the drivers of culture—encourage the leader-
ship team to “walk the talk”; clarify or change roles and accountabilities for key
jobs; change or replace people where necessary; put new performance metrics
or incentives in place; and change the performance management or recruiting
processes.
5. Communicate and celebrate. Culture change can be a long journey that requires
tireless leadership. Consistent sustained communication [supporting] the required
behaviors is critical. It is important to celebrate victories—large and small—but
never to declare victory outright.87

What Would ZAPPOS Do?88—A Mini Case Study


One company that managed to develop and maintain a winning culture was Zappos.
Founded in 1999, the online retailer began its business in shoes but expanded into
handbags, clothing, and more. Tony Hsieh, the CEO, believed that for the long term,
culture is the way to build the brand. He explained, “At Zappos, our belief is that if you

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get the culture right, most of the other stuff—like great customer service, or building a
great long-term brand, or passionate employees and customers—will happen naturally
on its own.”89
Zappos targeted its hiring process to ensure that it maintained its winning culture.
Having each potential new hire complete interviews—with the hiring manager, the
team they would be working with, and Human Resources—helped ensure the candidate
not only had the experience and technical skills for the position but also fit within the
culture. Hsieh continued, “We’ve actually said no to a lot of very talented people that
we know can make an immediate impact on our top of bottom line. But because we felt
they weren’t culture fits, we were willing to sacrifice the short-term benefits in order to
protect our culture (and therefore our brand) for the long term.”90
Once hired, every new employee, from software experts to lawyers to mail clerks,
must complete the same 6-week training program. The first 4 weeks orient the new
employee to the Zappos history, the long-term company vision, and the company phi-
losophy on culture and customer service. From there, the employee spends 2 weeks on
the phones working as a customer service representative before reporting to the posi-
tion for which they were actually hired. Hsieh explained, “This goes back to our belief
that customer service shouldn’t just be a department; it should be the entire company.”91
Additionally, Zappos actually offered the entire class of new hires $2,000 to quit
anytime within the first 4 weeks of training. Hsieh explained, “We want to make sure
that employees are here for more than just a paycheck. We want employees that believe
in our long-term vision and want to be a part of our culture.”92
Zappos also formally defined, displayed, reenforced, and practiced a list of core
values. Hsieh continued: “We believe that it’s really important to come up with core
values that you can commit to. And by commit, we mean that you’re willing to hire and
fire based on them. If you’re willing to do that, then you’re well on your way to building
a company culture that is in line with the brand you want to build. You can let all of your
employees be your brand ambassadors, not just the marketing or PR department. And
they can be brand ambassadors both inside and outside the office.”93
As Tony Hsieh says, “At the end of the day, just remember that if you get the culture
right, most of the other stuff—including building a great brand—will fall into place on
its own.”94

—Pause—Take a moment to reflect on the following questions. Note your initial


thoughts and insights.
1. What are some winning attributes in your organization’s culture? How does the
organization reinforce those attributes? What recommendations would you offer
that would improve the reinforcement?
2. When has your organization sacrificed the short-term for the long-term win?

C h a pte r 10 a   3 5 9
Millennials Effect on Culture
“The Millennials are Coming,” an article written in 2007 by 60 Minutes correspondent
Morley Safer, advised leadership to get ready for this new generation of workers.95 As
this generation, born between 1981 and 2005 and also known as Generation Y, joins
the workforce, strategic leaders are seeing a shift in the way they manage these workers.
Some experts suggest that supervisors need to act more like coaches than managers,
as Safer explained.96
Katrina Trinko noted in USA Today, “The [self-esteem] movement, which became
popular in the 1980s, urged parents and teachers to bolster children’s confidence by
being quick to praise and slow (if ever) to criticize, even when a kid opts to pursue
PlayStation expertise over pre-algebra.”97 Considering this movement in their forma-
tive years, many Millennials have very different work expectations than those of Baby
Boomers or Generation X; and strategic leaders need to be aware and change their
expectations or their organizations may suffer.
Many of the interviewed strategic leaders specifically addressed Millennials.
For example, Bob Stevens, Chairman and CEO of Lockheed Martin, explained,
“Our new employees, those just joining the workforce, don’t think like us and they
don’t communicate like us. It’s not that they are deficient or bad, they’re just very
different.”98 Similarly, Ambassador Nancy Powell, Director General of the Foreign
Service, explained that in the State Department, “The communication patterns of
Millennials are quite different. A Millennial doesn’t call, they tweet or they send
an e-mail. Their expectation is different from mine, but who is the person on the
other end? Is it someone like me, or another ‘millennial?’ This can cause problems
when you are attempting to solve problems or implement strategy.”99 Whereas
Mark Samson, Operating Partner of Praesidian Capital, suggests, “Younger people
have an entitlement mindset that poses challenges in making the organization run
effectively.”100 Accordingly, strategic leaders need to evaluate approaches in dealing
with their Millennials.
Some of the common themes offered by the interviewed strategic leaders include:101
• They want it now! They are hungry and want to advance quickly. They want to be
CEOs in 5 years—they want to know the steps to take to move up. If they do not feel
like they are advancing quickly enough, they will go where they think they can, or
they will start their own business.
• They do not understand that it takes years of experience to develop a gut instinct and
intuition. For example, they may want to be head of European operations when they
have never been to Europe. They do not understand that they need tangible, not virtual,
experience to develop the skills and knowledge needed to achieve that kind of success.
• They want instant feedback and gratification, with the information age creating this
now, now, now expectation. Millennials in general have very short attention spans,

3 6 0   L e a d in g a t t h e S t r a te g i c L eve l
being able to text, instant message, email, and surf the web all at the same time.
Consequently, they may become the most innovative generation, in that if they do
not get the gratification/answers they want they will come up with their own.
• They are tech savvy. They tweet, instant message, and email rather than talk on the
phone or in person. As a result, they often lack the social communication skills and
tact necessary for some business relationship-building positions.
• They do not believe they have to be in an office space to do their work. They can
perform their work on a Blackberry or a laptop remotely, and they expect flexibility
in their work schedule. They measure their work by their outcomes, not how long
they spend doing it.
• They want their work to be meaningful. They want to make money while they also
make a difference. Supervisors need to convey to this generation why the work they
are asked to do is meaningful rather than just telling them to do it.
• They think if they show up for work, leadership should reward them for the effort.
It is the “every kid makes the team and gets a trophy” concept.
• Because the Internet made the sharing of information so easy and convenient, they
have different views on privacy and confidentially. For the same reason, they have
access to more knowledge than any generation before them.
Strategic leaders need to determine how best to make the traits of this new gen-
eration blend into their organizational cultures while meeting the needs of older
generations who are also working there. To look at how these generational culture
differences become a strategic issue, consider how Lockheed Martin is managing
changing workforce demographics.

Lockheed Martin and the Millennials


In 1995, the merger of Lockheed Corporation and Martin Marietta formed Lockheed
Martin. It is “a global security company that employs about 126,000 people worldwide
and is principally engaged in the research, design, development, manufacture, inte-
gration and sustainment of advanced technology systems, products and services.”102
Approximately 60 percent of Lockheed Martin employees are from the baby-boom
generation, which means that in a few years, Lockheed Martin may find itself with a
significantly different workforce.103
However, with economic factors as a consideration, many people in the baby-
boomer generation may continue working longer than previous generations. Should
this happen, companies like Lockheed Martin, may find themselves with multiple
generations of workers in the same workforce. This presents a different kind of cul-
tural challenge for organizations and it is one for which strategic leaders need to be
prepared. Lockheed Martin Chairman and CEO, Bob Stevens, is well aware of this and
carefully considered how his company and its leaders need to manage this upcoming
workforce composition.

C h a pte r 10 a  3 61
Lockheed Martin is proactive in developing ways to make this transition as
smooth as possible. One thing it did was to bring in David Plouffe, the leader of the
team who mobilized millions of young voters in helping to elect President Obama.
Plouffe talked to 300 of Lockheed Martin’s leaders to help them understand how to
energize and mobilize this young generation. Stevens explained the importance of
how to address this audience.104
Lockheed Martin also set up “social rooms” where employees have to go for talking
rather than texting. This is to help improve the communication skills of this younger
generation—communication skills that are lost in the remoteness of texting and email.105
Finally, Lockheed Martin developed an internal social network they call Unity. With this
program, information can be shared easily between all employees and mentoring can
be established by the older generation of workers to the younger generation. Conversely,
the younger generation is teaching the older generation how to be more tech savvy.106
Through these types of actions and programs, Lockheed Martin has tackled cul-
tural differences head on. Its programs facilitated multigenerational cooperation and
learning. In doing that, the corporation also found tools that strengthen and reinforce
the overall organizational culture.

—Pause—Take a moment to reflect on the following questions. Note your initial


thoughts and insights.
1. What challenges do you see as a result of differing perceptions between generations?
2. What tools does your organization have in place to help ensure all generations of
workers understand the mission—and each other?

The first part of this chapter examined various aspects that affect organizational
climate and culture and demonstrated that both will have major impacts regarding
enhancing or restricting the strategic leader’s efforts to lead and manage organizational
change initiatives.

Notes
1
Kim Cameron and Robert Quinn, Diagnosing and Changing Organizational Culture, revised edition
(San Francisco: Jossey Bass, 2006), 16.
2
Darrel Rigby and Barbara Bilodeau, Management Tools and Trends 2009 (Boston: Bain & Company,
2009), 4, available at <www.bain.com/bainweb/PDFs/cms/Public/Management_Tools_2009.pdf>.
Cameron and Quinn, 1.
3

Ibid.
4

T. Owen Jacobs, Strategic Leadership: The Competitive Edge (Washington, DC: National Defense
5

University, 2005), 183.


Center for Creative Leadership (CCL), “Culture Eats Strategy for Breakfast,” Leading Effectively
6

3 6 2   L e a d in g a t t h e S t r a te g i c L eve l
e-Newsletter, May 2010. available at <www.ccl.org/leadership/enewsletter/2010/MAYculture.aspx>.
7
Louis Gerstner Jr, Who Say Elephants Can’t Dance? (New York: HarperBusiness, 2002), 182.
8
Robert Berner, “My year at Wal-Mart: How marketing whiz Julie Roehm suffered a spectacular fall
in 10 short months,” BusinessWeek (February 12, 2007), available at <www.businessweek.com/print/
magazine/content/07_07/b4021076.htm?chan=gl>.
9
Gerstner, 182.
10
Ibid., 169.
11
Ibid., 187.
12
Edgar Schein, Organizational Culture and Leadership, 3rd edition (San Francisco: Jossey Bass, 2004), 36.
These questions are part of a survey designed by COL Mark Vaitkus, USA, (member of ICAF Depart-
13

ment of Strategic Leadership faculty) as a student handout for one of the lessons in the Strategic Leader-
ship core course.
14
Ibid. The questions on organizational culture are based on the work of Edgar Schein.
John Kotter, “Leading Change: Why Transformation Efforts Fail,” Harvard Business Review, March–
15

April 1995, 67.


CCL, “Culture Eats Strategy for Breakfast,” Leading Effectively e-Newsletter, May 2010, available at
16

<www.ccl.org/leadership/enewsletter/2010/MAYculture.aspx>.
Personal interview and communications with VADM Wally Massenburg, Senior Director, Mission
17

Assurance/ Business Execution; Raytheon Integrated Defense Systems. Former Commander Naval Air
Systems Command (NAVAIRSYSCOM).
18
Kozaryn.
Stacy, “RASP: Ranger Assessment and Selection Program,” October 6, 2010, available at <http://
19

marriedtothearmy.com/rasp-ranger-assessment-and-selection-program/>.
20
Kozaryn.
21
Ibid.
22
Ibid.
23
Ibid.
Eric Shinseki, “Shinseki and the Black Beret,” Ericshinseki.Org, available at <http://ericshinseki.
24

org/2008/12/shinseki-and-the-black-beret/>.
Personal interview and correspondence with Bob McDonald, Chairman, President & CEO, Procter
25

& Gamble.
26
Jacobs, 197.
W. Henry Lambright, Leadership and Change at NASA: Sean O’Keefe as Administrator (Syracuse, NY:
27

Syracuse University, 2007), 20, available at <http://ctip.maxwell.syr.edu/papers/6/lambright-2007-10b.pdf>.


Dawn R. Gilpin and Priscilla J. Murphy, Crisis Management in a Complex World (New York: Oxford
28

University Press, 2008), 49.


29
Jacobs, 198.
30
Marshall Sashkin and Molly Sashkin, Leadership That Matters (San Francisco: Berrett-Koehler, 2003), 122.
31
Kotter, 156.
32
Jacobs, 199.
Terry Terriff, “Warriors and Innovators: Military Change and Organizational Culture in the US
33

Marine Corps,” Defence Studies 6, no. 2, June 2006, 219.

C h a pte r 10 a   3 6 3
34
Ibid., 228.
35
Terriff, 228–229.
36
Charles Krulak, “Commandant’s Planning Guidance (CPG),” Frag Order, August 31, 1997, 1.
37
Author’s personal correspondence with General Charles Krulak, former Commandant, USMC, 2006.
Charles Krulak, The 31st Commandants Planning Guidance: A Marine Corps for the 21st Century
38

(Washington, DC: USMC, August 1994), A-3.


39
In a speech before the National Press Club (October 10, 1997) Krulak described his vision of the
three-block war: “In one moment in time, our service members will be feeding and clothing displaced
refugees, providing humanitarian assistance. In the next moment, they will be holding two warring
tribes apart—conducting peacekeeping operations—and, finally, they will be fighting a highly lethal
mid-intensity battle—all on the same day . . . all within three city blocks.” Charles C. Krulak, USMC,
“The Three Block War: Fighting in Urban Areas,” Vital Speeches of the Day 64, no. 5 (New York: Decem-
ber 15, 1997), 139–142.
40
Terriff, 231.
Personal interview with General Chuck Krulak, USMC (Ret.), President, Birmingham-Southern
41

College; Board of Directors for Union Pacific and non-executive director for Aston Villa British Soccer
Club; former USMC Commandant; former Vice Chairman of MBNA and Chairman & CEO for MBNA
Europe Bank.
42
Terriff, 233.
43
Ibid., 233.
44
Ibid., 235.
Gary Yukl, Leadership in Organizations, Seventh Edition (Upper Saddle River, NJ: Pearson Education,
45

2010), 307.
46
Jack Welch, Winning (New York, NY: HarperCollins, 2005), 20.
Personal discussion with Linda Washington, Chair, Local Federal Coordinating Committee Com-
47

bined Federal Campaign of the National Capital Area (CFCNCA); former Assistant Secretary for
Administration, Department of Transportation.
48
Sashkin and Sashkin, 125.
49
“100 Best Companies to Work For,” CNN Money, available at <http://money.cnn.com/magazines/
fortune/bestcompanies/2011/snapshots/1.html>.
Rebecca Leung, “Working The Good Life,” 60 Minutes, February 11, 2009, available at <www.cbsnews.
50

com/stories/2003/04/18/60minutes/main550102.shtml>.
See SAS company website, available at <www.sas.com/company/about/index.html>.
51

52
Ibid.
53
Milton Moskowitz, Robert Levering, and Christopher Tkaczyk, “Fortune’s Best Companies to Work
for 2011,” Fortune, available at <http://jobs.aol.com/articles/2011/01/20/fortunes-best-companies-to-
work-for-2011/>.
Rebecca Leung, “Working The Good Life,” 60 Minutes, February 11, 2009, available at <www.cbsnews.
54

com/stories/2003/04/18/60minutes/main550102.shtml>.
55
A.G. Lafley, Presentation and Personal Discussion at ICAF, September 30, 2008.
Edgar Schein, Organizational Culture and Leadership 3rd Edition (San Francisco: Jossey Bass, 2004), 246.
56

57
Ibid.

3 6 4   L e a d in g a t t h e S t r a te g i c L eve l
58
Ibid.
Homeland Security Advisory Council, Report Of The Homeland Security Culture Task Force (January
59

2007), 6.
Personal interview with David Zuercher, Executive Vice President, International and Insurance
60

Services, Wells Fargo & Company.


61
Ibid.
62
Ibid.
Edgar Johnson, Workshop Introducing Innovation and Risk: Implications of Transforming the Culture
63

of DoD, IDA Document D-2967, Institute for Defense Analyses, Log: H 04-000346, March 2004, III-4.
The quotes referenced in this example are from: Alan Deutschman, Change or Die: The Three Keys to
64

Change at Work and in Life (New York, NY: HarperCollins, 2007), 176–177.
Alan Deutschman, Change or Die: The Three Keys to Change at Work and in Life (New York, NY:
65

HarperCollins, 2007), 177.


Alan Deutschman, “Building A Better Skunk Works,” Fast Company, March 1, 2005, available at
66

<www.fastcompany.com/magazine/92/ibm.html>.
67
Lafley.
Dan Sewell, “P&G-Gillette merger wins support, Deseret News, July 13, 2005, available at <www.
68

deseretnews.com/article/600148123/PG-Gillette-merger-wins-support.html>.
69
Arango.
Ted Leonsis and John Buckley, The Business of Happiness: 6 Secrets to Extraordinary Success in Life
70

and Work (Washington, DC: Regnery, 2010), 131.


71
Ibid., 132–133.
72
Chart was derived from information obtained in personal interview with Ted Leonsis and ibid.
73
Ibid., 131.
Tim Arango, ”How the AOL-Time Warner Merger Went So Wrong,” The New York Times, January
74

11, 2010, available at <http://finance.yahoo.com/career-work/article/108545/how-the-aol-time-warner-


merger-went-so-wrong?mod=career-leadership>.
75
Leonsis and Buckley, 132–133.
76
Jacobs, 183.
77
Personal interview with Bob McDonald, Chairman, President & CEO, Procter & Gamble.
Personal interview with General George Casey, former Chief of Staff of the United States Army (2007
78

to 2011) and Commanding General, Multi-National Force in Iraq (2004 to 2007).


79
Paul Nutt, Why Decisions Fail (San Francisco: Berrett-Koehler Publishers, 2002), 13.
80
Ibid., 12.
81
Ibid.
82
Ibid., 191.
83
Ibid., 250.
Paul Rogers and Paul Meehan, “Building a Winning Culture,” Business Strategy Series, Vol. 8, no. 4,
84

254.
85
Ibid., 256.
86
Ibid., 261.
87
Ibid., 256.

C h a pte r 10 a   3 6 5
Some information for the Zappos example taken from “Excerpt” and “About the Author”of his book:
88

Tony Hsieh, Delivering Happiness: A Path to Passion, Profits and Purpose (New York, NY: Hachette Book
Group, 2010) presented at <www.deliveringhappiness.com/>.
Tony Hsiesh, “Your Culture Is Your Brand,” ZAPPOS BLOGS: CEO and COO Blog, January 3, 2009) ,
89

available at <http://blogs.zappos.com/blogs/ceo-and-coo-blog/2009/01/03/your-culture-is-your-brand>.
90
Ibid.
Ibid.
91

92
Ibid.
93
Ibid.
94
Ibid.
Morley Safer, “The ‘Millennials’ Are Coming,” 60 Minutes (originally broadcast on November 11, 2011,
95

updated on May 23, 2008), available at <www.cbsnews.com/stories/2007/11/08/60minutes/main3475200.


shtml>.
96
Ibid.
97
Katrina Trinko, “Is narcissism killing innovation in America?” USA Today, December 21, 2011, 9A.
98
Personal interview with Bob Stevens, Chairman and CEO, Lockheed Martin.
Personal interview with Ambassador Nancy Powell, Director General of the Foreign Service, Depart-
99

ment of State.
Personal interview with Mark Samson, Operating Partner, Praesidian Capital; former Managing
100

Director, GetzlerHenrich, New York.


101
List derived from feedback during personal interviews for this book with 44 top strategic leaders.
102
See <www.lockheedmartin.com/aboutus/index.html>.
Todd Henneman, “At Lockheed Martin, Social Networking Fills Key Workforce Needs While Improv-
103

ing Efficiency and Lowering Costs,” Workforce Management, March 2010, available at <www.workforce.
com/section/software-technology/feature-lockheed-martin-social-networking-fills-key-workforce/>.
104
Personal interview with Bob Stevens, Chairman and CEO Lockheed Martin.
105
Ibid.
106
Henneman.

3 6 6   L e a d in g a t t h e S t r a te g i c L eve l
CHAPTER 10b | Organizational Climate
and Culture: Strategic Determiners,
Part II—Building Ethical and Innovation
Climates and Cultures

In addressing organizational climates and cultures, there are elements involved in the
makeup an enterprise’s culture. As noted in Part I of this chapter, there are a number
of subcultures within an organization. For example, Marketing could have its own
subculture, whereas Finance could have a different subculture—both contributing
to the enterprise culture. Two areas of special interest to most strategic leaders are
creating and sustaining an ethical climate and culture and a culture of innovation.
Innovation—as will be discussed shortly—must include a climate and culture of both
collaboration and shared learning to be truly effective.

Creating and Sustaining an Ethical Climate and Culture


Organizational climate and culture influence an organization’s values and strategic
imperatives. As discussed in the previous segment, an effective strategic leader can
have a tremendous influence on the actions of an organization’s members, and thus
on the organization’s climate and culture.
Chapter 2 discussed a person’s moral development. The “personal dimensions”
section (chapter 3) profiled a strategic leader’s character, integrity, and ethical behavior.
Building on these two basic frameworks, one concludes that a strategic leader being
ethical and behaving ethically does not necessarily translate into creating and sus-
taining an ethical organizational climate and culture. The following includes a more
focused examination on creating and sustaining an ethical climate and culture—a
key factor addressed by each of the interviewed strategic leaders.
Describing an “ethical culture,” the Ethics Resource Center states:
While the term “ethical culture” may sound mysterious or esoteric, it’s a reality
that all working people experience whether they realize it or not. In a “strong”
ethical culture, ethical values matter and that is apparent in the actions of
employees (especially management), company policy and procedures, and deci-
sions about who gets rewarded, who gets punished, and how to weather tough
times. In a “weak” ethical culture, ethical values aren’t promoted and “getting
the job done” is far more important than getting the job done in the ethically
right way. Basically, the strength of a company’s ethical culture is the extent to
which the organization makes doing the right thing a priority.1

C h a pte r 10 b   3 6 7
Research clearly demonstrates that strategic leaders are in the position to influence
or set the ethical tone of their organizations. Consequently, creating and sustaining
an ethical organizational climate and culture is a fundamental responsibility of the
strategic leader.
Recall in the “Maturity and Experience Framework” section of chapter 2, Johanna
Shapiro’s example of U.S. congressional debates regarding the U.S. Government’s reso-
lution to support the administration’s policy responding to Iraq’s invasion of Kuwait.
She demonstrated that the “adult” members of Congress who engaged in the debate
operated at all six stages of moral development. Therefore, regardless of organizational
position, age, or maturity, moral reasoning and development is individual specific and
not necessarily associated with position or age. In addition, research provides evidence
that, “most adults in industrialized societies are at the ‘conventional’ level of cognitive
moral development, and less than twenty percent of adults ever reach the ‘principled’
level where thinking is more autonomous and principle-based.”2
This leads to two questions:
•A  t what moral development stage is the strategic leader?
• At what stage are the majority of the leadership team and the organizational members?
To help assess those answers, consider the “Test your Ethical Climate” survey
(table 10b-1).

Table 10b-1. Test Your Ethical Climate1


1–STRONGLY DISAGREE; 2–DISAGREE; 3–NEITHER AGREE NOR DISAGREE; 4–AGREE;
5–STRONGLY DISAGREE
WHO ARE WE?
a) T he members of the organization demonstrate a commitment to the values of the organization.
b) T he members accomplish their tasks by “doing the right thing” rather than compromising
organizational values.
c) The members understand and commit to established organizational values.
WHAT DO WE DO?
a) We provide clear instructions that help prevent unethical behavior.
b) We promote an environment in which subordinates can learn from their mistakes.
c) We maintain appropriate, not dysfunctional, levels of stress and competition in our organiza-
tion.
d) We discuss ethical behavior and issues during regular training and employee review sessions.
e) We maintain an organizational creed, motto, or philosophy that is consistent with our organiza-
tional values.
f) We submit reports that reflect accurate information.

3 6 8   L e a d in g a t t h e S t r a te g i c L eve l
Table 10b-1. Test Your Ethical Climate1
1–STRONGLY DISAGREE; 2–DISAGREE; 3–NEITHER AGREE NOR DISAGREE; 4–AGREE;
5–STRONGLY DISAGREE
g) We ensure employees are aware of, and are comfortable using, channels to report unethical
behavior.
h) We treat those who report unethical behavior fairly.
i) We hold accountable members who behave unethically.
WHAT SURROUNDS US?
a) My organizational members are under an excessive amount of stress.
b) M y organization maintains a ‘zero defects’ outlook on performance, such as mistakes are not
tolerated.
c) My managers overemphasize competition between divisions.
d) M y leaders do not appear concerned with unethical behavior as long as the goals are met.
e) I do not feel comfortable bringing up ethical issues with my supervisors.
f) My peers do not seem to take ethical behavior very seriously.
WHAT DO I DO? (USE THE SCALE BELOW)
1–STRONGLY DISAGREE; 2–DISAGREE; 3–NEITHER AGREE NOR DISAGREE; 4–AGREE;
5–STRONGLY DISAGREE
a) I discuss organizational values in orientation programs when I welcome new members.
b) I routinely assess the ethical climate of my organization.
c) I communicate my expectations regarding ethical behavior in my organization and require
subordinates to fulfill their roles and responsibilities in an ethical manner.
d) I encourage discussions of ethical issues in follow up to trainings, meetings, seminars, and
workshops.
e) I encourage members to raise ethical questions and concerns to the leadership.
f) I consider ethical behavior in performance evaluations, awards presentations, and adverse person-
nel actions.
g) I include maintaining a strong ethical climate as one of my organizations goals and objectives.
1
Derived from the Ethical Climate Assessment Survey used by the Army, Field Manual 22-100, Army
Leadership.
Add your total:
• If your score is between 25 and 75, take immediate action to improve ethical climate.
• I f your score is between 76 and 100, take action to improve ethical climate.
• I f your score is between 101 and 125, maintain a healthy ethical climate.

The key point of the assessment relates to the role and responsibility of the strategic
leader in developing an ethical climate and culture. Linda Trevino and Michael Brown
make the point, “In practical terms . . . most adults are looking outside themselves
for guidance in ethical dilemma situations, either to significant others in the relevant

C h a pte r 10 b   3 6 9
environment (e.g., peers, leaders) or to society’s rules and laws. It also means that most
people need to be led when it comes to ethics.”3
Research supports their argument. More than a third of the respondents to the
2009 National Business Ethics Survey (NBES) indicated that their organizations had
a weak-leaning (30 percent) or a weak culture (9 percent). Furthermore, they reported
that per­ceptions of the ethics of strategic leaders (top management) are lower than in
any year prior (66 percent down from a high of 71 percent in 2003).4 Reporting on
the relationship between strong ethical cultures and organizational outcomes, NBES
states the 2009 data reveal:
• In stronger cultures, far fewer employees (4 percent) feel pressure to commit mis-
conduct than in weaker cultures (15 percent).
• Rates of observed misconduct in stronger cultures are roughly half (39 percent) as
high as in weaker cultures (76 percent).
• In stronger as opposed to weaker ethical cultures, failure to report observed miscon-
duct declines by more than a third, from 43 percent to 28 percent.
• The retaliation rate (e.g., retaliation against an organization, boss, or another person)
in stronger ethical cultures is 4 percent, compared to 24 percent in weaker cultures.5
—Pause—Take a moment to reflect on the following question. Note your initial
thoughts and insights.
Consider how you and your organization scored on the previous ethical climate
survey. Where did you and your organization fall in comparison to the 2009 NBES
respondents?

Trevino and Brown concluded, “Being ethical is not simple.” They emphasized
that, “Ethical decisions are ambiguous, and the ethical decisionmaking process
involves multiple stages that are fraught with complications and contextual pres-
sures. Individuals may not have the cognitive sophistication to make the right
decision. And most people will be influenced by peers’ and leaders’ words and
actions, and by concerns about the consequences of their behavior in the work
environment.”6 They concluded by noting: “The bottom line here is that most
people, including most adults, are followers when it comes to ethics. When asked
or told to do something unethical, most will do so. This means that they must be
led toward ethical behavior or be left to flounder. Bad behavior doesn’t always result
from flawed individuals. Instead, it may result from a system that encourages or
supports flawed behavior.”7
Richard Goldstein, former CEO of International Flavors & Fragrances, outlined
three key elements for an ethical company: Leadership, Values, and Systems.
1. Leadership. They say that ‘the fish rots from the head.’ That may be, but the same
point can be made in a positive light. In addition to setting an example for the entire

3 70  L e a d in g a t t h e S t r a te g i c L eve l
organization, a CEO should appoint a senior leadership team that holds itself to the
highest moral and ethical standards.
2. Values. A company can have as many anonymous whistleblower hotlines as it wants,
but those tools will be worth nothing if it does not also have—and truly live by—a
set of corporate values that demands and rewards integrity, honesty, and courage.
You must create a culture and an environment in which ethical behavior can not
only survive, but also thrive.
3. Systems. Once the stage is set with strong leadership and a healthy culture, you must
provide the information and tools that explain what kind of behavior is expected
and what to do if there are breaches of good conduct. In a multinational company,
it is important to provide multiple communication approaches to allow for cultural
sensitivities and preferences.8 [Recall “The Platinum Rule” discussed previously in
this chapter, Part I.]
Goldstein suggested simple questions to guide leaders through their personal and
professional lives:
• Is what I am doing right or wrong? Are my actions a matter of short-term expedi-
ency and gain for a select group and myself? Might they result in long-term harm
to others?
• Can I look at myself in the mirror after doing this? Can I face my family, friends,
and colleagues?
• Does this decision pass the “sniff test?” If it doesn’t smell right, that’s a good indica-
tion that it’s something you shouldn’t be doing.9

Developing an Ethical Climate and Culture


In view of the previous discussion and Goldstein’s elements for an ethical organiza-
tion, four key areas a strategic leader should focus to develop an ethical climate and
culture include:
1. Strong personal moral development and values—provides the strong personal
“character.”
2. Inspire and promote ethical and moral behaviors and decisionmaking.
3. Establish an appropriate vision, code of conduct, and work and reward processes
that encourage ethical behavior (2 and 3 establish ethical “expectations”).
4. Establish a system for ethical assessment and the reporting and appropriate punish-
ment for unethical behavior—creates ethical “accountability.”

Strong Moral Development


It is through these four focus areas that the strategic leader can influence, both directly
and indirectly, the behavior of organizational members and better align those mem-
bers with the stated ethical and moral values of the organization.

C h a pte r 10 b  3 71
To elaborate further on these focus areas, the strategic leader must recognize that the
first step to building an ethical climate and culture is to assess themselves. It is through
their own ethical and moral mental models, frames of reference, and framework that
they will be better able to influence the organization’s ethical climate.10 Research sug-
gests that if the strategic leader acts in an unethical manner, the leadership team may
do likewise—or, at least, disengage from ensuring ethical parameters are considered in
strategy formulation and decisionmaking. Even more problematic is the strategic leader
who is hypocritical. As Trevino and Brown noted, “Nothing makes people more cynical
than a leader who talks incessantly about integrity, but then engages in unethical conduct
himself and encourages others to do so, either explicitly or implicitly.”11
Lieutenant General Mike Dunn, USAF (Ret.), the National Defense University
President from 2003 to 2006, often speaks on what it takes to be a strategic leader:
I always worry about the ethical situation. I was working for the Secretary
of Defense and one thing that surprised me more than anything else—this
was when I was a one-star [General]—was the number of cases of General
Officer and senior officer misconduct. Almost all of them were because the
individual thought too much of himself and was not humble, or because he
or she did not think like a servant—like being a servant of the people. About
one-third of those incidents were . . . associated with the fact that people did
not think the resources they are using belong to the taxpayers. . . . I saw driver
issues [such as] “Take my daughter to the airport.” That is tax payer money
funding a soldier taking and using government gas to take a personal child
to the airport, and that is unsatisfactory.12
Consider three situations involving Boeing strategic leaders:
• Michael Sears (former Boeing Chief Financial Officer) authored Soaring Through
Turbulence, in which he emphasized the importance of maintaining high ethical
standards. Yet in 2003, he admitted secretly negotiating with Darleen Druyun for
a job at Boeing. At the time, she was the senior Air Force civilian procurement offi-
cial overseeing billions of dollars in contracts—including the airborne tanker lease
contract—given to Boeing. Druyun admitted influencing decisions towards Boeing
over its competitors. Prosecuted, she went to prison for 9 months.
• Boeing CEO Philip Condit resigned in December 2003 because of this and another
Boeing scandal involving the use of proprietary data of Lockheed Martin while
participating in a rocket-launch competition. Harry Stonecipher was brought out
of retirement to become the new CEO and made it his task to reestablish a strong
ethical climate and culture at Boeing.
• Stonecipher instituted myriad programs, including in 2004, a strong “Code of
Conduct (COC).” One of the elements stated in COC: “Employees will not engage
in conduct or activity that may raise questions as to the company’s honesty, impar-
tiality, reputation or otherwise cause embarrassment to the company.”13 Yet in

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2005, Stonecipher (who was married) resigned at the request of the Boeing board
of directors for his affair with a female employee.14
Strategic leaders should be—and generally are—expected and trusted to per-
form ethically and morally and be accountable for their conduct and actions. It is
through personal modeling of the appropriate conduct and actions that the leader
can enhance the application of that trust, expectation, and standard throughout
the organization.

Promoting an Ethical Tone


As noted previously, the strategic leader is in the position to set the ethical tone of the
organization through personal ethical behavior and inspiring others to embrace ethical
thinking and behavior throughout the organization enthusiastically. Being an ethical
cheerleader and promoter supported by concrete ethical modeling and decisionmaking, the
strategic leader can create an energy and environment that can sustain an ethical climate.
Research provides evidence that strategic leaders are central to the constant process
of creating an ethical climate, and that to be successful requires continuous direct atten-
tion by the strategic leader. This includes communications that outline the challenges of
dealing with ethical dilemmas, and showing courage to make the tough ethical choices.
In addition, strategic leaders should be mindful of the importance of modeling ethical
behavior. Unlike other personal behavior that can be publicly demonstrated, those
beyond their direct report subordinates often do not observe ethical decisionmaking.
Being a strategic leader frequently distances the leader from the majority of
the organization’s members, requiring indirect leadership approaches and actions
to influence organizational performance. This can have a major impact on ethical
leadership and organizational behavior. While the leader may be practicing ethical
and values-based decisionmaking, those outside his or her direct range of influence
may not be aware of the challenges and complexities inherent in addressing the ethi-
cal dilemmas or complexities that characterize executive decisionmaking. While the
strategic leader may fully believe that he or she is acting ethically and is following an
ethical decisionmaking process, the majority of the organization could infer that the
leader is ethically neutral unless the leader takes specific actions to inform the rest of
the organization of the decisionmaking process and actual decisions.
The majority of executives cannot fathom the idea of being ethically neutral. Rather,
they argue that there is an ethical component in every decision at the strategic level.
Being ethically neutral is simply a term they do not accept.15 Trevino and Brown sug-
gested, “The ethically silent leader is not perceived to be unethical but is seen as focusing
intently on the bottom line without setting complementary ethical goals. There is little
or no ethics message coming from the top [and] silence represents an important mes-
sage. In the context of all the other messages being sent in a highly competitive business

C h a pte r 10 b   3 7 3
environment, employees are likely to interpret silence to mean that the top executive
really doesn’t care how business goals are met, only that they are met, so employees act on
that message.”16 This could lead to unethical behavior as the “ends” justify the “means.”
Consider the example of downsizing. All organizations—be they government or non-
government—often have to deal with downsizing. Does laying off organizational mem-
bers to cut costs in order to keep the organization viable reflect being ethically neutral?
Do the leader’s actions or approaches imply that the leader does not care about people?
Unless the strategic leader makes an effort to communicate concern and to dem-
onstrate empathy beyond the reaches of his or her inner circle—to reach out to the
organization—perceptions by the organizational membership will be different from
what the leader may believe is an accurate assessment of the ethical framework used.
This is why it is important that the strategic leader be continuously engaged in strategi-
cally communicating the ethical message and taking personal actions to strengthen
the organization’s ethical climate and culture.
The role modeling effort of the strategic leader regarding ethics may not have as
much direct influence on the rank and file as it does at the operational and tactical
(supervisory) levels of the organization. Those with whom they have personal contact
or are capable of observing personally, such as their managers or supervisors, most
often influence ethical behavior. Yet the strategic leader has the most significant
influence on those he or she is in direct contact with—the strategic leadership team,
advisors and staff, stakeholders, and customers. It will be through their duplicated,
downward influence that the ethical persona of the organization will be cascaded.
However, if not purposefully driven, then similar to the “gossip” game,17 the message
to the workforce may distort and misconstrue ethical frameworks and perceptions of
appropriate behaviors.

Hewlett Packard CEO Carly Fiorina—Impact of Ethically


Neutral Leadership
Craig Johnson suggested that being ethically neutral contributed to the fall of former
Hewlett Packard (HP) CEO Carly Fiorina.18 Hired by the HP Board in 1999, the Board
fired her in 2005. Prior to taking over HP in 1998, Fortune magazine named her the most
powerful female executive. Fiorina took over a very profitable 63-year old company
known as a leader in many areas of technology, but its economic health begun to fail
in the late 1990s. As CEO, she felt that the “HP Way” of doing things would no longer
work in the modern world. She began making significant changes to HP’s strategy and
presided over a very contentious merger with Compaq. While the debate regarding
her effectiveness as CEO lingers, during her tenure HP stock lost half its value.
Regarding values during the HP-Compaq merger, Fiorina stated, “On the question of
values there was amazing alignment. . . . Values are signposts to guide people’s behavior

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when the rules aren’t clear and the supervisor isn’t present. Goals and metrics are what
get done; values are how those things get done. After all the research, we ended up with
the same core values that had always been part of the HP Way: trust, respect, integrity,
passion for customers, teamwork and collaboration, innovation, contribution—and one
new addition; speed and agility.”19
Yet Johnson suggests Fiorina did not uniformly practice a number of these values.
For example, she mentioned in her book that customers complained that the focus was
on products and not service; a reward system that prevented collaboration between
business units; and a lack of trust and respect between some of the senior leaders due
to relative personal power bases. Well into her tenure, customers continued to ques-
tion a customer-centric climate and culture. She laid off thousands of employees to cut
costs; and near the end of her tenure, some senior HP leaders and board members were
leaking information of board discussions to the press.
Johnson pointed out that upon becoming CEO, Fiorina’s primary focus was on
revenue growth and earnings. He illustrated by quoting Fiorina, “Carly interrupted a
presentation to say, ‘Let me make something very clear. You will make your numbers.
There will be no excuses. And if you can’t make your numbers, I will find someone who
can.’”20 He offered some examples of actions he believes demonstrated that Fiorina was
an “an ethically neutral leader.”21 Specifically, she seemed to overlook the human costs of
her plans; quickly blamed others for failure rather than take personal responsibility; and
used a downward communication style that made her “appear proud, not humble.” In
addition, he suggested that her focus on making the numbers and supporting individual
rewards encouraged unethical behavior by HP salespeople, undermining the chance for
a HP-collaborative culture as well as confidence in HP sales figures by financial analysts.
Immediately following her ouster, HP’s reputation was under attack following leaked
board deliberations to the press. In efforts to find the leaks, Chairman Patricia Dunn and
some HP senior people took questionable actions. As a result, Dunn was forced out and
a number of formal investigations ensued.22
In a written statement from Chief executive Mark Hurd, Chairman of HP following
Dunn’s resignation, to the House Energy and Commerce Oversight and Investigations
Subcommittee, “What began as a proper and serious inquiry into leaks to the press of
company information from within the HP board became a rogue investigation that violated
our own principles and values.” Referring to the scandal, Edward Whitfield (R-KY) stated,
“For the highest-ranking officials of a company like Hewlett-Packard to be aware of and
seemingly approve this kind of activity I do not think speaks well of their value system
or their culture.”23 In addition to Dunn, HP’s chief ethics officer, general counsel, and a
number of other HP executive or board members resigned due to the investigations into
illegally obtained private phone records.
In her “Afterword,” written in 2007, Fiorina stated, “To avoid the damaging conse-
quences of behavior that’s on the edge, managers, employees, executives, and board

C h a pte r 10 b   3 7 5
members must believe that ethical conduct is always more important than short-term
results.” She further emphasized, “The standards for ethical behavior are more stringent
than those for legal behavior. It is why a leader must constantly remind an organization,
in words and in deeds, which values matter—perhaps especially when it’s difficult or
unpopular.”24 Based on Johnson’s analysis, it appears that Fiorina failed in this endeavor
while CEO of HP.

—Pause—Take a moment to reflect on what you have read so far and review the
questions below. Make notes of your initial thoughts and insights.
1. If you were the HP CEO, what steps would you take that are different from the
approach Fiorina took?
2. Is your current organization ethical? Does it have a strong or weak ethical climate
or culture? How do you know? What steps would you take to strengthen its ethical
climate and culture?

Establishing an Appropriate Vision and Supporting Programs


If the emphasis in normal day-to-day operations is on making the numbers, precluding
or “drowning out” messages regarding ethical practices and behaviors, the organiza-
tion will focus on making the numbers—whatever it takes. If the commentary is, as
the Gordon Gekko character in Wall Street argued, “Greed is Good,” then expect such
unethical organizational behavior and actions to follow.
Creating an ethical climate and culture requires shared perceptions that reflect
ethical values and thinking. Institutionalizing and reinforcing ethical practices are
required. A number of formal and informal methods are available to accomplish these
objectives. For example, many organizations established a code of conduct. They defined
and expressed their values and ethics in their vision/core values statements and policies,
and established formal systems supporting ethical practices (e.g., a reward system that
recognizes those demonstrating ethical thinking and practices). These are among many
ways available to strategic leaders by which they can promote ethical thinking, behavior,
and practices. These actions also serve to embed the belief that this is “how we do things
around here” in the climate and ultimately the culture of the organization.
People pay attention to what others do and the behaviors and results that are rewarded
by the organization. If a strategic leader desires specific organizational decisions and
behaviors, an appropriate reward system that consistently recognizes and rewards people
performing those desired behaviors must be in place—and used. In addition, people value
their reputations. Providing positive recognition and rewarding ethical practices enhances
an individual’s reputation and esteem within and outside the organization.
For example, consider Lockheed Martin’s corporate vision: “Powered by innova-
tion, guided by integrity, we help our customers achieve their most challenging goals.”

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Three values support their vision: “Do What’s Right,” “Respect Others,” and “Perform
with Excellence.” Amplifying “Do What’s Right,” the vision explained, “We are com-
mitted to the highest standards of ethical conduct in all that we do. We believe that
honesty and integrity engender trust, which is the cornerstone of our business. We
abide by the laws of the United States and other countries in which we do business, we
strive to be good citizens and we take responsibility for our actions.”25
To help them drive their ethics program, the Lockheed Martin board set up the
Ethics and Corporate Responsibility Committee, and the CEO established the position
of Vice President of Ethics and Business Conduct (reports directly to the CEO and to
the board’s Ethics and Corporate Responsibility Committee). Lockheed Martin also
encourages a number of ethics-related activities supporting and reinforcing its ethics
programs, e.g., conducting annual ethics training for all employees, establishing a code
of conduct, appointing ethics officers, and producing short video “Integrity Minute”
messages and other media distributing information discussing ethics. (Information
regarding these activities is available at Lockheed Martin’s Web site.)
In contrast, organizational staff typically ignored systems put in place to enhance
ethical behavior and practices if those systems are not part of the culture. For example,
Enron had drafted a good code of conduct and its compensation and performance
appraisal systems supported ethical behavior. Yet, because key organizational leaders
and members making questionable ethical decisions did not receive punishment (and
were by default rewarded), the publicly stated moral and ethical rules were effectively
ignored. Therefore, imbedded in the culture were different rules (many informal).
Those hidden rules eventually destroyed the company.
Grojean et al. stated, “[Organizations realize] formal policies are not enough to
gain lasting changes in ethical behavior. . . . Training provides a systematic learning
atmosphere designed to change the work environment; and as such, ethical training
can be designed to introduce ethical concepts and formal policies, as well as provide
members with the opportunity to apply the newly acquired concepts.”26
Such training can include coaching and mentoring, discussions related to ethical
issues, and feedback sessions. Grojean et al. posited seven mechanisms for improving
organizational ethics including:
•u  se values-based leadership
• s et the example
• e stablish clear expectations of ethical conduct
•p  rovide feedback, coaching, and support regarding ethical behavior
• r ecognize and reward behaviors that support organizational values
•b  e aware of individual differences among subordinates
• e stablish leader training and mentoring.27

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Assessing the Ethical Culture
As illustrated previously, research suggests that some organizations have a less-than-
ethical climate and culture. These organizations often create job pressures and/or cre-
ate conflict in individual leader’s and member’s roles that can lead to unethical behav-
ior. In addition, they often fail to encourage or reward members who report unethical
practices and behaviors, or to discipline those who actually perform unethically.
It is important that strategic leaders clearly hold all members of their organization
ethically accountable as well as those external to the organization who are supporting
the organization. Organizational information systems such as hotlines and other feed-
back mechanisms (surveys) should be in place not only to report infractions, but also
to help gauge the effectiveness of the ethics efforts. “The information system should
support ethical behavior,” Jacobs stated, “and allow the strategic leader to know when
or where there are potential ethical breaches so that corrective action can be taken.
The real danger is that when unethical behavior is unnoticed and thus not punished,
members will assume it is condoned by the organization’s leadership, and it then will
become part of the organization’s culture.”28
“Ethical culture,” the Ethics Resource Center explained, “is the extent to which an
organization’s ethical standards are given priority and promoted by its management,
employees, policies, processes and decision-making. The more employees see others
being held accountable for ethical actions and acting with integrity, the stronger the
ethical culture of the organization will be.”29 Even in times when a member of the
organization’s senior leadership is under scrutiny for questionable ethics, the strategic
leader must use the opportunity to model the desired culture.
Consider Warren Buffet and his company, Berkshire Hathaway. Buffet took great
care to build his company with a strong ethical climate. In 2011, his company was in
the spotlight because of questionable choices made by his senior leadership. Buffet
had the opportunity to enhance or detract from the ethical culture he worked hard
to instill.

Ethics and Culture—Berkshire Hathaway


Your attitude on [matters that could have the appearance of impropriety],
expressed by behavior as well as words, will be the most important factor in
how the culture of your business develops.30
—Warren Buffet in a memo to his Berkshire Hathaway managers

In March 2011, Warren Buffett, CEO of Berkshire Hathaway, accepted the resignation


of his lieutenant, David Sokol, after Sokol admitted to purchasing stocks in a company
that he would later recommend that Berkshire should seek to control. Though Sokol’s
actions were not illegal, Buffet felt they had an appearance of impropriety, and therefore

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Sokol’s resignation was appropriate. As a leader, Buffett’s words and actions consis-
tently demonstrated his values regarding ethics in decisionmaking. “We can afford to
lose money,” he said, “even a lot of money. But we can’t afford to lose reputation—even
a shred of reputation.” Adding, “We must continue to measure every act against not only
what is legal but also what we would be happy to have written about on the front page
of a national newspaper in an article written by an unfriendly but intelligent reporter.”31
Interestingly, Sokol repeated the latter quote in his own Pleased but Not Satisfied. He
prefaced the statement by advising the reader what to consider if they are ever uncertain
about a decision. Sokol also highlighted integrity as one of six key business command-
ments in his book, and he provided the book to all his employees.32 So, how is it that this
leader, who was an integral part of maintaining a strong ethical culture in his organization,
could display “what is inarguably bad judgment and end up embroiled in a scandal?”33
In an article for Fortune magazine on Sokol’s “lost lessons in integrity,” the author,
Brian Dumaine, who had several previous interviews with Sokol, stated, “It may have
been inconceivable to Sokol that he could do anything that was unethical. . . . I think it is
unlikely that Sokol believed he was doing anything wrong.” Sokol, Dumaine concluded,
was simply “blind to the fallout” of his actions.34
Leaders must be aware of not only the legal ramifications of their decisions, but
also of how those decisions, even when not illegal, may be perceived from an ethical
perspective. The consequences from a perception of impropriety could be more far-
reaching than the leader anticipates. Clearly, Sokol did not anticipate the fallout of his
actions regarding his stock purchase. With the prominent media scrutiny over those,
had Sokol remained in a leadership role at Berkshire, the reputation of the company
could have suffered, resulting in a shift away from the high ethical standards he and
Buffet instilled in the organization’s culture.
If a leader is not seen modeling ethical behavior, the employees in the organization
may not think to incorporate ethics automatically into their daily operations. Making
ethical choices must be part of “the way we do things around here,” or it will not become
a part of the organization’s culture. Moreover, as Buffet says, “Culture, more than rule
books, determines how an organization behaves.”35

—Pause—Take a moment to reflect on the following questions. Note your initial


thoughts and insights.
1. What if Buffet decided to defend Sokol? After all, Sokol’s choices were not illegal.
2. What would happen if Buffet did not take any action? How would others perceive
his being neutral on this issue? Again, Sokol’s actions were not illegal.
3. Since Sokol’s actions were not illegal, why is this an ethical concern?
4. How would you ensure that members of your organization understand that “legal”
does not necessarily mean “ethical?”

C h a pte r 10 b   3 7 9
Concluding Thoughts on Ethics
The successful strategic leader inspires organizational members on a continuing basis
to be moral and ethical thinkers and to be consciously aware of being ethical in both
actions and deeds. Furthermore, the strategic leader needs to establish ethically based
codes of conduct and supporting systems and processes, e.g., rewards for being ethical
and punishment for being unethical.
In summary, to have an ethically-behaving organization that focuses on doing
the right thing, strategic leaders must exhibit outwardly-ethical behavior in all they
do—all the time—not just when the situation demands it. Leaders must be personally
involved in establishing and communicating desired ethical expectations on multiple
levels, in multiple ways. They must also provide mechanisms for ample feedback to
monitor how well the organization is doing from an ethical perspective. As sum-
marized by Trevino and Brown, “If management says, ‘We want you to do the right
thing, the ethical thing, and we’re going to try to create a culture that helps you to do
that,’ employee response should be quite positive so long as employees believe that
management is sincere and they observe consistency between words and actions.”36
There are a number of organizational climates and cultures important to organi-
zational effectiveness and ultimate success. Strategic leaders should create and shape
organizational climates and cultures that promote:
1. ethical decisionmaking and actions
2. creativity and innovation
3. accountability and excellence
4. shared information and learning
5. organizational flexibility and inquisitiveness
6. customer-centric perspective
7. shared vision and mission.

Building a Climate and Culture for Innovation


Innovation is critical to organizational success in today’s VUCA world. As busi-
ness consultant and author Ram Charan espoused, “The speed of change is such
that compared even to two decades ago, ‘innovate or die’ is truly the name of the
game.”37 Gary Hamel put it succinctly, “Somewhere out there is a competitor that
will render your strategy obsolete. Those who live by the sword will be shot by
those who don’t.”38
Charan offered the following comparison regarding approaches to business strat-
egy and innovation:
A culture of innovation is fundamentally different from one that emphasizes
mergers and acquisitions or cost cutting, both in theory and practice. For one

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thing, innovation leaders have an entirely different set of skills, temperament,
and psychology. The M&A leader is a dealmaker and transactionally oriented.
Once completing one deal, he moves to the next. The innovation leader, while
perhaps not a creative genius, is effective at evoking the skills of others needed
to build an innovation culture. Collaboration is essential; failure is a regular
visitor. Innovation leaders are comfortable with uncertainty and have an open
mind; they are receptive to ideas from very different disciplines. They have
organized innovation into a disciplined process that is replicable. And, they
have the tools and skills to pinpoint and manage the risks inherent in innova-
tion. Not everyone has these attributes. But companies cannot build a culture
of innovation without cultivating people who do.39
To create a climate and culture for innovation requires a culture of collaboration
and learning. In effect, “innovation is a social process”—a process that is embedded in
an organization that values learning and sharing. “And this process can only happen
when people do that simple, profound thing—connect to share problems, opportuni-
ties, and learning. To put it another way, anyone can innovate, but practically no one
can innovate alone.40
A key ingredient in developing a climate and culture of innovation is a tolerance
for failure. For example, the 3M Company is a model for innovation. “The bedrock
value shaping the culture at 3M is an unshakeable belief in the power of ideas and
individual initiative. The company also recognizes that entrepreneurial behavior
will continue to flourish only if management is willing to accept and even applaud
‘well-intentioned failure.’ At 3M the tendency is to ask not why did you fail, but what
did you learn?”41 Similarly, at P&G, A.G. Lafley points out that, “We’ve made learning
from failure a regular practice to improve our ability to manage risk.”42 Google also
has an innovative culture and a tolerance for failure. Describing his outlook regard-
ing innovation and failure to the Economist, Eric Schmidt, Google CEO, encourages,
“Please fail very quickly—so that you can try again.”43

The “Self-Esteem” Movement


As noted in Part I of this chapter, the “self-esteem” movement imbedded in many
Millennials a culture that everyone who puts forth an effort is to be praised and is
special, even if the work results are lackluster. Katrina Trinko suggested, “The self-
esteem movement that heaps praise on mediocrity might be mucking up this country’s
economic engine.” She posits that such a culture can stifle incentive and innovation.
She explained, “Essentially, when children are praised readily and frequently, regard-
less of their efforts’ outcomes, there is no incentive for them to strive for genuine
excellence—or even recognize that it can exist.”44 Consequently, as noted previously,
strategic leaders need to have a good understanding of the various groups of cultures

C h a pte r 10 b  3 81
that make up an organization and how best to engage those cultures into a collabora-
tive, mutually supporting, innovative culture.

Building Innovative Processes and Budgeting Time and Money


Google and other innovative companies build into their budgets both time and
funding, as well as establish processes to reinforce the desired creative and innova-
tive climate and culture. For example, employees generate many of the new ideas.
Using a prescribed time allocation system, technical employees are required to
spend 80 percent of their time working on their respective core business responsi-
bilities and projects. However, the other 20 percent is discretionary time they can
use to work on any technical project of their choosing. This is not simply making
use of spare time, but actual “work” time to do something the employee would like
to do. As employees generate ideas, one might be an exciting project to more than
one so they team up.
Google and other companies using a similar approach often provide seed money
for these “start-up” ideas. Clearly, many of those involved in these ad hoc projects are
excited about their projects (many are passionate) and their morale and energy are sky
high. Yet, as Lafley and Bob McDonald point out, there comes a time to decide whether
the organization will fully fund the project or decide to cancel it. Furthermore, “inno-
vative companies like Microsoft and Google not only give employees time to work on
discretionary projects, but also (within certain limits) abolish traditional duty day
constraints entirely. This permits employees to sleep and relax on the job for periods
of time with the understanding that they will be intensively burning the midnight oil
or its equivalent, thereby maximizing their net productivity.”45

Organizational Structure and Innovation


Steve Jobs envisioned that a building’s physical structure could play an important role
in creating a climate and culture of innovation. Following a number of Pixar’s suc-
cesses, “Jobs and Pixar facilities team found an abandoned Del Monte fruit cannery
in Emeryville,” tore it down, and began designing a new building for the 16-acre lot.46
Author Walter Isaacson describes Jobs’ passion with the design of the building and
its resultant impact on culture:
Jobs obsessed over every aspect of the new building, from the overall concept
to the tiniest detail regarding materials and construction. “Steve had this firm
belief that the right kind of building can do great things for culture,” said Pixar’s
President Ed Catmull. Jobs controlled the creation of the building as if he were
a director sweating each scene in a film.47
Jobs desired a huge building, incorporating all functional aspects and special
projects around a central atrium designed to encourage random encounters.

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Jobs was a strong believer in face-to-face meetings. “There’s a temptation in our
networked age to think that ideas can be developed by email and iChat,” he
said. “That’s crazy. Creativity comes from spontaneous meetings, from random
discussion. You run into someone, you ask what they’re doing, you say ‘Wow,’
and so you’re cooking up all sorts of ideas.”48
So he had the Pixar building designed to promote encounters and unplanned
collaboration. “If a building doesn’t encourage that, you’ll lose a lot of innova-
tion and the magic that‘s sparked by serendipity,” he said. “So we designed the
building to make people get out of their offices and mingle in the central atrium
with people they might not otherwise see. . . . Steve’s theory worked from day
one,” Lasseter recalled. “I kept running into people I hadn’t seen for months.
I’ve never see a building that promoted collaboration and creativity as well as
this one.”49
Collaboration and Learning
As illustrated in the above discussions, to have an innovative climate and culture
requires a collaborative culture and organizational learning. Through experimenta-
tion, risk taking, and reflective thinking, people are learning. As the system encourages
the sharing of information (rather than hoarding it), someone else in the organization
might be intrigued with the project and will volunteer some of his or her discretionary
time to participate in the project. This requires openness to dialog, ideas, and feedback.
Consequently, strategic leaders need to be role models for establishing organizational
values that reinforce collaborative and learning activities and behaviors, e.g., curiosity
and networking that will enhance a belief system and attitude conducive to innova-
tion. Creating an innovation culture takes time, especially if the leader wants to have it
permeate an entire business unit or company. However, by starting small and focusing
on four important elements—courage, being connected and collaborative, curiosity,
and openness—an innovation culture can be created and nurtured.

Building I nnovation Te a m s: P&G’s Clay St r e e t—


An Example50
In a converted brewery in downtown Cincinnati is a place that looks like both a playground
and a think tank. There are toys, computers, white boards, and crayons. “It’s not unusual
to see people sitting in a circle telling stories,” Lafley and Charan explained.51 Headed by
Dave Kuehler, the Clay Street Project is a global innovation program at Procter & Gamble.
When a significant opportunity or challenge surfaces, one of P&G’s leadership team
sponsors a new team of 10–12 people with members from a variety of functions to work
the issue(s). The sponsor for the project pays a fee to Clay Street to conduct the team
building and problem-solving process. The purpose of the fee is not for Clay Street to

C h a pte r 10 b   3 8 3
make a profit; rather the fee requirement is to ensure that the sponsor is committed to
the project (i.e., “earnest money”) and viewed as valued-added to P&G.52
Assigned to Clay Street for 10 to 12 weeks, new team members are required to
become totally immersed in a creative problem-solving process using Clay Street’s
skilled facilitators to train and guide the team. Members include recognized experts
as well as participants who know nothing about the problem, challenge, service, or
product. Choosing the “nonexpert” team members enhances the likelihood of ensuring
such safeguards as, “to make ‘the emperor has no clothes’ kind of comments.”53 While
on the team, members must work exclusively at Clay Street, including discouraging
emailing with colleagues.
The primary purpose of Clay Street is to create “Eureka!” moments, and Lafley
claims that every team that goes to Clay Street had one or more.54 Usually, Clay Street
has two projects running at any given time—suggesting the value of the process.
During the first 2 weeks, a Clay Street facilitator focuses on building the group into
a team. “Their jobs are to become sponges. To see things with fresh eyes, build deeper
capacity as a team, and build collective knowledge. In this early phase, designed exer-
cises and experiences have one purpose in mind—to develop trust. Team members eat
lunch together every day.”55 Kuehler emphasized, “A team won’t form unless they know
that what they are working on is meaningful and valuable for the organization. They
must know in their hearts and minds that the organization is depending on them to be
successful. It can’t be a ‘blue sky’ exercise.”56
“For the first 2 weeks, led by a facilitator, the team does no nitty-gritty business.
Then the team might start free-associating about ideas connected with their project:
What does a mother want from diapers? What does ‘organic’ mean? They literally
draw their thoughts and fears on big sheets of paper that are pinned up around the
room—an act that itself requires trust.”57 Every day the team is required to start with
“a good-morning circle.” Each person must say, “Good morning,” to each of the other
members—“followed by conversation, which can last anywhere from a few minutes to
a few hours. The idea is to begin each day as people, first, then address real problems
early, in an environment that allows difficult things to be said.”58
As the project continues, after a few weeks the team focuses on the business prob-
lem and their process becomes more structured. Often, outside speakers offer their
insights. Then, “around week six, there is a period of chaos. There is no directive that
says ‘chaos week,’ but it inevitably happens around this time.” This is when the team
is not sure what it is doing or where it is going. The team “is fretful and sometimes
fractious. They can’t believe they are going to be able to complete their task and can be
irritated with both the process and the people running it.”59
Kuehler explained that this period of confusion—referred to as “adolescence”—
is very brief. It is at this point that the facilitator relinquishes some authority and
control,and usually by the seventh or eighth week the team is autonomous. Kuehler

3 8 4   L e a d in g a t t h e S t r a te g i c L eve l
noted that they are “on track” when the team tells the Clay Street staff, “You don’t know
what you are talking about.”60

The “Eureka!” Moment


The design of the process practiced at Clay Street is to create “Eureka!” or “Aha!”
moments. Kuehler noted that the “Aha!” moments usually occur when the team
becomes frustrated, it cannot seem to find the answers, and the room is a mess. At
that point someone mentions something that someone else picks up on. Then “a novel
and higher order always emerges.” Kuehler stated that when it happens, it is magical.61
For example, one of the projects at Clay Street was the effort to revive the brand
Herbal Essences. In 2005, the brand was failing and one of P&G’s leaders, Susan
Arnold, chose a team from across P&G to participate in the process to find a solution.
The team focused on redesigning Herbal Essences to attract women in their late teens
and early twenties. After a number of weeks, team members were becoming very frus-
trated. They decided to send out two teams to shop for natural or organic products.
One team was in their 30s and 40s and the other team was in their teens and 20s. When
they came back, both teams had totally different items. The “Aha!” moment material-
ized when they realized the Generation-Y women had different beliefs and tastes from
the Boomer/Generation-X perceptions. They also had a number of additional “Aha!”
moments during the next 2 weeks.
As a result, the team developed and presented a proposal to P&G’s leadership
that included a total change of the formula and a revamping of the branding and
packaging. Clearly, what they were proposing was a big risk. Yet Arnold provided the
backing including $1 million in capital to retool the manufacturing line. In addition,
she pushed the team to bring the product to market in just 12 months rather than the
usual 24 to 36 months. In only 18 months, the product was selling in stores, resulting
in another P&G billion-dollar brand.62
In summary, it is clear that to have an innovative organization, both the climate
and culture must support and reward the desired behaviors required if innovative
thinking and programs are to flourish. The foundation for an innovative climate and
culture is an organizational culture receptive to information and knowledge sharing
and collaboration.

Concluding Thoughts on Climate and Culture


A primary responsibility of the successful strategic leader is leading and managing
change directed and focused on improved mission accomplishment. To the extent
the strategic leader does not successfully fulfill his or her responsibility, the organiza-
tion is highly likely to stand still and die a slow death. Recall IBM before Gerstner’s
revolutionary culture change. Rooted in prior successes, IBM became inward rather

C h a pte r 10 b   3 8 5
than outwardly focused and forward-looking. The workforce was demoralized and
employees were leaving in masses. Business experts were writing off the company.
Gerstner had to lead IBM through change, and his successor, Palmisano, had to
continue Gerstner’s momentum. A leader needs to be able to see when and where to
make such changes.
Very simplistically, climates—which are short-term and mainly a function of the
philosophies, attitudes, and behaviors of the senior leader—can range from either
nurturing (positive) to demoralizing (negative) with respect to personal morale,
perceptions regarding coworkers, and perceptions regarding leaders. On the other
hand, cultures—which are longer-term, difficult to change, and mainly perpetuated
by members of the organization—can be either adaptive or maladaptive with respect
to their environments and the existential need to change. One can view culture as a
lens that filters the leader’s actions, and the use of that lens will greatly influence the
chances of success or failure at the level of organizational climate.63
Recall the iceberg analogy at the beginning of this chapter: the strategic leader
directly influences and contributes to positive organizational climate, but indirectly (and
over the long term) affects its culture at the level of beliefs and values. Strategic leaders
should understand the important and pivotal role played by culture, and the factors that
influence it, before they begin taking steps to leading and managing change.

NASA—A Mini Case Study64


“If you do not manage culture, it manages you,” Edgar Schein, Professor Emeritus MIT
and culture scholar, argued, “and you may not even be aware of the extent to which this
is happening.”65 This case study reviews the National Aeronautics and Space Agency
(NASA) culture, how that culture developed, and its role in the losses of the Challenger
in 1986 and Columbia in 2003.
In 1958, Congress created NASA for the peaceful exploration of space. Beginning
in 1972, the mission of NASA began to blur when the Nixon administration replaced
the Apollo program with the Space Shuttle. Expectations were that the reusable shuttle
would reduce costs and be used jointly for military, commercial, and scientific pur-
poses.66 In 1983, when the Reagan administration introduced the “Star Wars” program,
the space shuttle gained an additional role as a platform for testing weapons.67
As mounting pressures for cost reduction along with interfering politics weighed
on NASA, the Space Shuttle program continued to experience “mission creep.” As a
result, agency engineers began to push the limits of acceptable safety risks.68 In addition,
public perceptions of NASA’s programs as new and exciting were no longer at their peak.
NASA starting viewing itself as an operational rather than experimental organization.
Its engineers and managers began comparing their programs to Japan’s automotive
manufacturing and Lockheed Martin’s aviation organizations.69

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Launching a space shuttle three to six times a year certainly was not a “routine”
process. For example, risk calculations determined that losing an orbiter or crew on a
mission was 1 in 77,70 whereas the risk of being involved in an airplane accident was 1
in 11 million.71 However, the NASA workforce became complacent with risk, forgetting
they were an experimental organization,72 an organization whose missions frequently
involved significant hazards and challenges.73
When an organization’s management and operational frame of reference evolves
from a raison d’être of experiment and risk to “just another operation,” a significant
and perilous cultural change is taking place and the original focus of that organization
becomes lost.74 “To the extent stated values are not operating values” Jacobs posited,
“organizational performance will be compromised to some extent, because members
will question what is believable, and commitment will suffer to the extent what is believ-
able is questioned.”75 NASA stopped demonstrating the characteristics of a learning
organization and a risk escalation culture was set in motion.76 On January 28, 1986, dur-
ing its 25th mission flight, the Space Shuttle Challenger exploded less than 90 seconds
after lift-off, killing all seven crewmembers.

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. Were you ever part of an organization where the stated values and the operating
practices were not congruent? How did the leadership reinforce this?
2. Were you ever part of an organization whose priorities changed? How did that
affect the climate/culture? Did it ultimately affect both climate and culture?
3. What can leaders do to monitor the pulse of organizational climate and culture
effectively when vision, strategy, or values begin to shift?

The post-Challenger investigative commission revealed the technical cause of


the space shuttle’s explosion was the failure of an O-ring. However, the report also
exposed characteristics within the organizational culture of NASA that contributed
to this tragic outcome. For example, counters placed on the desktops of all work-
ers showed the time remaining until the next launch. This self-imposed guideline
fostered an environment where the priority was to complete the steps needed to
meet the deadline rather than to ensure the safety of this experimental program.77
Engineers expressed concerns over the O-rings prior to the Challenger disaster,78
but pressure to maintain the published launch schedule led managers to minimize
those concerns.79
The day before the Challenger launch, Morton Thiokol, manufacturer of the
Solid Rocket Motor (in which the failed O-ring was located), recommended against
the launch because the projected temperatures were to be lower than normal. The

C h a pte r 10 b   3 8 7
company was concerned about the integrity of the O-ring seals when launching took
place in cooler temperatures.80 NASA managers argued strongly that more than 20
previous missions launched in cooler weather and did not experience problems with
the O-rings. This attitude led to the minimization of the O-ring problem81 and, fol-
lowing persuasion by NASA managers, Thiokol reversed its recommendation and the
launch went forward.82
In The “Challenger” Launch Decision, Diane Vaughan refers to this type of think-
ing as “the normalization of deviant.”83 She elaborated, “[T]he decision making process
itself was the key factor in the normalization of this technical deviation.”84 NASA
leaders discounted the concerns and failed to ensure that members of its organization
(including supporting contractors) followed safety practices consistent with high-risk
operations.85

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. Have you experienced “the normalization of deviant” in your organization?
2. Is the “it hasn’t happened before” argument acceptable in an organization whose
mission is experimental? How about in an operational organization?
3. Because nothing in a particular process previously failed, how does a leader deter-
mine which step or issue to overlook? How do the actions/attitudes of the leader
and senior management affect the rest of the organization?

The events leading up to the Columbia disaster in 2003 suggested strongly


that this normalization was still the active culture. According to the Columbia
Investigation Accident Board (CAIB) report, the technical cause of Columbia’s
disintegration upon reentry was due to a piece of foam detaching from the shuttle
and striking the wing just after lift-off. The report also outlined the operational
practices leading up to that failure, and those findings were eerily similar to those
of the post-Challenger investigation.86
“Complex systems almost always fail in complex ways,” the CAIB report stated.87
Rooted in the technical failures leading to the losses of the Challenger and Columbia
were social causes.88 Moreover, “blaming a failure on the final step in a multi-part
process without examining all steps before that will not provide an accurate view of
what needs to change in order to avoid a repeat of that failure.”89 The CAIB report
concluded, “We are convinced that the management practices overseeing the Space
Shuttle Program were as much a cause of the accident as the foam that struck the
left wing.”90

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.

3 8 8   L e a d in g a t t h e S t r a te g i c L eve l
1. When have you seen a failure repeat itself in an organization? Was it due to an
uncorrected end problem or a flaw in the process or culture? How do you know
the difference?
2. How does leadership find the true nature of the problem when it is rooted in the
culture? How does a leader know that the root of the problem is resolved?

Although foam strikes did not bring down the Challenger, both the Challenger and
the Columbia experienced them on prior missions.91 On at least five previously docu-
mented occasions, foam detached and struck the Space Shuttle during a mission. Since
that never caused a problem, NASA treated it simply as an anomaly.92 Post-Columbia
investigations found that many lower-level managers noted concerns regarding the foam
strikes but did not push for discussions on it with upper management. Upper management
considered this an anomaly, and NASA’s senior leadership consisted of members with
intimidating personalities who ran their management meetings with non-open styles.93
As early as 1978, there were reports of intimidating leadership styles in NASA.
Personnel conducting management seminars with employees concluded that group-
think was inherent in the culture. The evaluations concluded that internal career
ladders, masculine management styles, homogeneous professional backgrounds,
political pressures to succeed, and overconfidence due to a history of successes created
an environment where dissention was not acceptable.94
In 2003, James Oberg, a space analyst for NBC and a 22-year veteran of NASA,
observed that “an inbred ‘groupthink’ that is not conducive to disagreeing with what
management wants”95 was operating within NASA. He added, “anyone who felt dif-
ferently [than management] risked being branded [as] not a team player.”96 Audio
recordings of management meetings demonstrated this style as managers would solicit
for inputs by saying, “Then there is no dissent on that point, is there?”97

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. Observing phrases, tones, nonverbal actions, or other cues by leaders in man-
agement meetings, how do those actions influence and foreshadow the tone and
response of the meetings?
2. In NASA’s case, these cues created non-dissent. How can a leader use tones and
cues to create and reinforce positive change?

Oberg also discussed how, in the days of Apollo, large pools of workers were
available from which to recruit space teams, whereas, more recently, most employees
worked only at NASA. Sometimes, new leadership came from the hiring of retired
military officers, but those leaders brought a “following orders” mindset. These hiring
practices, Oberg noted, “encouraged an inbred ‘groupthink’ that was not conductive

C h a pte r 10 b   3 8 9
to disagreeing with what management wants.”98
Oberg shared the content of insider emails in which employees discussed the
NASA culture during and prior to the Columbia disaster of 2003. “How is the culture
going to change,” one employee stated, “when you are bringing in people that have
been trained to accept and have only worked with one cultural style? And that is the
cultural style that got you into trouble.”99 Another remarked, “There were times that
several of us talked about how the atmosphere was reverting to a pre-Challenger style
even a couple of years before Columbia.”100 Even in the CAIB report, one of the more
damning conclusions was that “NASA had managed to re-create an atmosphere that
officials had sworn would be banished forever after the Challenger exploded—one
in which ‘engineers had to produce evidence that the system was unsafe rather than
prove that it was safe.’”101

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. How does a leader ensure he or she has a balanced workforce? How does a leader
know when the culture exhibits “groupthink?”
2. How does a leader create and sustain true cultural change in an organization
where veteran workers have similar backgrounds and expectations and have
always done it that same way?
3. How do leaders keep themselves, as well as the organization, from reverting to
“the way it has always been done before?”

For a few years following the Challenger accident, NASA reestablished a focus on
safety, but in the 1990s, under the administration of Dan Goldin, it entered the era
of “faster, better, cheaper” (FBC).102 Successes with the Mars Pathfinder, which were
significantly more cost-effective than the Viking project of the 1970s, had Goldin tout-
ing his methods and calling previous techniques unnecessary.103 In a highly technical
environment, failures are generally limited because of crosschecks, but when people
become complacent, skip processes, forget details, or accept certain risks as routine
because of a “we know” attitude, as they did in NASA, it is just a matter of time before
disaster will strike.104
A 2004 article in the Air & Space Power Journal discussed NASA’s “we know”
attitude. It characterized the culture as not only closed to communication, but also
as arrogant.105 “Experienced space workers,” Oberg observed, “both those still inside
the program as well as retired, say this widespread attitude of being too smart to need
outside advice has created a culture resistant to—and indeed often contemptuous
of—outside advice and experience.”106 This was demonstrated during NASA’s response
to questions after the 1999 loss of a fleet of Mars probes. When asked, “Will anyone
be disciplined because of the loss?” NASA officials responded, “No.” The official then

3 9 0   L e a d in g a t t h e S t r a te g i c L eve l
added, “After all, who would we replace them with? We already have the smartest
people in the country working for us.”107

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. What are your thoughts regarding “faster, better, cheaper?” Is it an appropriate
philosophy for an experimental organization? How about an operational one?
2. Was the NASA official’s response to the question appropriate for an experimental
or learning organization? Would it be appropriate for an operational organization?
3. Have you experienced a “we know” attitude within an organization? What is
positive about that kind of attitude? Negative?
4. How does a leader know when the culture does not encourage learning? How can
a leader be sure he or she is not the one creating a non-learning culture?

Former IBM CEO Louis Gerstner explained in Who Says Elephants Can’t Dance
that “Culture isn’t just one aspect of the game—it is the game.”108 Truly effective lead-
ers must recognize that any organization can fall into complacency, explaining why
periodic reviews and assessments of organizational practices are mandated. NASA fell
into complacency. Simply stated, people in the NASA community had “not absorbed,
or had forgotten, these lessons” (from previous investigations).109
The CAIB investigation identified an underlying weakness in NASA’s history and
organization.110 History did seem to repeat itself, as many similarities in the cultural
environment during the Challenger explosion were also present in the environment
leading up to the Columbia loss. “NASA’s management and cultural mind-set were as
culpable,” the CAIB report noted, “because they paved the way for the foam strike to
do its deadly work. Before the mission, managers did not heed foreshadowings of the
potential threat; and during the mission, they allowed deadline pressures to squelch the
aggressive pursuit of information about the possible damage and its implications.”111
Sean O’Keefe led NASA from 2001 to 2004, with the Columbia disaster of Febru-
ary 1, 2003, occurring on his watch. Some employees felt O’Keefe was to blame for
what seemed to be pressure to meet the Columbia launch deadline.112 Scheduling four
shuttle flights between October 2003 and February 2004 was a concern for the CAIB.
It found that keeping that kind of a schedule would require a processing push similar
to the one that led to the Challenger accident.113
Also on the O’Keefe watch, practices of deviating from standard NASA guide-
lines occurred. For example, in the pre-orbit processing of Columbia, 18 tools were
unaccounted for, all of which could be hazardous in a microgravity environment.
Workers at the Kennedy Space Center said the items missing were not of significant
consequence and were considered debris with which they should not be concerned.114
Though this debris was not what brought down the Columbia, the leaders again seemed

C h a pte r 10 b  3 91
to be following the mindset of “it has never been a problem before.” Gerstner pointed
out, “Most of the really important rules aren’t written down anywhere.”115 If work-
ers observe leaders cutting corners, making exceptions, and waiving requirements,
the mindset that those things are acceptable will transcend through the ranks of the
employees. Verifying the completion or required steps is not the same thing as verify-
ing that the completed steps were correct.

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. How does a leader ensure the organization is not falling into complacency?
2. If something was never a problem previously, how do leaders know it will never
be a problem? In addition, how do they demonstrate this issue to the organiza-
tion’s employees?
3. What type of unwritten rules have you followed within an organization? How does
a leader influence and/or articulate and formalize the organization’s unwritten
rules?

Though many blamed O’Keefe for the culture leading up to the Columbia disaster,
he received credit for reorganizing NASA following the incident. The four launches
scheduled from October 2003 to February 2004 were cancelled post-Columbia.
O’Keefe also removed a number of high-level shuttle managers and began implement-
ing many of the recommendations from the CAIB report in the workforce. He stated
that he intended to follow the full range of CAIB recommendations and that the agency
had set up a special team to help “change the culture.”116
O’Keefe continued to demonstrate this commitment when he halted NASA’s
schedule for a 2006 mission to service the Hubble Space Telescope. He said he was
not sure NASA could meet the CAIB safety requirements by 2006 and that the risks,
at that time, were just too great. The CAIB hailed his decision, but many astronomers
and senators openly criticized it and stated the mission was worth the risk.117
NASA’s decisionmaking process continued to be more cautious after both Colum-
bia and O’Keefe’s tenure. A Discovery launch scheduled for February 19, 2009, did not
take place118 following reported concerns about the hydrogen values and hydrogen
leakage.119 Following the repairs, the Discovery lifted off without any problem on
March 15, 2009.120
NASA leaders provided further evidence of a more cautious culture when they
told Congress they could not meet the 2016 deadline for production of the new heavy-
lift rocket slated to replace the Space Shuttle. Senators Kay Bailey Hutchinson (R-TX)
and Bill Nelson (D-FL) balked at NASA’s delay, stating that the agency was not able to
justify the delay appropriately and added that Congress might defer funds for Kennedy
Space Center to the heavy-lift rocket program, if needed.121

3 9 2   L e a d in g a t t h e S t r a te g i c L eve l
—Pause—Take a moment to reflect on the following questions and capture your
initial thinking and insights.
1. Were you ever a part of an organization that received public or political pressure
to meet deadlines? How does a leader keep the organization from establishing a
compliant culture that succumbs to that pressure at (potentially) greater costs?
2. How does a leader determine when to be cautious when facing public, political,
or financial pressures, and when it is acceptable to take the risk?

Changing a culture is complex. Changing behaviors learned over decades is dif-


ficult.122 According to Jacobs, in the strategic environment everything is always in flux;
therefore, change within the organization should be continuous.123 Recall Gerstner’s
words earlier in the chapter, “You can’t lead a revolution [on culture change] from the
splendid isolation of corporate headquarters. . . . What you can do is create the condi-
tions for transformation. . . . Management doesn’t change culture . . . [it] invites the
workforce itself to change.”124 With cultural change, it is necessary to take it slow and
for the leadership to continue leading by example.125
NASA seems to be continuing on that path since 2003 to create a culture of open
communication with renewed focus on safety and mission. In January 2011, during a
wreath-laying ceremony at Arlington National Cemetery marking the 25th anniver-
sary of the Challenger disaster, Major General Charles Bolden, USMC (Ret.), NASA
Administrator and former astronaut, reiterated, “In memory of our colleagues, I ask
the NASA Family once again to always make its opinions known and to be unafraid
to speak up to those in authority, so that safety can always be our guiding principle
and the sacrifices of our friends and colleagues will not be in vain.”126

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. NASA cultural change is ongoing. What is the current culture of your organiza-
tion? How long has it been operating? What is your assessment of that culture?
2. What steps would you take to lead an organization through a cultural change?

In summary, this chapter examined the importance of shaping climate and cul-
ture and the methods used to do so. Clearly, climate and culture have major impacts,
either positively or negatively, on organizational performance and the ability of the
organization to either react to changes in the strategic environment or take advantage
of them (both internally and externally).

C h a pte r 10 b   3 9 3
Notes
1
Ethics Resource Center, The Importance of Ethical Culture: Increasing Trust and Driving Down Risks
(Washington, DC: Ethics Resource Center, 2010), 1.
Linda Trevino and Michael Brown, “Managing to be ethical: Debunking five business ethics myths,”
2

Academy of Management Executive 18, no. 2 (May 2004), 71.


3
Trevino and Brown, 71.
4
Ethics Resource Center, The Importance of Ethical Culture: Increasing Trust and Driving Down Risks
(Washington, DC: Ethics Resource Center, 2010), 3.
5
Ibid., 5.
6
Trevino and Brown, 71.
7
Ibid., 72.
Patriza Porrini, Lorene Hiris, and Gina Poncini, Above the Board: How Ethical CEOs Create Honest
8

Corporations (New York: McGraw Hill, 2009), 33–34.


9
Porrini et al., 35.
Marshall Schminke, Maureen Ambrosea, and Donald O. Neubauma, “The effect of leader moral
10

development on ethical climate and employee attitudes,” Organizational Behavior and Human Decision
Processes 97, no. 2 (July 2005), 136.
11
Trevino and Brown, 75.
Author and LtGen Mike Dunn, USAF, discussion with ICAF Students on “Setting Yourself Up for
12

Success Following ICAF,” in 2006.


Boeing, “Code of Conduct,” available at <www.boeing.com/companyoffices/aboutus/ethics/code_
13

of_conduct.pdf>.
Renae Merle, “Boeing CEO Resigns Over Affair With Subordinate,” The Washington Post, March 8,
14

2005, A01, available at <www.washingtonpost.com/wp-dyn/articles/A13173-2005Mar7.html>.


Linda Trevino, Michael Brown, Laura Hartman, “A qualitative investigation of perceived executive
15

ethical leadership: Perceptions from inside and outside the executive suite,” Human Relations 56, no.
1. (January 2003), 25.
16
Trevino and Brown, 75.
17
The “gossip” is sometimes identified as the “telephone” game of whispering a message to a person and
having it circle through a number of people to see how the message changes. As the message is passed
along, each individual adds to the misinterpretation and error, resulting in the person at the end, who
is required to take action, receiving a totally distorted message and improper direction and guidance.
Craig Johnson, Meeting the Ethical Challenges of Leadership, Edition 3 (Thousand Oaks, CA: Sage,
18

2009), 294–296.
19
Carly Fiorina, Tough Choices (New York: Penguin, 2007), 265.
20
Craig Johnson, 294.
21
Ibid., 295.
22
Ibid.
Ellen Nakashima, “Between the Lines of HP’s Spy Scandal: Hearing Papers Show Probe Fears
23

Ignored,” The Washington Post, September 28, 2006, available at <www.washingtonpost.com/wp-dyn/


content/article/2006/09/27/AR2006092701304.html>.
24
Fiorina, 323.

3 9 4   L e a d in g a t t h e S t r a te g i c L eve l
Lockheed Martin, “How Ethics Process Works,” available at <www.lockheedmartin.com/data/assets/
25

corporate/documents/ethics/HowEthicsProcessWorks.pdf>.
Michael Grojean, Christian Resick, Marcus Dickson, and D. Brent Smith, “Leaders, Values, and
26

Organizational Climate: Examining Leadership Strategies for Establishing an Organizational Climate


Regarding Ethics,” Journal of Business Ethics (2004), 55, 229.
27
Ibid., 55, 233.
T. Owen Jacobs, Strategic Leadership: The Competitive Edge (Washington, DC: National Defense
28

University, 2005), 196.


29
Ethics Resource Center, 2009 National Business Ethics Survey Supplemental Research Brief (Wash-
ington, DC: Ethics Resource Center, 2009), 7.
30
See <www.berkshirehathaway.com/letters/2010ltr.pdf>, 27.
Ibid., 26.
31

32
See <http://money.cnn.com/2011/03/31/news/companies/david_sokol_berkshire.fortune/index.htm>.
Brian Dumaine, “David Sokol’s lost lessons in integrity,” CNNMoney, March 31, 2011, available at
33

<http://money.cnn.com/2011/03/31/news/companies/david_sokol_berkshire.fortune/index.htm>.
34
Ibid.
35
See <www.berkshirehathaway.com/letters/2010ltr.pdf>, 27.
36
Trevino and Brown, 78.
A.G. Lafley and Ram Charan, The Game-Changer: How You Can Drive Revenue and Profit Growth
37

with Innovation (New York: Crown, 2008), 22.


38
Gary Hamel, Leading the Revolution (New York: Penguin Group, 2002), 11.
39
Lafley and Charan, 24.
40
Ibid., 26.
41
Brian Leavy, “A leader’s guide to creating an innovation culture,” Strategy & Leadership 33, no. 4
(2005), 39.
42
Lafley and Charan, 8.
Bala Iyer and Thomas Davenport, “Reverse Engineering Google’s Innovation Machine,” Harvard
43

Business Review (April 2008), 66.


44
Katrina Trinko, “Is narcissism killing innovation in America?” USA Today, December 21, 2011, 9A.
45
Personal communication with COL Mark Vaitkus, ICAF Strategic Leadership faculty member.
46
Walter Isaacson, Steve Jobs (New York: Simon & Schuster, 2011), 430.
47
Ibid.
48
Ibid., 431.
49
Ibid.
50
For more on the Clay Street Project and case studies, see <https://theclaystreetproject.pg.com/clay-
street/perspectives/default.aspx>.
51
Lafley and Charan, 223.
52
David Kuehler, “Archetypal Coherence,” available at <www.youtube.com/watch?v=tPhvorkbkDQ>.
53
Lafley and Charan, 225.
Darrell Rigby, Kara Gruver, and James Allen, “Innovation in Turbulent Times,” Harvard Business
54

Review (June 2009), 86.

C h a pte r 10 b   3 9 5
55
Lafley and Charan, 225.
56
Kuehler.
57
Lafley and Charan, 225.
58
Ibid., 226.
59
Ibid.
60
Ibid.
61
Ibid.
62
Ibid., 229–230.
63
COL Mark Vaitkus, unpublished lesson plan for ICAF Strategic Leadership Course.
The author expresses appreciation to Nicki Dover, Management Case Study Writer, for her research
64

and drafting of this case study.


Edgar Schien, Famous Quotes on Culture, available at <www.culturedyn.com/Famous percent-
65

20Quotes percent20on percent20Culture.htm>.


Richard Cook, “NASA’s Culture Kept Safety from Forefront,” Dandelion Salad, January 29, 2011,
66

available at <http://dandelionsalad.wordpress.com/2011/01/29/nasa percentE2 percent80 percent99s-


culture-kept-safety-from-forefront-by-richard-c-cook/>.
67
Ibid.
Steven Johnson, “Success, Failure, and NASA Culture,” Ask Magazine/Insight 53, available at <http://
68

askmagazine.nasa.gov/pdf/pdf32/NASA_APPEL_ASK_32i_success_failure_nasa_culture.pdf>.
69
Ibid.
Becky Iannotta, “Space Shuttle Extension Options Carry High Costs,” Space News, January 6, 2009,
70

available at <www.space.com/6285-space-shuttle-extension-options-carry-high-costs.html>.
Kendra Dhistrom, “Airplane Safety: Overcome Your Fear of Flying,” February 16, 2006, available at
71

<www.associatedcontent.com/article/146247/airplane_safety_overcome_your_fear.html>.
Tom Davenport, “25 Years After Challenger, Has NASA’s Judgment Improved?” Harvard Business
72

Review Blogs, January 28, 2011, available at <http://blogs.hbr.org/davenport/2011/01/25_years_after_


challenger_has.html>.
Columbia Accident Investigation Board, Report Volume 1 (August 2003), 6, available at <http://caib.
73

nasa.gov/news/report/pdf/vol1/full/caib_report_volume1.pdf>.
Duan W. Deal, “Beyond the Widget: Columbia Accident Lessons Affirmed,” Air and Space Power
74

Journal 18, no. 2 (Summer 2004), 35.


75
Jacobs, 188.
Dawn Gilpin and Priscilla Murphy, Crisis Management in a Complex World (New York: Oxford
76

University Press, 2008), 49.


77
Deal, 33.
78
Deal, 34.
79
Davenport.
80
Ibid.
81
Ibid.
82
Ibid.
83
Diane Vaughan, The Challenger Launch Decision (Chicago: The University of Chicago Press, 1996), 394.
84
Ibid.

3 9 6   L e a d in g a t t h e S t r a te g i c L eve l
85
Deal, 34.
86
Cook.
87
Columbia Accident Investigation Board.
88
Steven Johnson.
89
Columbia Accident Investigation Board.
90
Ibid.
91
Deal, 34.
92
Ibid.
93
Ibid., 37.
Andrew Dunar and Stephen Waring, “The Challenger Accident” in Power to Explore: History of
94

Marshall Space Flight Center (Washington, DC: NASA, 1999), 377, available at <http://history.msfc.
nasa.gov/book/chptnine.pdf>.
James Oberg, “NASA’s culture of denial,” MSNBC, August 25, 2003, available at <www.msnbc.msn.
95

com/id/3077543/ns/technology_and_science-space/t/nasas-culture-denial/>.
96
Ibid.
97
Deal, 37.
98
Oberg.
99
Ibid.
100
Ibid.
Kathy Sawyer and Eric Pianin, “Report Blames Flawed NASA Culture for Tragedy,” The Washington
101

Post, August 27, 2003, available at <www.washingtonpost.com/wp-dyn/content/article/2006/01/26/


AR2006012601160.html>.
102
Steven Johnson.
103
Ibid.
104
Ibid.
105
Deal, 38.
106
Oberg.
107
Ibid.
108
Louis Gerstner, Jr., Who Says Elephants Can’t Dance? (New York: HarperCollins, 2002), 182.
109
Deal, 32.
110
Columbia Accident Investigation Board.
Kathy Sawyer and Eric Pianin, “Report Blames Flawed NASA Culture for Tragedy,” The Washington
111

Post, August 27, 2003, available at <www.washingtonpost.com/wp-dyn/content/article/2006/01/26/


AR2006012601160.html>.
112
Ibid.
113
Deal, 33.
114
Deal, 33.
115
Gerstner, 182.
116
Sawyer and Pianin.
Robert Britt, “NASA explains Hubble decision,” MSNBC, February 4, 2004, available at <www.msnbc.
117

msn.com/id/4163294/ns/technology_and_science-space/>.

C h a pte r 10 b   3 9 7
Davenport.
118

119
Marcia Dunn, “After weeks of delay, a beautiful liftoff,” Associated Press, March 15, 2009, available at
<www.msnbc.msn.com/id/29706064/ns/technology_and_science-space/t/after-weeks-delay-beautiful-
liftoff/>.
120
Davenport.
Jason Rhian, “NASA Says It Cannot Produce Heavey-Lift Rocket on Time, Budget,” Universe Today,
121

January 17, 2011, available at <www.universetoday.com/92535/nasa-says-it-cannot-produce-heavy-lift-


rocket-on-time-budget/>.
122
Jacobs, 198.
123
Ibid., 198.
124
Gerstner, 187.
125
Jacobs, 198.
Hank Lacy, “25th anniversary of Challenger disaster arrives Friday as losses of Columbia and Apollo
126

1 remembered,” Examiner.com, January 27, 2011, available at <www.examiner.com/article/25th-


anniversary-of-challenger-disaster-arrives-friday-as-losses-of-columbia-and-apollo-1-remembered>.

3 9 8   L e a d in g a t t h e S t r a te g i c L eve l
CHAPTER 11 | Leading and Managing
Transformational Change

Strategic Leadership: Turning Around the Mayo Clinic


Jacksonville
In 2008, as the Mayo Clinic in Florida moved into a new facility in Jacksonville, it
was suddenly on track to lose $50 million. Bill Rupp, a Mayo Health System execu-
tive, led a team tasked to visit Jacksonville “to determine whether it could be turned
around financially, or if consideration should be given to closing the facility, selling
it, or seriously downsizing the organization.” After interviewing 280 people during a
2-month review, the team reported: “Yes, Mayo Clinic in Florida can be fixed. Here
are 72 suggestions, and by the way 71 of them came from the front line staff.” Dr.
Rupp emphasized the importance of the front line. “You’ve got to really listen to them,
because they know how to fix it.” Mayo then asked Rupp to take over the CEO position
and help to turn the Jacksonville clinic around.

Leadership Approach
Addressing his approach to get Mayo Jacksonville fixed, Rupp emphasized, “Our
leadership team had the burning platform. Jacksonville staff members were afraid
that the facility might be sold or downsized. It was a legitimate fear.” The vision was
clear at the time—survival. He acknowledged that there was (and continues to be)
resistance to changes. “But I really believe that if you can get the staff to focus upon
implementing their ideas, the important leaders, the early adopters, will generate
excitement and the rest will come along pretty rapidly. I tend to leave the resisters
out there. They either eventually will come along or, if somebody is a terrible resister,
perhaps they don’t belong here.”
Dr. Rupp acknowledged that he was heavy-handed early on. “I probably wouldn’t
do it—I don’t have to do it that way now. We now have peoples’ attention, and trans-
parency works. Transparency is a big motivator.” Telling the story of his first day as
CEO, he described how he walked into a nursing station and saw a large white board
of quality measures in the nursing break area. Some indicators were excellent while
others needed improvement. He said, “Why don’t you put that quality board up in
the hallway where everybody, staff, patients, and family can see it?” They told him,
“We don’t do that here.” He said, “Transparency is important. I’ll be back at 3 o’clock
and I’d like to see that quality board in a public area.” An hour later, he got a phone

C h a pte r 11   3 9 9
call. They told him, “You can’t do that. The facilities committee has to deal with that.”
He said, “OK, well, we’ve just disbanded the facilities committee. Let’s put the qual-
ity board in the public area.” An hour later, he got another phone call that said, “We
can’t do it. Infection Control has to sign off on it.” This was his first day, and he was
already going against the culture. Therefore, he said, “Well, somebody is not listen-
ing. Because I am going to be up there at 3 o’clock, and I want to see it in the public
area.” When he went up at three o’clock the quality board was in the public hallway,
and over the next 6 to 8 weeks, quality boards appeared in the hallway of every other
patient area in the hospital.
Later during his first week, he used another issue to make a point. “The value that
drives us at Mayo is ‘The needs of the patient come first.’ But we forget that occasionally.
So I used that value to support another change implemented within the first month of
my arrival regarding intensive-care unit visiting hours.” He said, “Visiting hours are
gone. Our patients’ families can be here with their loved ones whenever they want.”
Dr. Rupp used these two very visible examples to say, “We are in danger of going out
of existence. So we are going to do things differently.”

Initial Steps: Two additional examples of early actions


Dr. Rupp changed the leadership structure so the leadership group included the chairs
of five major departments. The 15 members of his senior leadership team are now
all major players in his organization. They work very closely together. They gather
at his house for a day and a half every quarter to work on longer-term strategy and
on functioning as a team. There is a lot more alignment because the people making
the decisions are the ones who have to implement them. “If we say we are going to do
something, the people around the table know they have to get it done.”
Based upon a committee system, the Mayo Clinic culture was to vet ideas and
build consensus. However, the committee structure became a stumbling block to
progress and rapid change in Florida. Consequently, he explained, “We dramatically
reduced the committee structure. We eliminated 12 committees and took 320 people
off the committees. Many committees now are down to one administrator and one
doctor who just get the work done.” In addition, he made a great effort to bring the
skills of Lean Six Sigma thinking to many teams and leadership groups. He also insti-
tuted most of the 71 steps the staff said the Clinic should take. That helped to build
trust and credibility along with the conviction that if someone makes a suggestion for
improvement, there will be follow-up action.

Strategy
Dr. Rupp established three initiatives: get costs down and break even by 2009; focus
on healthcare-acquired infections (e.g., the pneumonia that patients on ventilators
can acquire or the infections that can come from having central lines); and learn the

4 0 0   L e a d in g a t t h e S t r a te g i c L eve l
skills to take out process inefficiencies as they go forward. Addressing infections, for
example, Rupp noted, “We treat very very sick patients here. We are a large solid organ
and bone marrow transplant center. Therefore, there are a lot of central lines and other
devices that are vulnerable to infection, as well as urinary catheter infections and
surgical site infections. We set a goal of eliminating those infections.” The objective
resonated with physicians and healthcare workers as they rallied around goals that
improved the care of their patients. “They can get excited about getting rid of infec-
tions. Many doubted we could get to zero, but I think we will. Healthcare professionals
get excited about clinical outcomes, so we had a deliberate focus on clinical outcomes.”
As one example, Rupp reported that in 2008 Mayo had 14 ventilator pneumonias (each
one cost $25,000). A year later they had seven; and by 2010 (when he was interviewed),
the hospital only had two. Clearly, the focus and emphasis is working. “We are making
our financial margin targets for the first time in our history, and people are very proud
of the clinical results we are getting here, as well. . . . How do you do it? It’s a combina-
tion of improving just a few things we’re working on and being very very transparent
about the way we are doing it.”
Regarding those who might resist changes, he stated, “Ultimately, we must all be
aligned around the same goals and the strategies to reach those goals. Somebody who
disagrees is fine. Disagree as vocally as you would like. But ultimately, if a decision is
made to proceed in a certain direction, no one can be allowed to continually under-
mine the direction. Undermining the decision once made is not tolerated.”
To sustain momentum, Dr. Rupp argued that, “The currency of leadership is atten-
tion, and what the leader pays attention to, everybody else pays attention to. So when
the leader says, ‘We are going to fix the finances,’ that means it must be important. If I
delegate the finances to somebody else and they say they are going to fix the finances,
it may appear that I don’t care about the finances.” Furthermore, “It’s all about ask-
ing the right questions. I don’t have to personally do the finances. I have to rely upon
someone in that position whom I trust and who will feed me legitimate data. I have to
know when things don’t smell right. I can do that.”
It’s also about creativity and continuous improvement. When attempting new
processes (other than critical medical procedures), there will be mistakes, and orga-
nizational members can learn from those mistakes. “In most of the places where we
are keeping track of successfully-implemented ideas, I want to see lists of things we
tried that didn’t work. Because if we don’t have a list of things that didn’t work, then
we didn’t try anywhere near enough new ideas.”
So much of what we do in healthcare is to prevent lightning strikes. Dr. Rupp
provides a simple example:
When the Orthopedic staff were working on a lean process for hip replacement,
they followed a patient through the whole process, and one of the things they

C h a pte r 11  4 01
discovered is the moment the patient moves from the operating room to the
hospital room, the nurses come in and change all the IV tubing, a cost of about
$85. They throw it away. The question is why do they do that? Well, because
the IV tubing used in the operating room is a different size from that used up
on the hospital floors. Well, why do they use that size in the operating room?
If the patient needs to receive blood, that larger size will allow you to do it a
little faster. How long would it take to change the tubing in the operating room
if we had to? About three minutes. When is the last time we gave blood in the
operating room to an elective hip patient? None in the previous two years. So
you know what happened is one day somebody had to give some blood, they
had to change the IV tubing, and somebody said, “ from now on always use the
big tubing.” They were treating a lightning strike. As a result, we throw away
$85 on every single patient. We build incredibly complex processes because we
have been preventing lightning strikes, instead of analyzing the process, writing
it out on the wall and deciding, “What adds value and what doesn’t add value?”
Then eliminate what does not add value.1

Results
In 2009, Mayo Jacksonville made $43 million—a significant turnaround.
All interviewed senior leaders viewed themselves as “change agents.” The majority
felt being a change agent was a key responsibility for the strategic leader. As identified
in chapter 4, leading and managing organizational change is a critical and ongoing
responsibility of a strategic leader. This responsibility is of key importance for both
short- and long-term organizational viability and success—operationalized through
the requirement to align the organization with the external environment. Interviewed
leaders concurred that transformational change is the most challenging, difficult, and
time-consuming of all change initiatives.

Leading and Managing Transformational Organizational Change


With the ever-increasing turbulence and extraordinary changes and challenges in the
external environment, there are continuous pressures for change in how government
and nongovernment organizations do their business. As noted in chapter 4, the most
comprehensive organizational change approach occurs when the strategic leader
recognizes that the organization must transform the way it does business (or oper-
ates). Because transformational change is both the most important and most difficult
undertaking faced by the strategic leader and the organization, it requires the best of
both strategic leadership and management as depicted in the pie-shaped sector “Lead
Organizational Change,” in the Strategic Leadership Model (figure 2-1). Consequently,
to set the organization for long-term viability and success requires the strategic leader

4 0 2   L e a d in g a t t h e S t r a te g i c L eve l
and his or her strategic leadership team (SLT) to be adept in what it takes to lead and
manage transformational change.
Chapter 4 discussed a number of factors that influence and/or determine the pros-
pects of successful long-term organizational change. For example, table 4-1 outlined
three key areas requiring attention: Inadequate Strategic Leadership, Organizational
Resistance, and Individual Resistance. Certainly these three areas deserve major atten-
tion as the strategic leader proceeds with conceptualizing, planning, and implementing
a transformational change initiative. This chapter examines how the strategic leader
and the leadership team can enhance levels of success while leading and managing
transformational change.

Organizational Change Models


Research and applied management literature offer a wide variety of organizational
change and transformation models that can be adapted and applied by organiza-
tions. Some suggest themes or stages an organizational transformation can follow
to be successful; others identify key drivers to organizational change. For example,
Davis, Kee, and Newcomer identified three general phases that are essential for stra-
tegic leaders to address in leading and managing transformative change, including:
1. The visioning phase (explore, diagnose, create options). This phase involves the
diagnosis of opportunities, threats, and risks for the organization; the explora-
tion of mission and possible futures; and thinking ‘out of the box’ about options
for the future.
2. The strategy phase (strategize, negotiate, mitigate). This phase involves examining
strategic influences, values, and options; negotiating strategic issues and priorities;
and developing strategies to mitigate risks for the organization.
3. The implementation phase (manage, commit, evaluate). This phase involves the
strategic deployment and implementation of the chosen options including specific
goals and objectives, the development of and commitment to specific action plans
and alignment of processes and resources to those action plans, and the measure-
ment of performance and reinforcement of the transformation initiative.2
Regarding the role of the strategic leader or the CEO in transformational change,
McKinsey’s Carolyn Aiken and Scott Keller stated that based on their research and
direct experience in support of numerous CEOs leading transformational change
efforts, four key functions collectively enhance a CEO’s ability to lead and manage a
transformation:
1. Making the transformation meaningful. People will go to extraordinary lengths
for causes they believe in, and a powerful transformation story will create and
reinforce their commitment. The ultimate impact of the story depends on the
CEO’s willingness to make the transformation personal, engage others openly, and
spotlight successes as they emerge.

C h a pte r 11   4 0 3
2. Role-modeling desired mindsets and behavior. Successful CEOs typically embark
on their own personal transformation journies. Their actions encourage employees
to support and practice the new types of behavior.
3. Building a strong and committed top team. To harness the transformative power
of the top team, CEOs must make tough decisions about who has the ability and
motivation to make the journey.
4. Relentlessly pursuing impact. There is no substitute for CEOs rolling up their
sleeves and getting personally involved when significant financial and symbolic
value is at stake.3
An example of specific drivers of organizational change is provided by Flamholtz
and Randle, who suggest four key drivers to organizational change:
• Vision
• creating a “picture” of what the future state will be like (that is, the result to be
achieved)
• clearly communicating the vision to all involved
• continually reinforcing the vision through words and actions.
• Culture
• identifying what the current culture is with respect to innovation, risk taking,
change, etc.
• defining the “desired” culture with respect to change
• managing the culture so it promotes valuing and embracing change (as opposed
to resisting change).
• Systems
• identifying targets of change within existing systems
• evaluating the costs and benefits of changing existing systems
• developing new systems (operational and management) to support vision and
culture changes
• helping others “let go” of the old ways of doing things.
• Operations
• using day-to-day operations of a business, business unit, or administrative unit to
support change
• influencing the behavior of people on a day-to-day basis to operate in ways consis-
tent with changes to the vision, culture, and/or systems.4

McKinsey’s Josep Isern, Mary Meaney, and Sarah Wilson presented another set
of four transformational change drivers. They suggested the key drivers (or tactics)
are “aspirations (well-defined stretch targets), leadership (strong CEO involvement),
process (a clear structure for the transformation), and energy (for instance, efforts to

4 0 4   L e a d in g a t t h e S t r a te g i c L eve l
ensure frontline ownership of change).”5 Based on their research and experience, they
argued that, “Setting a well-defined stretch target is the single tactic most tied to suc-
cess—indeed, 90 percent of transformations that lack such a target fail.”6 They further
explain that each of the other three drivers or tactics increases the likelihood of success.
Harvard professor John Kotter probably presented the most influential organi-
zational change model. Based on significant research and experience with transfor-
mational change in organizations, he presented his findings in Leading Change. He
assessed nearly a hundred transformational change efforts to ascertain the actions
and characteristics of leaders that were successful while leading and managing orga-
nizational transformation. He described transformation as the adoption of new
technologies, major strategic shifts, process reengineering, mergers and acquisitions,
restructuring into different sorts of business units, attempts to significantly improve
innovation, and culture change.
Kotter suggested eight steps organizational leaders needed to follow if they
expected transformational success. In 2002, he and coauthor Dan Cohen presented
their research based on almost 100 organizations around the world in The Heart of
Change, which validated the eight steps. It was during their research for the book that
both Kotter and Cohen realized that the core problem with transformational change
was not strategy, structure, culture, or systems. While these elements are important,
they strongly argued that, “the core of the matter is always about changing the behav-
ior of people, and behavior change happens in highly successful situations mostly by
speaking to people’s feelings.”7 Subsequently, Kotter published other articles and books,
all affirming the centrality of the following eight steps:8
Step 1: Increase Urgency. Establish a feeling of urgency so people start telling each
other “we must do something” about the problems and opportunities. It is critical to
reduce the complacency, fear, and anger that prevent change from starting.
Step 2: Build the Guiding Team. Identify and organize the right mix of people with
the right characteristics and sufficient power to drive the change effort. It is the role
of the strategic leader to help them build trust and emotional commitment to one
another.
Step 3: Get the Vision Right. Elevate the movement beyond traditional analytical
and financial plans and budgets. This stage involves creating the aligned, compelling
vision to help direct the change efforts and support the guiding team as it develops the
requisite strategies needed to transform bold visions into exciting realities.
Step 4: Communicate for Buy-In. Send clear, credible, and heartfelt messages to
stakeholders articulating the direction of change. Establish genuine, internalized
buy-in manifested by how people act. Using clear reasoning aligned with deeds, and
employing new technologies to unclog communication channels and overcome confu-
sion and distrust, are critical aspects of this stage.
Step 5: Empower Action. Remove barriers blocking the support and actions of those
who have genuinely embraced the vision and strategies. This involves identifying and

C h a pte r 11   4 0 5
removing obstacles within both their organizations and in their hearts to enable them
to behave differently.
Step 6: Create Short-Term Wins. Generate sufficient wins fast enough to blunt and
diffuse cynicism, pessimism, and skepticism. Building and sustaining perceived
momentum is the objective of this stage—making sure successes are visible, unam-
biguous, and speak to what people care about.
Step 7: Don’t Let Up. Help stakeholders create wave after wave of change until the
vision is a reality. Do not allow urgency to sag. Do not avoid the more difficult parts
of the transformation, especially the bigger emotional barriers.
Step 8: Make Change Stick. Ensure people continue to act in new ways, despite the
pull of tradition, by rooting behavior in reshaped organizational culture. Using the
employee orientation process, the promotions and recognition processes, and the
power of emotion to enhance new group norms and shared values can help institu-
tionalize change.
The Kotter eight-step model will serve as the baseline for a modified model for
transformational change. It is important, however, to acknowledge that a number of
other change models can be useful. It is also true no single model will ensure suc-
cess—several factors influence a model’s effectiveness. Examples include the context
and situation the organization is facing at the moment (urgency, crisis, survival, etc.),
the motivation and personality of the strategic leader, the magnitude and nature of
the required transformation, and the capabilities of the organization and its members
to embrace and sustain energy for the change.

—Pause—Take a minute and reflect on the following questions. Note your initial
thoughts and insights.
1) What do you believe are the most important drivers to organizational transfor-
mation?
2) Do you need a “burning platform” to get sufficient urgency within the organiza-
tion to take action? Why or why not?

The Syncretic 10-Step Change Model


Based on research and senior-leader interviews combined with the previously exam-
ined reasons regarding why the majority of change initiatives fail (chapter 4), a ten-step
model for transformational change is proposed using Kotter’s eight steps as a baseline.

Step 1: Need for Transformational Change and Organizational


Capability
Based on both an internal and external scanning process, determine if a transforma-
tional change initiative is justified for the organization’s long-term growth, survival,
and prosperity.

4 0 6   L e a d in g a t t h e S t r a te g i c L eve l
Considering the timing, situation, and context, assess whether a change initiative
makes sense, and determine if there is a case for a legitimate sense of urgency.
Identify the resource requirements and where to obtain the resources, including
who presently controls them.
Perform a risk analysis to determine the appropriateness of making a transfor-
mational change and evaluate different scenarios for making the change—to include
possible second- and third-order consequences.
Perform a comprehensive stakeholder analysis to identify key individuals, groups,
agencies, etc., that will either embrace a proposed organizational change, or possibly
resist or bring pressure to undermine the change’s strategic objectives. As Mark
Gerencser, Executive Vice President of Booz Allen Hamilton, stressed, “Stakeholder
analysis is something that a strategic leader should spend a fair amount of time con-
ducting. A leader can have the best strategy in the world but if they can’t get alignment
from the stakeholders and can’t execute it, what good is it?”9 Similarly, Renee Acosta,
President and CEO of Global Impact, explained, “In any change initiative, especially
transformational change, you must take into account the mission and vision of stake-
holders and keep them apprised of all progress.”10
As examined in previous chapters, organizational culture and collective mindsets
will influence any transformational change initiative either positively or negatively.
Therefore, the strategic leader must assess the feasibility of using the current culture
(and its core values) to support the change effort. If it is determined that current
individual mindsets and culture will most likely resist the evolving change initiative,
facilitate discussions regarding changes in systems and subsystems to help establish
and encourage individual (core values-based) behaviors necessary for the change
effort to succeed. It must be recognized that if a transformational change effort must
be made, there will be other major issues (strategic and operational) that will require
attention throughout the change process—often distracting from or even counteract-
ing some of the change initiative elements or actions. Thus, the strategic leader must be
willing to drive the transformational change initiative and demonstrate perseverance
and commitment to it.

Step 2: Strong Strategic Leadership


The strategic leader must perform a personal self-analysis regarding his or her self-con-
fidence and willingness to lead and manage transformational change. To be effective:
1) The leader must recognize his or her personal limitations and compensate appro-
priately to ensure the leader’s personal dimensions do not hinder or even derail the
change initiative.
2) The leader must be consciously aware of his or her biases, mental models, and
frames of reference to help avoid using old thinking and strategies to solve something
that is new to the organization’s way of doing business. In most cases, making such

C h a pte r 11   4 0 7
a transformational change will require personal learning to help identify what the
transformational effort is attempting to solve, as well as the possible strategies, courses
of action, and measures of effectiveness that will lead to successful change. Part of this
learning effort is to ensure the proposed solutions and outcomes address the root cause
for the transformation—versus fixing only a symptom, rather that the root cause.
3) The leader needs to recognize that his or her decisions, actions, and behaviors must
align with and reflect the desired change expectations.
Once the strategic leader is in the current position for more than a year, he or she
must acknowledge that he or she may be part of the problem. Their actions or inaction,
decisions or nondecisions, and interactions with peers, subordinates, and stakeholders
may have in some manner contributed to the current need to change directions. For
example, in 1999, Andrea Jung became CEO of Avon. The company was operating in
more than 140 countries with more than six million Avon representatives. In 2009,
Avon was valued at more than $10 billion. Like other leaders interviewed for this
book, she had a passion for her work and strongly advised all leaders to “Follow your
compass, not your clock.” She also served on the board of directors for both GE and
Apple. Jung believed strategic leaders cannot transform their organizations without
first reinventing themselves. She explained, “[R]einvention of a brand or reinvention
of a company is only as good as the reinvention of the leader and the leaders.”11
Following 5 years of 25 percent earnings growth, Avon hit a wall in 2005. Jung
never faced issues such as layoffs or turning around an organization. Because of these
pressing issues, she was aware the Board might fire her. If she did not turn it around,
the Board would have no choice. Jung asked herself, “Can I be humble enough to
destroy my own thinking of the last five years and re-create it as if I were a brand-new
hire? The thing is, you’re not new. You’re taking out the same people you put in. Being
able to reinvent yourself personally as a leader is just as important as reinventing the
company and its strategy.”12 After leaving work on a Friday night, she came back on
Monday and pretended the Board just hired her to turn Avon around. She took out
eight layers of management and reshaped the organization. She stated, “I had a very
hard look at some people who were terrific friends and got us from, you know, three
billion to six billion, but weren’t going to get us to 11. And then, made all the hard
calls, with the right values, and the rest has been the last few years. But, you know, I
had to become a definer of my own second chapter and start it afresh. So it’s been like
a new job.”13
Similar to Andrea Jung, strategic leaders must admit to themselves that they are
part of the problem when their organizations suffer decay. They need to reflect and
analyze what their contributions were and share them with their executive teams. This
will enable members of the executive teams to own up to their mistakes and to find
more enlightened solutions that sustain the legitimacy of their organizations in the
eyes of important stakeholders.

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A key factor in the success of the transformational effort will be the specific
leadership approaches taken by the strategic leader and the executive team. Some
representative examples include:
• Clearly, to transform an organization requires adaptive leadership rather than
technical leadership. Adaptive leadership is required because learning is needed to
understand and provide meaning to those root causes of the changes in the external
environment that are necessitating the transformation, as well as finding solutions
to the challenges or opportunities.14
• Practicing values-based leadership enhances the leader’s ability to make decisions
relevant now and into the future. When making decisions based on their beliefs,
leaders are more likely to make decisions related to what they experienced in the past.
By sticking to their operational values, strategic leaders will find it easier to make
the tough choices, especially when planning for and implementing organizational
transformation. Values-based leadership will enhance trust building with organi-
zational leaders and members, thus helping to gain their buy-in and engagement in
the transformational process and helping them to embrace the desired outcomes.
• Leadership researcher Jim Collins stressed that these leaders have professional will
and personal humility. For example, these leaders demonstrated the professional
will to have “ferocious resolve, an almost stoic determination to do whatever needs
to be done to make the company great.”15 However, in doing so, they demonstrated
the personal humility to channel “ambition into the company, not the self . . . [and
they set] up successors for even greater success in the next generation.”16
• To drive transformation throughout the organization requires distributed or shared
leadership. Many researchers and practitioners argue that distributed and shared
leadership are the leadership approaches needed both today and in the future. They
believe that the job is just too big and complex for the strategic leader to perform
alone. In addition, all leaders must participate in driving and sustaining the energy
for change and, in doing so, they are perceived as authentic.
• Transformational and transactional leadership are not only of value in leading and
managing transformational change, they are essential. Of particular importance is
transformational leadership. While the term may be confused with the purpose of
organizational transformation, transformational leadership theory is not directly
associated with organizational change. Still, the precepts of transformational leader-
ship can greatly enhance a strategic leader’s ability to “lead” organizational transfor-
mation. The four main components—idealized influence, inspirational motivation,
intellectual stimulation, and individualized consideration—directly relate to address-
ing the individual and group resistance factors previously discussed. They focus on
such important requirements as determining where the organization needs to go,
setting challenging expectations, helping individuals transcend their self-interest for
the sake of the organization, and inspiring and creating excitement for the upcom-
ing transformational journey. Transactional (quid pro quo) leadership, on the other
hand, is a very useful approach to “manage” the transformation. Using transactional
leadership, strategic leaders can set transformational goals, objectives, and expecta-
tions. Transactional leadership also helps identify organizational members’ rewards
for their commitment, efforts, and results.17
C h a pte r 11   4 0 9
Step 3: Sense of Urgency
As reflected in Kotter’s eight-step model, a sense of urgency is essential for any trans-
formational change. Kotter pointed out that the leader must distinguish a sense of
urgency from false urgency—focused on busywork and activities. Instead, “With
a true sense of urgency, people want to come to work each day ready to cooperate
energetically and responsively with intelligent initiatives from others.”18 Furthermore,
he argued that, “A real sense of urgency is a highly positive and highly focused force.
Because it naturally directs you to be truly alert to what’s really happening, it rarely
leads to a race to deal with the trivial, to pursue pet projects of minor significance to
the larger organization, or to tackle important issues in uniformed, potentially dan-
gerous ways.”19 In comparing his first step of “urgency” with the other seven steps of
his model, Kotter cautioned:
Most organizations handle step 1 [creating a sense of urgency] poorly. Many fail
elsewhere too. . . . But the very best available evidence, everything I have seen in
my work over the years, suggests that the number-one problem they have is all
about creating a sense of urgency—and that’s the first step in a series of actions
needed to succeed in a changing world.20
Similar to the Navy’s TQL example (see chapter 4), many organizations develop
a well-researched, well-written business case for transformational change. Unfortu-
nately, most business cases do not tug the emotional strings that are essential for creat-
ing the necessary energy and momentum to drive—and succeed—in transformational
change. Most business cases supporting change will be discussed and debated as to
some of the specifics, followed by general agreement or consensus by senior leaders,
and then be approved for implementation. What was obtained is, again, intellectual
buy-in. This is important; yet it is insufficient to carry a transformational change
effectively. Creating a sense of urgency helps to build the emotional tie to the desired
change. It helps to build the necessary “feelings” and energy that support the need for
the change. As Kotter explained, “More than thoughts in the mind, it is feelings in the
heart that create the unchanging behavior of complacency, the unproductive flurry
of behavior that is a false urgency, or the powerfully useful actions of true urgency.”21
Moreover, “The winning strategy combines analytically sound, ambitious, but logical
goals with methods that help people experience new, often very ambitious goals, as
exciting, meaningful, and uplifting—creating a deeply felt determination to move,
make it happen, and win, now.”22
Thus urgency is a necessary, but not a sufficient, condition for ensuring successful
transformational change in an organization. Many organizations certainly have expe-
rienced a sense of urgency. Yet most observers acknowledge that the transformational
change initiatives made by these CEOs and agency leaders failed to meet expectations.
For example, following a 50 percent drop in stock price, Procter and Gamble’s Board of

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Directors pressured CEO Durk Jager to resign in June 2000. As Business Week reported,
“Jager had charged into office determined to rip apart P&G’s insular culture and remake
it from the bottom up. Instead of pushing P&G to excel, however, the torrent of proclama-
tions and initiatives during Jager’s 17-month reign nearly brought the venerable company
to a grinding halt.” His replacement, “A.G.” Lafley, proceeded to lead one of the most
“sweeping transformation[s] of the company since it was founded.”23 His efforts restored
P&G’s reputation, vitality, innovativeness, and viability. Although a sense of urgency is
critical to successful transformational change efforts, there must also be a vision of how
the change will allow the organization to prosper into the future.

Step 4: Building a Strong and Committed Executive Team


Similar to Kotter’s step 2, “Build a Guiding Team,” the strategic leader must build a strong
executive team that will help lead and manage the transformational change. The fact
is, organizational transformation is just too complex for a strategic leader to lead and
manage alone. Whether using the existing SLT, or forming a team composed of selected
members from the executive team (or other leaders) to lead the transformational efforts,
the leader must choose wisely. Team members must have the required management and
executive skills and experience, coupled with the organizational power needed to plan
and drive the change effort. This team must share the strategic vision defining the desired
outcome of the change initiative, demonstrate respect toward other team members, and
foster an atmosphere of candid dialog, trust, and commitment.
The Center for Creative Leadership (CCL) suggests that the first responsibility of
the strategic leader planning transformational change is to transform the executive
team. To lead and manage a successful organizational change process, the executive
team must be fully willing and able to pursue the change agenda. Furthermore, CCL
emphasized that the effort to change organizational culture to support the change is the
responsibility of the executive team—not Human Resources or a consultant. “Whatever
you do, don’t pawn off the culture work on someone else. . . . No one else can create
change for the executive team. No proxy can carry the senior team’s responsibility.”24
Not surprisingly, executive teams often experience some of the difficulties encoun-
tered by organizational units (e.g., crossfunctional teams). Consequently, in position-
ing the executive team for success in leading and managing the transformational
change initiative, the strategic leader should ensure members agree to a specific charter
prior to initiating the change. In addition, the leader and the leadership team should
agree on how to obtain and allocate required resources. Working with the team, the
leader must engage it collectively to build trust and set up processes for rigorous debate
without creating dysfunctional conflict. Each member must be willing to be account-
able for his or her participation and contribution, decisions, and actions, as well as
for holding other members equally accountable. (Recommend reviewing chapter 6,
“Building and Leading a Strategic Leadership Team.”)

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Step 5: Get the Vision (Change Purpose) Right
Similar to Kotter’s step 3, the need to define and articulate a shared compelling vision
or organizational purpose is essential to successful organizational transformation.
As noted previously, an organization’s vision or strategic goals are recognized as key
drivers in implementing successful change. This is particularly true in gaining buy-in
from both stakeholders and organizational members.
The previous discussion regarding vision applies when the strategic leader is
planning transformational change. However, a shared vision, or Big Hairy Auda-
cious Goal (BHAG—see chapter 4), is especially important for transformational
change. This shared BHAG becomes the primary motivator to gain support, energy,
and the aligned efforts of organizational members and stakeholders during the
transformational effort. Clearly, changes of such magnitude will almost certainly
require concomitant changes in work and reward processes, culture, social systems
(formal and informal), skills, and behaviors. People will need to see that the change
endstate is meaningful, therefore warranting their time, energy, sacrifice, and work.
They will need to know and feel that the desired change is not simply justified and
fair, but also exciting, ennobling, and worthy. They can see it intellectually but they
must also touch, taste, and feel it.
An organizational crisis often mandates a transformational change effort. In such
crisis situations, how the strategic leader presents the vision or BHAG depends on what
is needed to reposition the organization to ensure future survival. In his first press
conference after assuming the job as IBM CEO, Lou Gerstner stated, “There’s been a
lot of speculation as to when I’m going to deliver a vision of IBM, and what I’d like to
say to all of you is that the last thing IBM needs right now is a vision.”25 This shocked
the reporters and the Wall Street analysts. Yet Gerstner knew that IBM did have a
vision that required immediate attention—survival. A year later when the financial
health of IBM began to stabilize, Gerstner would present a vision that guided IBM’s
return to corporate health and vibrancy.
It is important that the strategic leader or other organizational change agents
clearly understand that it is not what they think the vision is that matters. The opinions
that matter belong to the individuals being directed to change. These individuals must
view the organizational vision and desired destination as something they want because
it offers both individual and collective value.
If the vision is vague or conflicts with a member’s values and aspirations, there can
be apathy, resistance, anger and resentment, and ultimately loss of key employees. Con-
sequently, getting the vision or BHAG right is critical in a transformational change.

Step 6: Communicate for Buy-in


Similar to Kotter’s Step 4 [Communicating for Buy-In], obtaining the necessary buy-in
for transformational change requires well-thought-out planning and communication

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strategies. The communication should articulate and support the alignment among
the purpose of the organization, the vision of where the organization is going, and
the strategy(ies) that will define the journey. The strategic communication effort is
essential to achieve the objectives of calming anxieties, while simultaneously building
the enthusiasm and engagement regarding the organizational and personal behavioral
changes needed to achieve the desired outcomes.
The communications planning should address the expectations and needs of those
individuals asked to change and provide them with clear expectations. The messages and
communications should be consistent at all levels of leadership—including the nonverbal
messages interpreted through observing the strategic leader’s role-modeling, moods, and
behaviors. The strategic leadership team should give particular attention to evaluating
what people are feeling; mitigating confusion, anxieties, and distrust; and planning their
communications effort to use the existing culture and mindsets to best advantage. The
ultimate objective is to influence as many people as possible to feel the need for change, to
have a sense of urgency, to embrace the change process, and “to make the vision a reality.”26
Part of the communication strategy should enhance the flow of communications
and dialog among all members of the organization, encouraging them to collaborate by
sharing knowledge and information. Planning should consider a specific focus towards
generating good ideas to help address the challenges and opportunities encountered
during the transformational journey.
As examined in chapter 9 on strategic communications, the development of an
inspiring story can enhance listeners’ buy-in. As Isern, Meaney, and Wilson suggest:
A good transformation story is another step to bridge the gap between top
management and the rest of the organization. Typically, using metaphors and
analogies to explain what is at stake, the story addresses three key aspects:
the case for change, the challenges and opportunities ahead, and the impact
of change on individuals. The strategic leader should write the story in prose,
not bullet points. Good stories also confront the emotional angle—the need to
bid farewell to cherished habits and routines and to embrace a different, and
perhaps initially uncomfortable, future.27
It is critical, however, to again recognize that the vision and messages may be
clear to the strategic leader and the leadership team and yet be confusing, vague, or
misinterpreted by stakeholders and organizational members. Therefore, it is important
to monitor accurately how people are receiving the messages, encourage feedback as
to how they are interpreting what they hear, and get their views regarding the actions
taking place. Black and Gregersen noted:
What may surprise you is how often leaders think the new right thing is crystal
clear, but subordinates report that both the direction and the destination are like

C h a pte r 11  413
a fog. If it is so critical (and obvious) that they must be clear, why do leaders fail
to make them clear? Once again, are we brain dead or what? Our explanation
reverts to the “I get it” mistake. Precisely because we see where we’re headed
clearly, we think everyone else sees it as clearly. What we must keep in mind is
that seeing the destination clearly as leaders means absolutely nothing to follow-
ers. The only thing that matters, the only thing that motivates our employees, is
whether they see it clearly.28
Furthermore, transformational stories must appeal to what is important to an
organization’s members. According to McKinsey consultants Aiken and Keller, “What
the leader cares about (and typically bases at least 80 percent of his or her message to
others on) does not tap into roughly 80 percent of the workforce’s primary motivators
for putting extra energy into the change program.”29 They cited the story told by the
leadership of a large U.S. financial-services company supporting their cost reduction
program. The story initially focused on items associated with the company’s competi-
tive position and future and after 3 months resulted primarily in employee resistance.
“The change team worked together to recast the story to include an element related
to society (to deliver affordable housing, for example), customers (fewer errors, more
competitive prices), the company (expenses are growing faster than revenues, which
is not sustainable), working teams (less duplication, more delegation), and individuals
(more attractive jobs).” Aiken and Keller reported that, “This relatively simple shift in
approach lifted employee motivation measures from 35.4 percent to 57.1 percent in
a month, and the program went on to achieve 10 percent efficiency improvements in
the first year—a run rate far above initial expectations.”30

Step 7: Empower Action, Enhance Collaboration and Learning, and


Recognize the Influence of the Organization’s Culture
While similar to Kotter’s Step 5 regarding empowering action, this step also takes
into consideration the importance of individual and organizational learning, as well
as the influence of the organization’s culture. Linking these three items in this step
acknowledges that they ideally occur concurrently and compatibly.
Empower Action. One of the key areas of focus in Kotter’s Step 5 is to “remove
the ‘Boss’ Barrier.” Kotter suggested that some of the biggest obstacles facing trans-
formational change are senior to lower-level managers and supervisors who are either
against the proposed change or through their inaction and apathy stifle subordinates
who wish to embrace the change. Kotter suggested three ways to deal with these boss
barriers, including: “We ignore the issue, we send the obstacle to a short training
course, or (rarely) we try to fire, demote, or transfer the person. . . . None of these are
great solutions.” What is important in successful change cases is that people begin
by confronting the issue fairly; and if that fails, “they try more creative solutions.”31

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Kotter also suggested ensuring that the current operating and reward systems are
not disempowering action. For example, a company wishes to change from a “trans-
actional” sales approach (selling something the company makes or offering a specific
service), to a “solution” approach (helping the customer find a solution that includes
some or all goods or services offered by the company). To do the latter requires the
salesperson to serve in a consulting role, to spend more time with the customer to learn
their business and challenges, and to observe how the salesman’s company can help
solve their problems. However, if the sales manager rewards employees based on how
many customers they interface with monthly, then the reward system will encourage
reaching as many customers as possible, thereby greatly diminishing effectiveness of
the learning and customer relationship building so essential to achieving a solution
sales approach.
Another example often occurs in cost-savings initiatives. A number of years ago
the author represented a major U.S. Navy organization in Hawaii and was tasked to
fly to Panama for a planning session. The author suggested a flight from Hawaii to
Los Angeles to Panama City. Instead, the organization’s travel office scheduled the
trip via San Francisco, New York City, Miami, and then to Panama City. Meeting
their department’s strategic objective to “cut the cost of travel” instead cost the author
36 hours in travel—arriving in Panama exhausted and, therefore, not as effective in
carrying out the organization’s mission. By rerouting, the travel office saved $133—a
metric that demonstrated its success in achieving its strategic goal. However, overall,
this “achievement” was a detriment to the entire organization since it undermined
the likelihood of overall mission accomplishment.
Thus, in implementing change, subordinate leaders must be mindful of the
consequences of their actions as well as their intentions; even beneficial efforts in
their specific domains can undercut large-scale efforts for the entire organization.
Making sure operational and reward systems, policies, and practices are all aligned
with the intent of the transformational change is a key responsibility of the strategic
leader—and the leadership team—during the transformational change planning and
implementation phases.
Empowering people typically requires both individual and organizational learn-
ing and changing belief systems and habits—many of them long-standing and deeply
ingrained. For example, a number of years ago a major organization was switching
from the old DOS computer operating system to the new Windows operating sys-
tem. A majority of the workforce was competent at using DOS and felt they would
not be able to learn the new and (perceived as) more complicated Windows system.
The strategic leader and the leadership team decided to allow both systems to be on
the employee workstation computers to allow a smoother transition from the old to
the new system. In addition, leadership provided training on the new system to the
workforce. In reality, because the workforce was confident and competent with DOS

C h a pte r 11  415
and was rewarded for what they were accomplishing—and not for embracing the new
system—they continued to use DOS. The workforce maintained a collective mindset
that the new system was too complicated to learn; therefore, they did not even try. Not
until the leadership took the old system off the computers did the workforce finally
begin to learn and use the new system.
Some examples of desired empowerment actions could include:
• leading managers and the workforce to feel a sense of ownership
• creating a climate supportive of collaboration and learning
• appealing to and motivating people both intellectually and emotionally
• providing clear and aspirational stretch targets
• removing obstacles that impede structural and process alignment
• establishing recognition and reward policies—and processes —that encourage indi-
vidual optimism, motivation, and engagement
• fostering individual mindsets toward openness, creativity, and generation of big
ideas, while addressing and minimizing fears that could negatively affect self-
confidence, self-efficacy, and self-esteem.

Enhance Collaboration and Learning. Throughout the change process, both leaders
and workforce will be anxious. Some employees will be pessimistic and believe that they
cannot do it. It is important, therefore, to provide a safe and collaborative environment
where individuals can make honest learning mistakes as they explore new procedures,
processes, routines, and skills. A key aspect of the transformational process is to focus
on learning initiatives, systems, and programs that enhance individual and group efforts
to build self-confidence and self-efficacy in the new ways of doing business. Leaders
should place emphasis on building excitement for learning, encouraging risk-taking,
and tolerating mistakes. They should make efforts to evaluate and provide feedback in
a nonthreatening manner and allow time for reflection. It is also important to identify
credible mentors or coaches and to engage people who have successfully made the transi-
tions to serve as spokespeople to others: “I was able to do this; you can too.”
As mentioned previously, there will be times when cherished processes, habits, and
approaches to doing business will need to be unlearned, as they no longer provide value
in the new organizational environment. Furthermore, there may be times when even
previous leaders and key members are unable to grasp the new technologies, policies,
processes, procedures, and skills sets needed for confidence and competence within
the new organizational setting and context. In such cases, leaders must be prepared,
however reluctantly, to take those steps needed to install successors having the required
mix of abilities and aptitudes.
Recognize the Influence of the Organization’s Culture. Remembering the key
points addressed in the previous chapter on shaping organizational climate and

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culture, the strategic leader and the leadership team can clearly understand how
culture affects decisions and actions taken during the transformational change
effort. Interestingly, a number of strategic leader-directed change initiatives focused
specifically to effect an organizational culture change.
If the organization has a culture that truly embraces creativity, innovation, and
change, the strategic leader and the leadership team have a much better chance of
establishing and maintaining the momentum of strategically important change initia-
tives with both organizational members and stakeholders. If neither the climate nor the
culture supports risk-taking—if there is no tolerance for well-meaning mistakes—if
there is a silo mentality with little collaboration and sharing of information and
knowledge—or if there is a tendency to criticize others’ work habits and performance,
the leadership team should consider undertaking a more in-depth analysis to better
understand the values and norms of the culture and to identify appropriate changes.
Facing such a challenging culture, strategic leaders should shape their visions for
the future—and supporting stories—through strategic communications that touch
people’s feelings, hopes, and aspirations. As noted previously, logic or intellectual
reasoning will not sway people working in a culture resistant to change. In essence,
their hearts—not their minds—need to be the primary focus to gain acceptance, sup-
port, and engagement.
Louis Gerstner, in referring to examples of cultural issues at IBM, shared an
example regarding excellence: “The pursuit of excellence over time became an obses-
sion with perfections. It resulted in stultifying culture and a spider’s web of checks,
approvals, and validation that slowed decision making to a crawl.”32 In addition,
Gerstner determined that many people were reluctant to take personal responsibility
for outcomes, causing decisions to creep. He recalled:
Instead of grabbing available resources and authority, they waited for the boss
to tell them what to do; they delegated up. In the end, my deepest culture-change
goal was to induce IBMers to believe in themselves again—to believe that they
had the ability to determine their own fate, and that they already knew what
they needed to know. It was to shake them out of their depressed stupor, remind
them of who they were—you’re IBM, damn it!—and get them to think and act
collaboratively, as hungry, curious self-starters.33
Gerstner also recognized that, as the organization’s leader, he needed to deal with
the culture personally, and he knew it would take at least 5 years (which he later admit-
ted he underestimated). As he explained, “I knew the leader of the revolution had to be
me—I had to commit to thousands of hours of personal activity to pull off the change.
I would have to be up-front and outspoken about what I was doing. I needed to get
my leadership team to join me. We all had to talk openly and directly about culture,
behavior, and beliefs—we could not be subtle.”34

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Step 8: Create Short-Term Wins
This step is the same as Kotter’s Step 6, “Create Short-Term Wins.” It is through
short-term wins and vigilance for “low-hanging” fruit that the strategic leader and
the leadership team build credibility for the transformational change initiative. These
short-term wins, however, need to be from the stakeholders’ and organization mem-
bers’ perspective—the wins must resonate with people’s expectations and see a clear
connection between the wins and the ultimate desired destination. Kotter stated that
short-term wins are essential and serve four important purposes:
• provide feedback to change leaders about the validity of their visions and strategies
• give those working hard to achieve a vision a pat on the back, an emotional lift
• build faith in the effort, attracting those who are not yet actively helping
• take power away from cynics.35
Strategic leaders and leadership teams should carefully pick some early transfor-
mation targets that are relatively easy, and most important, meaningful to organization
members and stakeholders. Failing to achieve some short-term wins for a significant
length of time can lead to dissipation of energy and cynicism.

Step 9: Don’t Let Up


This step is the same as Kotter’s Step 7. Keeping the perceived energy flowing and
momentum for the transformational change initiative is essential. Usually, by this
stage in the process, the leader has achieved the quick wins and is now facing the much
harder and often time-consuming change efforts. This is the time that Kotter recom-
mended focusing on keeping the energy up and “eliminating unnecessary, exhausting,
and demoralizing work; and by not declaring victory prematurely.”36
At this point, too many transformational efforts lose staying power and ultimately
result in less than expected results. This critical period in the transformation process
requires direct attention by the strategic leader and the leadership team. Establishing
processes that provide meaningful data regarding actual progress of the transformational
effort is essential. Consistent messaging from the leadership that keeps spirits alive and
the vision’s destination attractive and achievable, along with celebrating individual and
group successes, will help sustain momentum. It is at this point that policies instituting
supporting systems and procedures, or aligning organizational work and processes, are
quite valuable in shaping the desired climate, culture, and behavior. Establishing an effec-
tive communication process that enhances sharing of information and knowledge, as
well as fostering the growth of individual self-confidence and competency, is necessary.

Step 10: Make Change Stick


This step is similar to Kotter’s Step 8. This step institutionalizes the transformational change
effort. It is during this stage that supporting systems and culture should be in place; the

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necessary retooling and learning has resulted in an agile, flexible, and high-performing
organization that embraces and practices the new way of organizational work.
In summary, keep in mind that most change efforts are never really complete.
During process, the strategic leader and the leadership team must continually evalu-
ate the change effort and its destination to verify if they remain valid. In most cases,
there will be continuing modifications of the change process to reflect the changing
environment, situation, context, and lessons learned during the journey. In the end,
while these 10 steps follow a logical order, many of the steps will be underway simul-
taneously and actually represent an iterative process.

Are Transformational Change Efforts the Same Regardless of


Sector?
The implementation of the transformation in the public and private sectors is, for
all practical purposes, the same. The same guiding models apply. The same human
behavior occurs. The same leadership and management skills are required. However,
although both government and nongovernment entities can execute transformational
change using the 10-step model presented above or other models, there are some issues
that are more prevalent in government organizations.
Making transformational change in government and military organizations is
more difficult than in the business and nonprofit sectors. For example, in their chap-
ter on “Transformational Stewardship,” James Kee, Kathryn Newcomer, and S. Mike
Davis explained, “Generally speaking, organizational change in the public sector must
be transparent, requires extensive consultation, and is usually conducted in a highly
visible arena. Additionally, the nature of political leadership [and the likelihood of the
strategic leader being at the helm for only 2–3 years] results in a short-term horizon for
many of the stakeholders, making long-term change initiatives more problematic.”37
There are a number of recent examples illustrating the differences and difficulties
in leading change in government organizations (e.g., the creation of the Department
of Homeland Security with the merger of 22 separate agencies). One of the first inter-
agency attempts to transform government work was the Clinton administration’s
National Performance Review (NPR) led by Vice President Gore and Bob Stone.
Believing that drastic change was required in how the Federal Government per-
formed its operations, NPR’s primary belief and focus was on government structures
and systems—not Federal employees. As one would expect, implementing NPR was
controversial from the beginning. Agency leaders and employees questioned whether
policies, public announcements, and actions were politically based or for the actual
benefit of providing goods and services and/or ways to downsize the Federal work-
force? Some actions taken were based on Presidential executive orders, e.g., directing
Federal agencies to reduce their internal regulations by 50 percent. Yet the consensus
was that many of these executive orders had little impact. Directives, executive orders,

C h a pte r 11  419
and the like were—and most often continue to be—ineffective in creating true orga-
nizational change.
The NPR effort illustrates the difficulty in implementing transformational change
when the agency head is not committed. While NPR had the positional “power” of
the White House, most government agencies are large bureaucratic organizations
steeped in the status quo—a result of regulations, polices, laws, and procedures. In
the beginning in 1993, similar to many elected politicians and political appointees,
“Gore knew practically nothing about how government works . . . but he learned
quickly and was directly involved in the NPR effort.”38 The reality of accomplishing
actual governmental change relied primarily on political savvy: praising one office for
its improved approach and not praising others; persuasion; and attempting to convert
various leaders into role models and catalysts within their organizations. In many
cases, it involved helping leaders reframe issues—for example, changing the percep-
tion from regulators viewing those they oversee as the enemy to one of a partnership
in the general interest of American citizens. Bob Stone explained:
At EPA, their mindset was that the corporations they were inspecting were
the bad guys. “We can’t partner with them. We have to go after all of them.”
They were driving me nuts. At a conference, I wound up just hanging around
with a bunch of middle and senior level managers over lunch and dinner;
and what they were talking about was saving people’s lives, protecting kids
from getting asthma, preserving the water supply. I could not have any suc-
cess if I said, “Look, you guys have to collaborate with DuPont”—because
they would have said, “DuPont’s the enemy.” Therefore, when I put them
together with people from DuPont who cared just as much about children
getting asthma and improving their DuPont plants as EPA people did, they
began to collaborate.39
There are a number of factors making it more problematic to exercise trans-
formational change in government organizations. These include the multitude of
stakeholders who will have a say on “what” the organization will do and “how” it
will do it (e.g., Congress, unions, interest groups, political leaders, long-term internal
organizational leaders and workforce, and contractors—a result due to the growing
dependence on outsourcing and contractor support to accomplish government work),
and “statutes and system-wide rules [that] govern many aspects of organization and
procedure, sometimes dictating the actual agency structure and placing constraints
on job descriptions, purchasing, space procurement, personnel decisions, and many
other processes.”40 Noted below are additional differences and potential constraints:
• Agency heads and political appointees often do not have in-depth government expe-
rience or organizational transformation experience.

4 2 0   L e a d in g a t t h e S t r a te g i c L eve l
• The possible disruption or realignment of working relationships among key stake-
holders, e.g., legislators, political executives, and interest groups, with current agency
organizational leaders and units may lead to resistance to a change initiative.
• Because change often requires legislation and policymaking decisions, resource sup-
port, consensus decisionmaking, and timeliness may be difficult to achieve.
• Agency heads and political appointees often have short tenures. Career civil
servants can wait their political leaders out, provide only lip service, or mobilize
opposition through their long-term relationships with congressional staffers and
interest groups.
• Increased demands for government transparency, freedom of information, and media
and public scrutiny can deter making necessary organizational changes.
Davis, Kee, and Newcomer argue that government and nonprofit organizational
transformational change efforts should center on stakeholder analysis, relationships,
and engagement. They note that, “Each and every stakeholder stands to contribute to
or feel the impact of a major strategic transformational change that an organization
initiates. Leaders need to systematically identify all people and groups involved in the
implementation of a change initiative.”41

—Pause—Take a minute and reflect on the following questions. Note your initial
thoughts and insights.
1. If you work for a government or nonprofit organization, what has limited your
efforts to make transformational change to your organization?
2. What worked well for you?

The Birth of an Enterprise: Culture Change in Naval


Aviation—An Overarching Case Study42
—Pause—Read and reflect on Vice Admiral Wally Massenburg’s efforts to transform
how the U.S. Navy supports the Naval Aviation Community. Reflect on the key points
offered in this chapter as well as previous chapters. Keep in mind the additional
constraints strategic leaders face in transforming government organizations. Note
your initial thoughts and insights. As you read the below case study, ask yourself:
1. Did Admiral Massenburg have a vision, BHAG, or plan? What steps did he take
to plan and execute the transformation?
2. Were any of his steps similar to the steps examined in this chapter?
3. Was he successful? Why or why not?
4. Did CNO Admiral Vern Clark have a vision, BHAG, or a plan? What steps did he
take to plan and execute the transformation?
5. What would you do differently if you were in charge?

C h a pte r 11  4 21
On September 10, 2001, Chief of Naval Operations (CNO) Admiral Vern Clark was
considering cutting the force. There were serious problems with Naval Aviation mainte-
nance, supply, and logistics systems. Current readiness was at an all-time low, marked
by parts shortages and aging aircraft. Though the Navy possessed a complement of
11 aircraft carriers, only four could operate at any given time due to a lack of adequate
aircraft, maintenance support equipment, or precision ordnance. To make matters
worse, Naval Aviation had a “flying hour” budget deficit of $131 million for the year and
a low likelihood of closing that gap.

And Then 9/11 Occurred!


Fifteen months later, General Richard Myers, Chairman of the Joint Chiefs of Staff,
requested four aircraft carriers to support the March 2003 invasion of Iraq. CNO Clark
proudly responded, “You bet! In fact, you can have eight!”43 Seven eventually deployed in
support of Operation Iraqi Freedom and other taskings. The transition achieved by Naval
Aviation during this short period continued into 2007 under the guidance of a few key
strategic leaders. Their combined effort to change the culture of Naval Aviation resulted
in the creation of an empowered enterprise aligned to a single customer-driven metric
that benefited the Fleet as a whole. This case study chronicles the methods and strategies
used by the Commander, Naval Air Forces (CNAF); the Commander, Naval Air Systems
Command (NAVAIR); and other supporting commanders to save Naval Aviation.
This case study represents the perspective from the Commander, NAVAIR, the
primary command responsible for providing products and services for Fleet aircraft.
Headquartered in Patuxent River, Maryland, in 1966 NAVAIR became the successor to
the Navy’s Bureau of Naval Weapons with military and civilian personnel stationed at
eight locations across the continental United States and one site overseas. NAVAIR’s
overall mission is to provide full life-cycle support for Navy and Marine Corps aviation
aircraft, weapons, and systems. This support includes: research, design, development,
and systems engineering; acquisition; test and evaluation; training facilities and equip-
ment; repair and modification; and in-service engineering and logistics support.44
NAVAIR’s support role is integral to national security. As a result, its emphasis and
direction were oriented constantly towards warfighting and combat readiness—and
incentivized to move to the future “at all costs.” This served the organization well until
it confronted a series of problems in the late 1990s. The organization, which consistently
excelled at solving warfighting problems with ingenuity and skill, was now faltering
from a business perspective in support of the sustainment of the Fleet’s aircraft and
aircraft carriers.

The Burning Platform


In the summer of 2000, Naval Aviation’s problems reached critical mass. While prepar-
ing to take over as CNO, Admiral Clark learned that there would be a $131 million flight

4 2 2   L e a d in g a t t h e S t r a te g i c L eve l
budget deficit for the coming fiscal year. For an organization that already mortgaged
current readiness to fund future readiness, it appeared this budget shortfall would
likely result in even greater readiness problems in the Fleet. The procurement deficit
was deepening—”you can’t afford the Fleet you have, and you can’t afford to buy air-
planes to replace the Fleet you’re going to need.” This represented a “perfect storm,”
a “downward death spiral” that resulted in a hollow force. The Aviation Maintenance
and Supply Readiness (AMSR) Study illuminated these problems enumerating 19 major
problems with Naval Aviation.45 At the same time, the Naval Inspector General released
a report affirming the precarious position of Naval Aviation sustainment.46 Moreover, the
reports mutually reinforced a single grim message: Unless Naval Aviation made drastic
changes to its structure and operations, it would no longer be capable of performing
the naval air mission.

The Four-Carrier Navy


The readiness and retention problems identified by the studies—and worsened by the
budget shortfall—were symptoms of more serious underlying conditions affecting Naval
Aviation. A number of organizational barriers greatly undermined the efficiency and effec-
tiveness of the organization. For one thing, there was an expansive gap between the amount
spent throughout Naval Aviation and the degree of readiness produced. Costs consistently
exceeded the operating budget, resulting in the sacrifice of current readiness to future readi-
ness. Moreover, the metrics used to measure performance did not support current or future
readiness. Naval Aviation also consistently failed to meet its retention goals—in part due
to poor job satisfaction. This compromised readiness further by pushing would-be leaders
from the organization while increasing the cost of training new employees.
A historic division existed among Naval Air Forces Pacific, Naval Air Forces Atlan-
tic, and NAVAIR that led each to operate virtually autonomously. This divide produced
divergent behaviors across the groups. There was a lack of collaboration and shared
information; and subgroups and elite societies sabotaged cooperation toward a shared
goal. To make matters worse, there were over twenty additional key stakeholder organi-
zations in Naval Aviation, each with competing interests, differing priorities, stovepiped
resources, various measures of performance, and disparate cultures.
Like other government organizations, Naval Aviation exhibited a “culture of con-
sumption.” This culture justified wasteful behavior and stultified efforts to change. The
sine qua non of Naval Aviation’s culture of consumption was a “use it or lose it” mental-
ity fueled by the sincere belief that future funding would be diminished if current funding
was not consumed in its totality. For example, the prevailing guidance was to ensure
completion of all scheduled flight hours and gasoline tanks topped-off just before the
budget for the next year took effect.
This model of overconsumption, paired with a tribal competitiveness between
Naval Aviation stovepipes, drove continued resource consumption. The competition

C h a pte r 11   4 2 3
divided all stakeholders of Naval Aviation and justified behavior that was harmful to the
Fleet as a whole. Worst of all, because of their learned patterns of behavior, the leaders
of Naval Aviation were not likely to change the organization for the better. All of their
training—and the performance criteria that affected individual promotion—taught them
to maximize readiness at any cost.

CNO Clark’s Vision


Although he was a surface warfare officer, Admiral Clark resolved to bring a new busi-
ness approach to the Navy and chose Naval Aviation as his first target. He was the
first CNO to hold an MBA. His education and background made him more aware of the
need to establish a fiscally responsible culture to the organization. His overall goal was
simple: link readiness requirements to the money spent and achieve them by aligning
the incentive and operational structures.
Guiding Naval Aviation to a different place would not be an easy task. What he
needed above all else was a catalyst for change, and then to find the agents within Naval
Aviation necessary to develop and implement the changes required. Clark’s first step
was to craft a message. He conveyed the seriousness of the predicament confronting
the organization to its members, stating boldly that, if nothing changed, Naval Aviation
would no longer be capable of defending the United States. In short, the “four-carrier
Navy” was unacceptable.
It is significant to note that, despite its grim content, Clark’s message was optimistic.
He did not blame people for following the organization’s traditional habits of consump-
tion, nor did he assume a fatalistic attitude about Naval Aviation’s future. Instead, he
made everyone aware of the severe consequences of maintaining those destructive
habits while encouraging them to use their own initiatives and capabilities to shape a
more responsible culture. This message was one of empowerment. He entrusted Naval
Aviation with the power and responsibility to change.

Clark’s Solutions
Clark’s message alone would not have been powerful enough to revamp Naval Avia-
tion. He proposed three solutions to help reduce the major obstacles confronting the
organization. First, Naval Aviation needed a single person with authority and responsi-
bility for the whole. Second, the organizational stovepipes that inhibited collective goal
accomplishment needed to be broken down to encourage cross-functional collabora-
tion. Finally, the metrics used to gauge performance and readiness required revision
to reflect the new goals of the organization.
Clark began Naval Aviation’s transformational effort by making a single person respon-
sible and accountable for all of Naval Aviation (what would become the Single Process
Owner), Vice Admiral John Nathman, then Commander, Naval Air Pacific. This provided the
organization with a transparent, linear hierarchy that clarified communication, authority, and

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accountability. More importantly, this designation was the primary and necessary step in the
unification of Naval Aviation and its alignment with a single series of priorities and metrics.
Clark’s other two solutions would not be implemented as easily as the first. Instilling
collaboration and revising metrics necessitated involvement and a sustained effort from
both internal and external stakeholders. Between 2000, when Naval Aviation’s prob-
lems became clear, and 2004, when the Naval Aviation Enterprise (NAE) was formally
acknowledged, three seminal programs/events combined to reshape Naval Aviation in
response to Clark’s message: 1) the Naval Aviation Readiness Integrated Improvement
Program (NAVRIIP), 2) the Type/Model/Series Construct/”Boots on the Ground,” and 3)
the Dallas Conference (all of which will be discussed later). It is important to note that
each of these initiatives operated on its own time horizon yet significantly influenced
the final emergence of the NAE.

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. Were you ever involved either as an external stakeholder/customer or as organi-
zational member with an organization that was dealing with a burning platform?
If so, how did the leaders deal with the issue?
2. What were some of the difficulties Admiral Clark faced when he attempted to
change the culture of Naval Aviation? What potential roadblocks can you iden-
tify that would impede a transformational culture change in your organization?
3. Can you identify stovepipes within your own organization? If so, what types of
issues do these stovepipes generate?

NAVRIIP: Readiness, Single Process Ownership, and the


Single Fleet-Driven
In the 2001 timeframe, Rear Admiral Massenburg, the Naval Aviation Logistician (a
position within the Naval Aviation Systems Command), introduced the concept of an
aligning metric to address the “at-home” training levels of readiness and took advantage
of the Single Process Owner concept to drive alignment. He defined the program as the
Naval Aviation Readiness Integrated Improvement Program. The metric developed was
Aircraft Ready for Training. Following 9/11, Admiral Clark asked Naval Aviation to deploy
eight carriers in support of Operation Enduring Freedom. Naval Aviation responded
with only four fully-equipped carriers while another partially equipped carrier deployed
to support Special Operations Forces in Pakistan. During the period between 9/11 and
March 2003, Naval Aviation focused on the new metric. Through this period, Naval Avia-
tion became more comfortable establishing new priorities through a cross-functional
team demonstrating different behaviors in support of “the greater good” represented
by the metric rather than operating in relation to parochial instincts. When Admiral Clark

C h a pte r 11   4 2 5
asked Naval Aviation to deploy eight carriers in support of Operation Iraqi Freedom,
Naval Aviation responded effectively.

Figure 11-1. Naval Aviation Executive Leadership Cross-Functional Construct

Warfighting Requirements/Risks

FLEET

Providers Resources

Type/Model/Series Cross-Functional Teams/”Boots on the Ground”


In early 2001, the NAVAIR leaders began to tour the air stations under their purview.
These visits were part of an initiative known as “Boots on the Ground,” designed to
connect the providing/supporting Admirals to the Fleet customer to provide a better
understanding of how and where the organization needed to improve to compensate
for inadequate funding. Several of these visits framed unique learning opportunities
for Naval Aviation leadership.
The first visit, to Naval Air Station (NAS) at Whidbey Island, Washington, revealed
the importance of focusing on broad process improvements as integral to improving
readiness and reducing costs as opposed to superficial single-point solutions. Perhaps
the most important visit was the third, to NAS Mayport, Florida, as Naval Aviation
leadership implemented the same triangular working relationship—the Type/Model/
Series team—that distributed leadership and accountability in a cross-functional, ratio-
nal manner as previously introduced at the Naval Aviation executive leadership level.
The T/M/S concept organized aircraft communities around the type of aircraft
flown with an assigned responsible and accountable Single Process Owner, aligned
to the Single Fleet Driven Metric focused on readiness “outcome.” Figure 11-2 depicts
the relationship in a single community between the commodore (a Navy Captain), the
resource managers, and the providing organizations (maintenance, supply, manpower,
etc.) for a given type, model, and series of aircraft. The leaders established an entitle-
ment system to ensure that each T/M/S team had what it would need to generate the
level of readiness required “and no more.” Now with visibility of resources and com-
mitment from all providing organizations, Single Process Owners could concentrate

4 2 6   L e a d in g a t t h e S t r a te g i c L eve l
on the resources required, identify gaps to success, remove organizational or cultural
barriers, and focus on readiness as the outcome. This organizational business struc-
ture would eventually be extended into Product Enterprise Teams (PETs) for major
components, such as engines, radars, sensors, and other major items.
As the organization underwent this “behavioral” metamorphosis, this focus
reinforced the importance of the single process leaders at all levels of the organization
and entrusted them to make holistic decisions in relation to the Single Fleet Driven
Metric. In order to integrate the manifold metrics needed to define readiness more
accurately, there was an evident need to involve all of the major internal stakeholders
in the metrics redefinition process. Redefining the organization’s structure would
originate from leadership provided by Fleet community commanders and aligned
supporting commanders while the revised readiness metric would help define and
validate the organization’s focus.

Figure 11-2. Type/Model/Series Structure for a Community

Commodore

Squadron

Providing Resource
Organizations Managers

—Pause—Take a minute and reflect on the following questions. Note your initial
thoughts and insights.
1. Do you think establishing a single metric could lead to an overall improvement
of your organization’s efficiency? If so, what new metric would you recommend?
2. Do you believe that the “boots on the ground” approach at NAVAIR was the best

C h a pte r 11   4 2 7
way to bring those responsible for providing readiness closer to those who created
the demand? Would you think that this effort provided opportunities to see results
of the new business construct (Single Process Owner, Single Fleet Driven Metric,
and cross-functional team approach)? How do you think this approach would
work in your organization?

The Dallas Conference: Constrained Readiness at Cost, Entitlement


Maturation
At the annual conference in the summer of 2003, Naval Aviation began what would be a
complete transformation of the way business was done. The mood at the conference was
giddy as the participants had achieved the originally established Single Fleet-Driven Metric
to fix the training cycle and Naval Aviation had answered the bell when asked to provide
support for Iraqi Freedom. There was celebration and feelings of success. Those feelings
were short-lived. All that had happened was that the pendulum swung from the “getting
to the future at all costs” to achieving “current readiness at all cost.”47 The resources to pay
for the new emphasis on current readiness came from the acquisition accounts.
RADM Massenburg, taking advantage of cycles of learning, demonstrated that
there was interdependence between current and future readiness, that there was a need
to have balance between the today and tomorrow, and that “cost” really did matter.
He argued that Naval Aviation leaders needed a detailed understanding of where the
community was spending its money. The conference in Dallas was a pivotal moment
for Naval Aviation because it furthered the concept of entitlements to achieve readi-
ness—but now at reduced cost (where before cost did not matter). In addition, these
actions codified a process of subordination of all activities (not just collaboration) to
the Single Fleet-Driven Metric and the keeper of the metric—the Single Process Owner.
The metric was modified to include the whole training and deployment cycle, not just
the at-home cycle, to achieve a defined readiness metric in relation to risk “and no
more.” The metric matured to Aircraft Ready for Tasking at Reduced Cost. Naval Avia-
tion leaders assigned the new metric and values of entitlements to all Naval Aviation
aircraft communities. The more mature concept of entitlements provided the solution
to the fiscally irresponsible behaviors of the organization while assuring a risk-based
level of readiness with an understanding of how much that readiness cost.

Enduring Constructs for Success


“The Main Thing”
The Single Fleet-Driven Metric drives alignment and subordinates an inordinate
number of disparate metrics that are used to measure readiness. This moved the met-
ric discussion from one of input—consumption metrics—to a metric that identified
readiness as the outcome. In addition to focusing on the metric itself, a new philosophy
identified “When enough was enough!”

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At the beginning of this case study, Admiral Clark told General Myers he could give
him more carriers than he requested. In part, this signaled to Myers that Naval Aviation
had overcome its serious readiness crisis and was now more effective in defending the
Nation. Moreover, Clark was confident that Naval Aviation could achieve even greater
readiness in time for Operation Iraqi Freedom. This was not to suggest that an excess
readiness was already present, but rather that Naval Aviation’s new purpose, culture,
and sense of urgency would likely bring about an elevated level of readiness in a shorter
time frame than was expected prior to its transformational change.
Naval Aviation still needed to continually refine its metrics to allow for achieving
specific readiness states at required levels and time frames. With this newfound effi-
ciency, Naval Aviation inadvertently transitioned from a problem of underproduction
to the inefficiencies of overproduction.
While Naval Aviation sent out eight carriers in 2003, it did so at tremendous cost
in money and resources. Although the organization made considerable progress since
the crisis of the 1990s, this approach compromised future readiness. The problem was
one of overproduction, or “unconstrained output,” as illustrated by a surplus of 237
pilots at a cost of $60 million without understanding the consequences downstream
of the Training Command. When asked why they produced the excess, the Train-
ing Command leadership answer was “because we could!” Aligning resources and
requirements entails not only creating entitlements that allow resource allocations
and expenditures, but also preventing unnecessary expenditure of resources to where
they are not necessary. The existing metrics failed to drive and reward the desired
behavior and therefore needed to change. Following that, the program evolved until
it produced the necessary amount of readiness—and no more.
The combined reform of the organization led to a Fleet-centered readiness metric
that became the organization’s “main thing.” The “main thing,” a concept borrowed
from The Power of Alignment, is “the single most powerful expression of what [an
organization] hopes to accomplish, its instrument for producing growth and profits
[in this case, savings or surplus].”48 The profit of Naval Aviation would become the
redistribution of resources that would allow Naval Aviation to afford its future while
achieving the readiness required to maintain its forces today. The authors, George
Labovitz and Victor Rosansky, identified three key points about any organization’s
“main thing:”
• The main thing as a whole must be a common and unifying concept to which every-
one can contribute.
• Each department and team must be able to see a direct relationship between what it
does and this overarching goal.
• The main thing must be clear, easy to understand, consistent with the strategy of the
organization, and actionable by every group and individual.49

C h a pte r 11   4 2 9
Naval Aviation’s “main thing” continues to evolve. Today, the Single Fleet-Driven
Metric is Aviation Units Ready for Tasking at Reduced Cost—Today, Tomorrow, and into
the Future. This emphasis has focused on realigning readiness requirements based on
the system of entitlements tailoring resources to those requirements, but continues that
theme into the future to tie current readiness and future readiness together. In addi-
tion, the new Fleet-driven metric curbed overproduction and emphasized continuous
process improvements (CPI) while avoiding the dangers inherent in underproduction
of readiness. With the creation of a novel, behavior-based organizational structure in
the Type/Model/Series teams, and a recalibrated, Fleet-driven metric, the stage was set
for Naval Aviation to become an enterprise. In July 2004, the Navy officially named it
the Naval Aviation Enterprise (NAE)—see figure 11-3.

Figure 11-3. Naval Aviation Enterprise

CNAF

Directs/Monitor
Requirements

THE FLEET

Executes Funds
Requirements Requirements
NAVAIR, OPNAV/
ICP, DLA, NPDC, HQMC
CNATRA FINANCE

Key: CNAF: Commander Naval Air Forces; ICP: Inventory Control Point; OPNAV: Office of the Chief
of Naval Operations; DLA: Defense Logistics Agency; HQMC: Headquarters Marine Corps; NPDC:
National Parts Distribution Center; NAVAIR: Commander, Naval Air Systems; CNATRA: Chief of
Naval Air Training Command

The Enterprise Effect


The Naval Aviation Enterprise was a fundamental reinvention of Naval Aviation. Yet
even before formally creating this structure, the groundwork already existed for a
new culture. The progressive realization of the importance of cross-functional and
distributed leadership, alignment, the need for revised metrics, and entitlements began

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to evolve the culture of Naval Aviation toward an Enterprise long before the structure
became clear to the Admirals who created it.

The Enterprise Structure


The structure of the Executive Level NAE is the same as that of the next echelon
represented by the Type/Model/Series teams (see figures 11-1 and 11-2). While the
T/M/S teams each have an aviation community as their domain, the NAE addresses
the concerns of the Fleet as a whole—a Fleet-centered model. In the Enterprise triad,
the top of the echelon—warfighting requirements and risks—consists of the com-
mander (the keeper of the metric) who creates the demand signal and is responsible
and accountable to produce the readiness that is required for the resources. Combined
with the supporting commanders, who provide resources and product in relation to
the demand signal, this resultant organization delivers the warfighting capability and
availability affordably.
As VADM Massenburg colorfully explained, the Enterprise triad created
alignment between Naval Aviation’s “people, dollars, and stuff.”50 These groups,
which rarely talked to one another in the past, were now required to meet on a
regular basis with all other stakeholders to work toward the advancement of col-
lective goals.

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. What lessons can you extrapolate from Naval Aviation’s successful transition to
an Enterprise?
2. Are there any aspects of the change that seem especially relevant to your own area
of expertise?
3. Are there potentially destructive changes?

Analysis: Leading Change in Naval Aviation


The preceding portrait of Naval Aviation’s transformation to an Enterprise offers
the opportunity to outline the stages involved while achieving the change—and
making it last. The 10-Step Change Model introduced earlier in this chapter serves
as the guideline for assessing this effort and therefore provides the organizational
structure for the following discussion. It is recommended that you compare your
change model to the 10-step approach.
Step 1: Assessing the Need for Transformational Change. The first stage of
transformational change includes asking whether such a large-scale alteration is nec-
essary. Ideally, this should be the outgrowth of a detailed analysis of organizational
strengths and weaknesses (SWOT) in which the potential benefits should outweigh
the risks. For Naval Aviation, the Aviation Maintenance and Supply Readiness Study

C h a pte r 11  4 31
Group’s report functioned as the internal scanning component of the change process.
It not only turned a critical eye to the organization’s structure and purpose, but also
provided a detailed list of discrete and actionable problems that melded effectiveness
and efficiency. Essentially, the report dispelled the idea that transformational change
was not necessary. The leadership of the organization came to believe that failure to
transform was not a viable option.
Step 2: Strong Strategic Leadership. The second stage asks leaders to become
fully aware of their personal strengths and weaknesses. In the Naval Aviation context,
the foremost leader of the change effort was Admiral Clark. Because of the position
where he expected and demanded change, Clark was uniquely qualified to focus new
attention and urgency on the organization and the problems it faced. Furthermore,
he had considerable business acumen, giving him the skill set and confidence to lead
the overall transformation.
Step 3: Creating a Sense of Urgency. The third stage involves creating a sense of
urgency throughout the organization that keeps employees motivated and focused on
the change mission. Clark and the Admirals in charge of leading Naval Aviation not
only followed, but also embraced this stage. Clark’s first public action addressing the
Fleet was putting the organization in perspective with a single message: If things did
not change, Naval Aviation would fail.
Step 4: Building a Strong and Committed Executive Team. The fourth stage
demands the creation of a capable—and invested—executive team. In part, the prob-
lem that afflicted Naval Aviation involved a “team” divided between East and West
coasts and the Systems Command. In leading Naval Aviation’s transformation, Clark
did not hesitate to name a single-process owner for the organization—Admiral Nath-
man. Furthermore, he created a succession plan that would ensure that the change
would stay on course through the changes of leadership from VADM Nathman to
VADM Malone to VADM Zortman. What also fostered success was a consistent,
constant presence within Systems Command, as VADM Massenburg held successive
Fleet-oriented Systems Command positions, resulting in eventual command of all of
it. Trust, confidence, and transparency were the outcome. This brought the organi-
zation into alignment under his direction, thereby creating a single message for the
vision of change.
Step 5: Get the Vision Right. The fifth stage of leading transformational change
involves the content of the change-vision. “Getting the vision right” is generally chal-
lenging because ultimate success depends upon how well the vision is understood by
individuals throughout the organization. A strategic change vision must identify and
articulate a solution to the organization’s existential problems.
For Naval Aviation the vision steadily progressed over time from Clark’s general
vision to that of improving the organization by inculcating a financial conscience in its
members while aligning resources and requirements. This broad vision narrowed and

4 3 2   L e a d in g a t t h e S t r a te g i c L eve l
focused into a number of structural reforms involving single-process ownership and
cross-functional elements—including operating changes involving metric recalibra-
tion. The final vision for Naval Aviation, as presented in the Enterprise structure, was to
produce the right amount of combat readiness at reduced cost—now and in the future.
Step 6: Communicate for Buy-In. The sixth step requires that strategic leaders
communicate their vision as a means to obtain acceptance and support from internal
stakeholders. This process can often be complex and challenging because of the unique
behaviors of individuals and subgroups within large organizations. Nonetheless, the
communication efforts responsible for transforming Naval Aviation were relatively
straightforward. Memos and executive briefs delineated the vision and purpose of the
organization, constantly reinforcing and honing the message to strengthen buy-in.
Leaders used conventions, lectures, and other large gatherings to reiterate the same
messages albeit using different words or concepts.
The elevator speech for all in the enterprise was “We are Naval Aviation, we
Fly, Fight, and Lead. We are about dominant maritime combat power and cost-wise
readiness, to make a great Navy/Marine Corps Team. We value reliability, cycle-time
reduction, and alignment to the Single Fleet-driven Metric, with leadership responsible
and accountable for outcomes with a material and manpower system that supports
the outcome.”
Step 7: Empower Action, Enhance Collaboration and Learning, and Recognize
the Influence of the Organization’s Culture. The seventh step involves empowerment,
collaboration and culture. Leaders adhered to each component of this step in Naval
Aviation’s transformation process. First, Servicemembers were empowered to make
decisions within their own realms, especially those in charge of subgroups within
the Type/Model/Series teams. Also, a system of entitlements was generated to give
individuals the tools to accomplish their tasks. Second, Naval Aviation transformation
expanded the collaboration and learning of those within the organization. Muting
stovepipes, cross-functional cooperation became an indispensable—and expected—
part of decisionmaking. Supporting the core value emphasizing continued process
improvements were programs like AIRSpeed (Naval Aviation’s adoption of Lean, Six-
Sigma, Theories of Constraints and other toolsets targeted to give power to the rank
and file to master their own environments). There was a clear connection between the
vision guiding Naval Aviation’s change effort and the output-culture it would adopt.
Step 8: Create Short-term Wins. The eighth step entails the creation of bench-
mark victories that demonstrate the value of the changes made. These wins are sig-
nificant because they validate and communicate the direction of the change. These
wins were pronounced for Naval Aviation. At some points, though, these victories
served more to affirm the importance of specific programs rather than to articulate
a monolithic strategic vision. One example of such a victory was the Flying Hours
Program. Aligning flight schedules to entitlements reduced the cost by over a billion

C h a pte r 11   4 3 3
dollars per year on a $4.2 billion base. Other cases involving process improvements
also emphasized the importance of sustaining more financially aware attitudes.
The reported successes of these programs consistently emphasized the vision that
motivated Clark and others of bringing a business-like mentality to Naval Aviation.
Collaboration, autonomy, and continued process improvements were values given
further credence through the announcement of these short-term wins. With AIRSpeed
process improvement, a genie (empowerment of the rank and file to change in relation
to the “Main Thing”) was let out of the bottle and would not be put back in easily.
Step 9: Don’t Let Up. The ninth step presents the challenge of sustaining
momentum despite lethargic progress. With the formal creation of the Enterprise
in 2004, the problems faced were no longer as difficult to address as before that
construct. NAE helped prevent future issues by taking more proactive approaches
and identifying and dealing with foreseeable difficulties by creating cross functional
teams, identifying and adopting more applicable readiness metrics, establishing
single process owners at various levels, and institutionalizing continuous process
improvement initiatives.
Step 10: Make Change Stick. The tenth and final stage of successful transforma-
tional change requires that strategic leaders culturally inculcate and institutionalize
the transformative changes. A significant obstacle when leading change is the constant
allure of reversion to old habits and behaviors. Naval Aviation addressed this reality by
determining that the new Enterprise would not be allowed to revert to its former, pre-
change culture—the incremental reforms leading to the NAE already distributed power
to those at the lower ranks of the organization. Once the power was ceded to them, the
Admirals would have a hard time retrieving it. The NAE empowered Sailors, Marines,
and employees and gave them the tools they needed to succeed by helping themselves and
the organization. Their success in this mission in many cases helped transform their own
12-hour days into 8-hour days, leaving them generally more satisfied. As a result, anyone
threatening to remove the Enterprise was also threatening to strip Servicemembers of
their newfound satisfaction and purpose. If nothing else, the success of the NAE has
helped demonstrate that empowering employees will help change stick.

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. In your view, did the presence of four-star, top-down direction and the “urgency”
value of fixing a critical national security shortfall make this an easier task than
it would have been in the civilian sector?
2. Does the above analysis seem accurate? What lessons can be learned about con-
cepts like empowerment and alignment from it?
3. Does any single concept seem more important than any other, or are all concepts
of equal value when leading change?

4 3 4   L e a d in g a t t h e S t r a te g i c L eve l
Final Notes on NAVAIR’s Transition to Enterprise
As noted in chapter 4, Kotter and Cohen argued, “People change their behavior less
because they are given analysis that shifts their thinking than because they are shown
a truth that influences their feelings” (italics in original).51 This affective approach to
change guides all of Kotter’s eight steps of transformational change. According to this
model, people must not only hear about an impending change, but they must also see
and feel the need to change as well as reacting to the power and charisma of leadership.
This was the character of the transformation within Naval Aviation.
Maintaining motivation throughout the change process was integral to success,
and the key mechanism behind this sustainment was the forward-looking attitude
displayed by Naval Aviation’s leadership—mirrored by those at all ranks. The prob-
lems that confronted Naval Aviation were of its own making, but Clark and others
understood that the culture, not the people, was directly responsible for this outdated
and antistrategic behavior. Rather than chastising Servicemembers for their wasteful
actions, Clark encouraged them to look onward and upward to change their behavior
for the better. One lesson learned from this case study is that purpose, charisma, and
optimism of this nature can contribute to remarkable success in establishing and
sustaining transformational organizational change.
In summary, as change agents, strategic leaders need to be adept at leading and
managing change, especially the most difficult type of change—organizational trans-
formational change. Properly implementing a transformational change initiative
requires the strategic leader to lead and manage both the change and the organization
to help ensure the most effective alignment of the organization’s purpose, mission,
vision, structure, culture, and processes. Having a well-thought-out change process
and a guiding team greatly enhances the chances for success-enhancing buy-in and
achievement of the organization’s strategic goals and objectives.

Notes
Personal interview with Dr. William Rupp, MD, CEO, Mayo Clinic, Jacksonville, Florida.
1

2
Elizabeth B. Davis, James Kee, and Kathryn Newcomer, “Strategic transformation process: Toward
purpose, people, process and power,” Organization Management Journal 7 (2010), 73.
3
Carolyn B. Aiken and Scott P. Keller, “The CEO’s role in leading transformation,” McKinsey Quarterly,
February 2007, 19–20.
4
Eric Flamholtz and Yvonne Randle, Leading Strategic Change (Cambridge, UK: Cambridge Press,
2008), 51.
Josep Isern, Mary Meaney, and Sarah Wilson, “Corporate transformation under pressure,” McKinsey
5

Quarterly 8, April 2009.


Ibid.
6

John Kotter and Dan Cohen, The Heart of Change (Boston: Harvard Business School Press, 2002), x.
7

C h a pte r 11   4 3 5
8
Adapted from Kotter and Cohen, v–vii.
9
Personal interview with Mark Gerencser, Executive Vice President, Booz Allen Hamilton, coauthor
of Megacommunities.
10
Personal interview with Renee Acosta, President and CEO, Global Impact (Nonprofit NGO).
11
Andrea Jung, Discussion with Students at Stanford University, November 17, 2009.
12
Bill George, “Andrea Jung Corporate Executive,” US News and World Report (November 12, 2007).
13
Jung.
14
Ron Heifetz argues, “The most common cause of failure in leadership is produced by treating adaptive
challenges as if they were technical problems.” He defines technical problems as those with “known solu-
tions.” Even if very complex and viewed as critically important (he uses the example of a heart surgeon
replacing a valve as a technical problem—the process and skill sets are known), the pathway to action
is known and can be “implemented with current knowledge,” whereas, “adaptive challenges can only
be addressed through changes in people’s priorities, beliefs, habits, and loyalties.” Thus, not only is the
challenge unclear, the solution is often unclear as well—requiring learning to take place before one is
able to interpret and understand the challenge as well as develop new thinking, skills, and practices to
create an appropriate solution. See Ronald Heifetz, Alexander Grashow, and Marty Linsky, The Practice
of Adaptive Leadership (Boston: Harvard Business Press, 2009), 14.
15
Jim Collins, Good to Great (New York: HarperCollins, 2001), 30.
16
Ibid., 36.
See Bruce Avolio, “Pursuing Authentic Leadership Development,” in Handbook of Leadership Theory
17

and Practice, ed. Nitin Nohria and Rakesh Khurana, 739–768 (Boston: Harvard Business Press, 2010).
18
John Kotter, A Sense of Urgency (Boston: Harvard Business Press, 2009), 8.
19
Ibid.
20
Ibid., 13.
21
Ibid., 45.
22
Ibid., 47.
Robert Berner, “P&G: New and Improved: How A.G. Lafley is revolutionizing a bastion of corporate
23

conservatism,” BusinessWeek, July 7, 2003.


24
John McGuire, Charles Palus, William Pasmore, and Gary Rhodes, “Transforming Your Organiza-
tion,” Global Organizational Development White Paper Series (CCL, 2009), 13.
25
Louis Gerstner, Jr., Who Says Elephants Can’t Dance? (New York, NY: HarperCollins, 2002), 68.
26
Kotter and Cohen, 83.
Josep Isern, Mary Meaney, and Sarah Wilson, “Corporate transformation under pressure,” McKinsey
27

Quarterly, April 2009, 13.


Stewart Black and Hal Gregersen, Leading Strategic Change (Upper Saddle River, NJ: Pearson Edu-
28

ation, 2003), 77.


Carolyn Aiken and Scott Keller, “The irrational side of change management,” McKinsey Quarterly,
29

April 2009, 103.


30
Ibid.
31
Kotter and Cohen, 104.
32
Gerstner, 185.
33
Ibid., 188.

4 3 6   L e a d in g a t t h e S t r a te g i c L eve l
34
Ibid.
35
Kotter and Cohen, 127.
36
Ibid., 143.
37
James Kee, Kathryn Newcomer, and S. Mike Davis, “Transformational Stewardship,” in Transform-
ing Public Leadership for the 21st Century, ed. Ricardo Morse, Terry Buss, and C. Morgan Kinghorn
(Armonk, NY: M.E. Sharpe, 2007), 156.
38
Personal interview with Bob Stone, Former Director for Reinventing Government for Vice President
Gore, former Deputy Assistant Secretary of Defense for Installations, and coauthor of The Ethics Chal-
lenge: Strengthening Your Integrity in a Greedy World.
39
Ibid.
Hal Rainey, Understanding and Managing Public Organizations, Third Edition (San Francisco: Jossey-
40

Bass, 2004), 384.


41
Davis, Kee, and Newcomer.
42
This case study is the result of interviews and correspondence with Vice Admiral Walter Massen-
burg, USN (Ret.), former Commander Naval Air Systems Command, by the author and two Dwight
D. Eisenhower School for National Security and Resource Strategy (ESNSRS) interns supporting the
author, doctoral student Zachary Knitter and Brad Davidson, a recent Master’s Degree graduate from
George Mason University School of Public Policy. Following the interviews and review of a number
of Admiral Massenburg’s documents, Zac Knitter, drew extensively from VADM Massenburg’s yet-
unpublished manuscript (describing and detailing the development of the Naval Aviation Enterprise)
and conducted follow-up discussions with Admiral Massenburg, to draft this case study. The author
is grateful to Admiral Massenburg, for sharing his insights and unpublished documents and for his
generosity in personally spending a number of hours with us, and to Zac Knitter for researching and
drafting this case study.
43
Vern Clark, foreword in Walter Massenburg, Untitled Manuscript, unpublished.
See <www.navair.navy.mil/index.cfm?fuseaction=home.display&key=9E99EE24-2F3D-4E23-A0C1-
44

A54C18C3FFC8>.
45
Massenburg, 1.
46
Ibid.
47
Massenburg interviews.
George Labovitz and Victor Rosansky, The Power of Alignment: How Great Companies Stay Centered
48

and Accomplish Extraordinary Things (New York: John Wiley & Sons, 1997), 40.
49
Ibid., 43–44.
50
Massenburg interviews.
Kotter and Cohen, 1.
51

C h a pte r 11   4 3 7
CHAPTER 12 | Leading Strategically in a
Crisis Situation

On August 14, 2003, a snapped tree limb triggered the largest electrical blackout in
North American history. About 60 million people in the northeastern United States
and southern Canada lost power; equivalent to the entire population of either France or
Britain. Looting broke out in darkened cities including New York, Detroit, Cleveland,
and Toronto. Economic losses totaled about $12 billon. An official with PJM Intercon-
nection, a consortium that coordinates East Coast power transmission, commented,
“Nobody saw this coming. . . . None of us drew the proper conclusions about what
was going to happen.”1

Crises in the Environment: The Growing Need for Crisis


Leadership
As noted earlier, strategic leaders face significant challenges. Perhaps none are more
damaging than those that come from the external environment, such as shifting
demographic, economic, financial, and political conditions; the increase in wicked
problems; the exponential pace of emerging technologies; and major natural disasters
(e.g., the March 2011 earthquake in Japan, the January 2010 earthquake in Haiti, and
Hurricane Katrina). Each of these challenges can create an environment of instability
for both large and small organizations. Instability often deteriorates into crisis. When
an organization, company, or government faces a crisis, there can be a confluence of
all these factors, including serendipity forces or actions. Table 12-1 is a small sample
to illustrate various crises faced by organizations.
All lasting organizations—government, business, or nonprofits—will face a cri-
sis sometime in the future. For the contemporary strategic leader, today’s fast-paced
environment will produce an increasing number of “inevitable surprises.” As the
interviewed senior leaders confirmed, this represents the new normal. “We must
accept that no organization is immune from a crisis anywhere in the world—even if
that organization is vigilant and actively seeks to prevent crises.”2

C h a pte r 12   4 3 9
Table 12-1. A Small Sampling of Crises Faced by Organizations
GOVERNMENT MILITARY NONPROFIT BUSINESS
BP Gulf Spill Abu Ghraib United Way JetBlue Ice Issue
Northeast U.S. Blackout Interrogation Methods American Red Cross e. coli at Taco Bell
Blood Supply
South Canyon Fires Walter Reed Care for Catholic Church Sex Union Carbide Disaster
Wounded Warriors Abuse Scandal at Bhopal
Indian Ocean Tsunami Firings of Senior Air Embezzlement Enron, Tyco, WorldCom
Force Leaders
Challenger and Columbia Leaking of Classified American Red Cross Ford/Firestone Tire Crisis
Space Shuttle Documents on Handling of 9/11 Fund
Explosions Internet, e.g., WIKILeaks
Hurricane Katrina Iraqi Occupation Financial Crises Vioxx Recall
9/11 Acquisition Issues, e.g., Fraud and Tylenol Poisonings
Airborne Tanker Excessive Executive
Pay Packages

Organizational crises can make or break the strategic leader. Hence, the better
prepared the leader is for a crisis, the more favorable the chances are for a successful
personal and organizational outcome. Furthermore, when in a crisis, stakeholders,
constituencies, customers, employees, media, and possibly the general public want
to see the organization’s leadership—not an underling or public relations spokesper-
son—as the face of the organization. Like it or not, it is the responsibility of the senior
leadership, regardless of the sector, to be at the forefront of any response.
Most research efforts investigating how strategic leaders should deal with crisis
rest on key aspects of public relations and communications. These sources emphasize
the need for senior leaders to ensure their professional public relations leaders are
well versed in crisis-prevention and mitigation skills and techniques. While commu-
nication during a crisis is a critical component of effective strategic leadership, such a
myopic focus fails to take into account the significant responsibilities and actions an
effective strategic leader must address before and after a crisis. These include how a
crisis is defined, whether crisis leadership is distinct from ‘normal’ day-to-day stra-
tegic leadership, and what a strategic leader’s responsibilities are before, during, and
after a crisis.

Crisis Defined
There are a number of definitions for the term crisis. Merriam-Webster’s Collegiate
Dictionary defines crisis as, “An unstable or crucial time or state of affairs in which a
decisive change is impending; one with the distinct possibility of a highly undesirable
outcome.”3 Ian Mitroff, a leading crisis management scholar, suggested, “A crisis is an

4 4 0   L e a d in g a t t h e S t r a te g i c L eve l
event that affects or has the potential to affect the whole organization. If something
affects only a small part of an organization, it may not be a crisis. For an event to be a
crisis, it must exact a major toll on the lives, property, financial earnings, reputation,
and general well-being of an organization. More often than not, all of these occur
simultaneously. A crisis is something that ‘cannot be contained completely within
the walls of an organization.’”4
Scope is not the only factor used to determine whether a situation is one of crisis.
Christine Pearson and Judith Clair in “Reframing Crisis Management” explained the
cognitive attributes associated with most crises. They defined an organizational crisis
as “a low-probability, high-impact event that threatens the viability of the organization
and is characterized by ambiguity of cause, effect, and means of resolution, as well as
by a belief that decisions must be made swiftly.”5
Research findings generally agree with those crisis researchers who suggest that an
organization faces a crisis when its leadership and/or stakeholders and key constituents
believe a crisis exists. For example, in Crisis Management in a Complex World, Dawn
Gilpin and Pricilla Murphy stated, “how an event is perceived and how it affects the
people linked to an organization, both individually and as a group, will determine
whether or not it is classified as a crisis and how it is subsequently handled.”6 Timothy
Coombs, a renowned crisis communication scholar, added:
A crisis can be viewed as the perception of an event that threatens important
expectancies of stakeholders and can impact the organization’s performance.
Crises are largely perceptual. If stakeholders believe there is a crisis, the organi-
zation is in a crisis, unless it can successfully persuade stakeholders it is not. A
crisis violates expectations; an organization has done something stakeholders
feel is inappropriate.7
Crises can originate from within and outside an organization. The Chernobyl
nuclear incident, Union Carbide’s chemical release disaster at Bhopal, the Enron col-
lapse, and the Ford/Firestone tire issues are examples of self-inflicted crises; whereas
terrorism, natural disasters, disease, tampering, slander, and changes in conventional
business practices or competitor capabilities are externally driven crises. Regardless
of the source, however, when senior leadership and/or key stakeholders perceive the
organization as unprepared or incapable of responding in a timely and resolute man-
ner, the crisis becomes an organizational one.

Strategic and Crisis Leadership: Is There a Difference?


Is strategic leadership different during an organizational crisis? One might consider
crisis leadership the same as noncrisis strategic leadership—but with the all the features
intensified. While the strategic leader will need to use all of the personal dimensions
illustrated in the Strategic Leadership Model in chapter 7, there are some key strategic

C h a pte r 12  4 41
leadership approaches uniquely necessary during a crisis. For example, the strategic
leader is faced with a compressed time frame for ascertaining what is happening, the
event’s impact on the organization and its stakeholders, and what should be the ini-
tial steps taken to mitigate organizational damage. Typically, the strategic leader will
initially be in catch-up mode, searching for meaningful information that will allow
him or her to “get ahead of the game.”
Andy Grove, former CEO of Intel, explained, “Managing, especially managing
through a crisis, is an extremely personal affair.”8 A crisis will identify the strategic
leader, either positively or negatively. General Charles C. Krulak, former Commandant
of the Marine Corps and Vice Chairman of MBNA, explained:
When you talk about strategic leadership, it’s the same sort of leadership, except
very compressed in time, and it becomes very CEO identifiable. You’re identi-
fied as the problem and you’re identified as the solution, and you better get out
there and do it. You’ve got to very quickly figure out first steps, make sure that
whatever you say is transparent and to the best of your ability is true.9
The identification of the strategic leader with the role of crisis manager clarifies
that it is his or her responsibility to guide the organization toward a solution. While
this demands a similar skill set to standard leadership at the strategic or executive
level, the speed, clarity, and steadfastness with which the leader responds take on
added significance.

Reputation, Credibility, Trust, and Legitimacy (Strategic


Leadership—Crisis Leadership)
As discussed earlier, the primary responsibility of a strategic leader is to maintain the
viability and vitality of the organization. With this responsibility comes the require-
ment to manage his or her personal reputation, along with that of the organization.
This solidifies the leader’s integrity and legitimacy in the eyes of stakeholders and
customers. This effort requires maintaining excellent relationships with stakeholders,
managing their expectations and perceptions, and trust-building inside and outside
the organization. Loss of reputation can lead to loss of legitimacy and could even bring
the destruction of the organization. As General Krulak pointed out:
The military is attuned to risk—they deal with it on a continuing basis. For a
company there are two key risks during a crisis: financial and reputational.
Reputational risk is the one that will kill you. Reputational risk is where you
better be out front communicating, talking, making right decisions, which are
normally very hard ones, because it could probably impact the financial side.10
One example of successful reputation management during a time of crisis comes
from James Burke, CEO of Johnson & Johnson (J&J). He faced a crisis in 1982 when

4 4 2   L e a d in g a t t h e S t r a te g i c L eve l
seven people died from cyanide placed inside Tylenol capsules. In response, Burke
took “two vital actions in the earliest stages of the Tylenol crisis . . . that enabled [J&J]
to maintain the confidence and trust of the news media and the public—and also to
bring the Tylenol business back at a later date.”11 The first action was an immediate
response to the press, which helped to present an image that J&J was also a victim.
The second was to take immediate action to protect customers by pulling the product
from the shelves (at a cost of more than $100 million). This crisis also illustrated the
importance of organizational values and culture. Burke and his executive team, in
debating how to respond to the crisis, turned to the company’s credo. Burke explained
that the company’s value system was critical to its successful handling of the crisis:
[E]ach act of an employee can either build or block trust. The values provided
the context within which J&J management made its decisions. The values,
however, went beyond informing decision making, playing an important role
in motivating J&J’s employees to get the new tamper-resistant Tylenol to the
market in six weeks.12
Failure to maintain a positive strategic leader or organizational reputation and/or
excellent stakeholder relationships can complicate—or hamper—efforts to mitigate the
immediate effects of a crisis—and even jeopardize the organization’s long-term viabil-
ity and survival. Research shows that relationship history and negative performance
histories influence how stakeholders, customers, and the public perceive organizations
during a crisis. As Coombs and Holladay explained, poor or inadequate histories
regarding relationships and responses to previous crises, “can create a strong, negative
velcro effect.”13 The public relations approach adopted by BP during the 2010 oil spill in
the Gulf of Mexico provides one example of leadership designed to overcome this effect.
Press reports and online videos of BP’s refinery explosion in Texas that killed 15 workers
in 2005 resulted in a Federal fine of $50.6 million. Following that was the Alaskan oil
pipeline leak in 2006 and an additional $20 million in penalties. This history of disasters
clung to BP when it attempted to communicate a positive message about actions taken
during the 2010 spill, often intensifying public scrutiny toward the company.

Operational Readiness and Situational Awareness


Two military terms, operational readiness and situational awareness, are useful in
exploring how to prepare for and deal with crises. Operational readiness includes the
capability of a military unit to perform the missions or functions for which it is orga-
nized or designed. In preparing oneself (as a strategic leader) and one’s organization
for a crisis, it is useful to ask continually, “Are we operationally ready to face a crisis?”
Situational awareness originally was “adopted to describe the processes of attention,
perception, and decisionmaking that together form a pilot’s mental model of the cur-
rent situation.”14 Today, situational awareness can apply to any ongoing mission or

C h a pte r 12   4 4 3
action. In thinking and preparing for crises, it is useful for the strategic leader to ask
such questions as:
• Are we maintaining strategic situational awareness for both the internal and external
environments?
•A  re we able to connect the dots and sense an impending crisis?
• If in a crisis, do we have situational awareness of the various events and develop-
ments currently impacting the organization and its ability to respond in the face of
the crisis?

Strategic Leader Responsibilities


Strategic leaders should anticipate the need to take actions that will help prevent crises
from occurring, or that will help mitigate negative outcomes once the organization is
involved in a crisis. Most experts emphasize the need for organizational leaders to take
preventative measures and plan for potential crises, respond quickly and effectively
during the crisis, and ensure postcrisis evaluation and determine lessons learned. In
view of these requirements, the following suggested strategies and actions could assist
strategic leaders in being better prepared for a crisis, performing effectively during a
crisis, and enhancing personal and organizational learning following a crisis. It is not
the intent of this chapter to outline all the key strategies and tasks required for suc-
cessful resolution. Rather, the suggestions below illustrate a variety of elements and
actions that can improve the strategic leader’s ability or that of his or her organization
to successfully navigate the dangerous rapids of a crisis and create a much stronger
organization afterward.
Readiness and preparation for a crisis improves the operational readiness of both
the leader and the organization to identify an impending crisis and to be more effec-
tive when fully engaged in it.

Suggestions for the Strategic Leader Prior to a Crisis


(suggestive—not prescriptive)
1. Self-Awareness. The strategic leader should clearly understand his or her opera-
tional values and should stay within them and be authentic. Knowing one’s core values
before a crisis is important, especially when faced with uncertainty, confusion, and
unpredictability while operating under immense pressure and scrutiny.
2. Stakeholder Relationships. As noted earlier, an effective strategic leader must
continually attempt to maintain communications, collaboration, and trust building
with all stakeholders. This effort is important for the reputations of the leader and the
organization, as well as its management, integrity, and organizational legitimacy. As
Gilpin and Murphy emphasize, it is important to remember that stakeholder relation-
ships are continually evolving and often “have conflicting, changing needs and desires,
requiring the organization to continually re-earn its legitimacy.”15

4 4 4  L e a d in g a t t h e S t r a te g i c L eve l
3. Strategic Leadership Team. The quality of the strategic leadership team is
important in a crisis, but one should not wait until a crisis develops to build an effective
team. Having an effective strategic leadership team or crisis-management team (CMT)
that is experienced in collaboration, strategy development, and outcomes provides an
experienced group of open, creative, and trustworthy critical thinkers, which greatly
facilitates a leader’s ability to deal with the crisis. In addition to normal interactions
while conducting business, it is through pre-crisis training and exercises that these
leaders will develop their intuition and learn the nuances and the individual and col-
lective mindsets of their leaders and teammates. When faced with a crisis, they will
be in a better mental and emotional position to gather, evaluate, and make sense of
information from a variety of sources, thereby enhancing their knowledge and ability
to exercise discerning judgment in decisionmaking. Regardless of whether the team is
the strategic leadership team or a CMT with different membership, it is important that
the strategic leader identify team membership. It is also vital to develop and provide
fundamental generic guidance outlining plans and processes for the organization’s
initial crisis response.
4. Scanning the External and Internal Environment. As discussed in chapter 4,
a critical responsibility for a strategic leader is scanning and processing the disparate
information needed to understand the dynamic strategic environment. While con-
ducting these normal strategic scanning activities and processes, the strategic leader
needs to maintain vigilance while attempting to identify and assess developments that
could lead to a crisis or a “strategic inflection point.” Andy Grove, former CEO and
Chairman of Intel Corporation, defined a strategic inflection point as “a time in the
life of a business when its fundamentals are about to change. That change can mean an
opportunity to rise to new heights. But it may just as likely signal the beginning of the
end.”16 Consequently, a key component of dealing with a crisis is the ability to acquire,
organize, and process information to ensure it matures into actionable knowledge
that supports timely and effective decisionmaking. Remember, this typically occurs
in an emotionally charged atmosphere, with the strategic leader and his or her team
operating under extreme timelines, scrutiny, stress, and pressure to perform.

INTEL—An Example17
For example, in the fall of 1984 Intel was losing money competing with Japan’s high
quality, low-priced, mass-produced memory parts. “The need for a different memory
strategy, one that would stop the hemorrhage, was growing urgent.” While Intel contin-
ued to lose money, Andy Grove and his executive team had endless meetings debating
different strategies for survival. After more than a year of this “aimless wandering”
and in a “downbeat” mood, Grove met with Gordon Moore, Intel’s Chairman and CEO.
Grove asked Moore, “‘If we got kicked out and the board brought in a new CEO, what

C h a pte r 12   4 4 5
do you think he would do?’ Gordon answered without hesitation, ‘He would get us out
of memories.’ I stared at him, numb, then said, ‘Why shouldn’t you and I walk out the
door, come back and do it ourselves?’” They walked out the door, came back in, and
decided that microprocessors would be their business focus. In the following days,
Grove stated that he “experienced the confusion that engulfs you when something
fundamental changes in the business, and I felt the frustration that comes when the
things that worked for you in the past no longer do any good. I learned how desperately
you want to run from dealing with even describing a new reality to close associates.
And I experienced the exhilaration that comes from a set-jawed commitment to a new
direction, unsure as that may be.” Grove acknowledged, “strategic inflection points,
painful as they are for all participants, provide an opportunity to break out of a plateau
and catapult to a higher level of achievement.”

The above mini case study offers several lessons. First, the strategic leader should
ensure members of the strategic leadership team or CMT have a process in place that
is operational and capable of scanning the internal and external environments to
identify—in time—impending crises. Second, the leader should include listening to
stakeholders and employees for outliers that might signal concerns that could lead to
a crisis. Through the scanning, sensemaking, and the learning processes, the effec-
tive strategic leader is more likely to gain the perspective needed to develop clear
messages, goals, and objectives, as well as formulate a revised vision that is better able
to prevent or mitigate a crisis or that better positions the organization for eventual
success. Furthermore, connecting the dots may require leaders to trust their guts. As
Grove explained, “[W]hen dealing with emerging trends, you may very well have to
go against rational extrapolation of data and rely instead on anecdotal observations
and your instincts.”18
5. Planning. One requirement on which most crisis scholars agree is pre-crisis
planning. Developing plans for dealing with a crisis offers a number of benefits. First,
experiencing the developmental phases from which a plan emerges provides impor-
tant benefits—cognitive and social—for the team members involved. By discussing
and evaluating various aspects and components of the plan, key leaders sharpen
their own assessment and management competencies, ensuring that both the plan
and their skills are ready to deal with whatever lies ahead. A plan will identify in
advance the key stakeholders and customers and members of the CMT (if different
from the strategic leadership team) and will outline the initial (generic) steps to be
taken in the event of a crisis. It will also include generic strategies and frameworks
for those crises that are foreseeable—e.g., organizations in Florida should expect
a hurricane sometime—rather than being forced to develop such strategies from
scratch during a crisis.

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Many organizations that plan for unexpected crises typically use an approach
referred to as continuity of operations plans (COOP). A basic assumption held by
COOP planners is that having strategies, policy guidance, supporting personnel, and
logistics pre-identified (and hopefully resourced)—in short, the planning process and
the plan itself—will assist decisionmakers in taking immediate and necessary actions.
For example, banks in California have duplicate database centers in different regions
of the state in case of earthquake. Some Wall Street firms have alternate locations in
New Jersey in case a catastrophe occurs in lower Manhattan. Such COOP plans typi-
cally incorporate key organizational assets and functions identified as fundamental to
sustaining the current mission, strategy, and progress toward achieving the organiza-
tion’s strategic objectives. The goal for such pre-crisis planning, including prescribed
checklists and suggested strategies, is anticipating and mitigating the need for the
strategic leadership team to formulate strategy and tactics on the fly during a crisis.
Four key planning aspects must be addressed prior to a crisis. First, a plan must be
developed with someone made responsible for its continuous revision to maintain its cur-
rency. Second, various worst-case scenarios should be postulated that better enable the
organizational leaders to anticipate and develop contingency plans. Third, there must be
an acute appreciation that “communication is the essence of crisis management”19 both
for the prevention phase and during a crisis. Fourth, the leadership team must partici-
pate in training and education activities pertaining to the plan and dealing with crises.

A) The Plan
Establishing an anticipatory planning process and maintaining the plan’s relevance
helps the strategic leader ensure a “readiness to meet any crisis” mindset that is useful
both during the scanning process and in updating and validating worst-case scenarios.
However, strategic leaders should be wary of simply taking a plan “off the shelf” and
moving to deploy it without serious review, reassessment, and discussion. Regardless
of the diligence and in-depth analysis performed while developing the plan, no pre-
crisis plan will be sufficient when a crisis actually occurs. Some scholars point out
that the planning process depends largely on the cognitive and social skills exhibited
by those doing the planning. In many organizations, others develop the pre-crisis
planning instead of the strategic leadership. Typically prepared during everyday,
business-as-usual situations, these plans may even include fully developed strategies,
suggested courses of actions, and action checklists. However, in a time-constrained,
highly visible, emotional, and stressful environment that accompanies a crisis, there is
rarely enough time to accomplish or fulfill all seventeen steps of a crisis-management
checklist. A strategic leader may only have time to do two or three of the suggested
action steps. Testing and exercising the plan can help ascertain which of the seventeen
steps are the top three, thus allowing the leader to be better prepared regarding which
steps to take and when.

C h a pte r 12  4 47
Additionally, Gilpin and Murphy suggested that, “irrationality, faulty heuristics,
and blind spots may render a crisis management group less than effective when it
designs its plan in the first place.” In addition, they cautioned that, “the crisis plan itself
raises concerns about the hazards of overdetermination even as it provides the security
that most eventualities have been foreseen and appropriate strategies devised.”20 Grove
agreed but added the need to plan:
If you run a business, you must recognize that no amount of formal planning
can anticipate such changes. Does that mean you shouldn’t plan? Not at all.
You need to plan the way a fire department plans: It cannot anticipate where
the next fire will be, so it has to shape an energetic and efficient team that is
capable of responding to the unanticipated as well as to any ordinary event.
Understanding the nature of strategic inflection points and what to do about
them will help you safeguard your company’s wellbeing. It is your responsibility
to guide your company out of harm’s way and to place it in a position where it
can prosper in the new order. Nobody else can do this but you.21
General Krulak concurred that the leader needs to plan. However, in an actual
crisis, many important aspects will be unexpected and the suggested courses of action
identified in the pre-plan can be limiting or faulty. As a Union Pacific Railroad board
member, Krulak explained:
We transport hazardous waste, not because we want to, but because the govern-
ment asks us to, tells us to, whether it’s chlorine or you name it. You have to antici-
pate a chlorine breach in a major city or out on the track and how you’re going
to handle that. You go and you talk to the first responders, you coordinate with
the police in all the cities, because you know where you’re transiting. You do that
kind of preparation, but my dad used to say the next war will be fought in a place
you’ve never heard of, utilizing an operation order that hasn’t been written yet.22
In essence, establishing a good planning process and updating the plan on a continu-
ing basis keeps a healthy crisis mindset during the scanning and identifying process as
well as updating and validating the plan to anticipate worst-case scenarios. Plans and
planning, however, are rarely adequate to cover the multitude of events, scenarios, or
resource issues a strategic leader will face in an actual crisis. While the planning process
helps to identify key organizational players and variables, the ultimate challenge and
responsibility for strategic leaders is to use the knowledge gained from such planning
and tailor responses to better address and manage the actual crisis at hand.

B) Scenario Development
Chapter 4 examined foresight and “seeing around corners.” Clearly, use of such personal
and organizational skills and techniques is critical to recognizing an impending crisis,

4 4 8   L e a d in g a t t h e S t r a te g i c L eve l
as well as evaluating possible opportunities and desired outcomes during and follow-
ing a crisis. As noted previously in this chapter, strategic leadership in a crisis requires
timely sense-making and responsiveness. During a time of rapidly changing internal
and external environments filled with uncertainty, complexity, and unknowns, coupled
with disrupted communications and information systems (inhibiting the sharing of
data and information), the strategic leader will often be making discerning judgments
and decisions on the fly—typically with limited situational awareness. One anticipatory
crisis management technique is building exploratory or future-based scenarios. Scenario
development is an excellent brainstorming technique to use during a pre-crisis learn-
ing period in efforts “to examine possible futures and cascading consequences that are
complex and uncertain.”23

C) Communications
Chapter 9 examined the importance of strategic communications. A special need for
strategic communications occurs during a crisis. Most crisis scholars refer to this type
of communications as “crisis communications” and argue that its use is critical for
crisis resolution. For example, Coombs explained:
In pre-crisis, crisis communication revolves around collecting information
about crisis risks, making decisions about how to manage potential crises, and
training people who will be involved in the crisis management process. The
training includes crisis team members, crisis spokespersons, and any individuals
who will help with the response.24
People expect strategic leaders to be the faces and voices of their organizations
during crises. More importantly, everyone will be listening to strategic leaders’ words,
critiquing their actions, and making judgments based on what they say and do. To help
ensure effective communications, crisis pre-planning should also address strategies
regarding anticipated audiences, message content, available and preferred media distri-
bution channels, and the means by which feedback will be obtained. While each crisis
will be different, having a conceptual framework and an understanding of the need
for effective communications prior to a crisis will be invaluable when an organization
is faced with an actual crisis. A robust model will make crises more manageable even
when they are unpredictable.

D) Training and Education


The strategic leader should ensure that training and education are available to all members
of the strategic leadership team or the CMT. Such training should include the development
of worst-case scenarios and exercises designed to help personnel prepare themselves for
the real thing. There must also be time to reflect and learn from such training and educa-
tion. Having the team work together and rehearse critical decisionmaking via gaming and

C h a pte r 12   4 4 9
simulations, case studies, and scenario building will enhance the team’s understanding of
other members’ personalities, strengths and weaknesses, judgment, and decisionmaking
approaches. During such drills, simulations, and other training and education activities,
the strategic leader should remind the team constantly and consistently that when a crisis
hits the organization, it will be unpredictable in scope, length, and outcome. The leader
should impress upon everyone that existing planning will be insufficient and all members
must have an open mind, the empowerment to challenge existing assumptions, and the
“grace under fire” focus on how to respond immediately while not losing sight of long-
term organizational sustainability. The best advantage a strategic leader and his or her
team will have when facing a crisis is a collective mindset prepared for the unexpected
and possessing the agility to recognize and embrace the reality that any crisis faced will
not completely match any of the pre-crisis-developed scenarios.

E) Personal and Organizational Resilience


The strategic leader and other members of the team cannot know how people are likely
to react during a real crisis. Some employees may experience shock, stress, confusion,
and distress. They may feel overwhelmed and anxious and need reassurance that the
organization will survive. It is certainly appropriate to identify dedicated medical and
personal counselors in the plan—or how to gain such help—to assist those who may
require physical or psychological support. Strategic leaders should make it clear that
when the use of such support is required, it is not only appropriate but expected. In addi-
tion, it should be expected that leadership team members, as well as many organizational
members, will not get enough sleep. Therefore, when a crisis takes place, the strategic
leader and his or her team should be alert to fatigue or possible “burnout,” and a potential
loss of focus or even impaired decisionmaking by key leaders—and plan accordingly.
6. Implementing a Strategy That Creates a Crisis. In formulating and executing
strategy, it is important to ensure the alignment of the resulting strategic objectives
and tasks with the views of stakeholders and internal organizational members. For
example:
• Are the envisioned strategy and actions in concert with, or at odds with, the orga-
nization’s known culture?
•H  ow do they align with customers’ and stakeholders’ expectations?
• Notwithstanding the numerical argument supporting a strategy and plan, what
approach will the strategic leader take to ensure general acceptance and buy-in for
the strategy ?
• Is there any potential “good will” or negative emotional concerns raised regarding
the proposed actions?
• Has the leader clearly identified the key people and publics who will have an interest
in what he or she does, and will their interest motivate support or resistance to the
proposed actions?

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This type of questioning and analysis helps reduce the impact of unexpected
consequences or second- and third-order effects.
A strategic leader needs to be able to anticipate potential emotional reactions to
various strategies, as well as the principles of management science that support their
analysis and decision. For example, is the leader listening to those who see potential
outliers or miscalculations that could lead to less than desirable results? Failure to do
so could result in crisis mishandling, or even a self-induced crisis.
One example comes from an intended humanitarian endeavor. To prevent the
homeless from freezing during the cold winter in 1992, the U.S. Army distributed
wool blankets to more than 2,000 shelters. Although previously treated with small
amounts of the Environmental Protection Agency-banned pesticide DDT to prevent
moths, scientists and experts proclaimed that there were negligible risks in the use of
the blankets. Backed by that scientific evidence, the Army felt that the infinitesimal
chance of a DDT-related illness was of little consequence compared to the immediate
need to prevent the homeless from freezing to death. While the intent was admirable,
the public outcry when they learned the blankets contained elements of DDT caught
the Army off guard. Some in the press equated the blanket distribution with settlers
providing smallpox-infested blankets to Native Americans.25 Consequently, the Army
was compelled to hold news conferences that outlined how to return or dispose of the
blankets. “What had appeared to be flawless planning and a win-win situation was
sunk by the assumption that knowledge about statistical risk would prevail with the
public as it had with the scientists.”26
The above example also illustrates the inherent challenges of planning for crises.
The Army did not anticipate the public’s antipathy as a reaction to its well-intended
gesture to help keep the homeless from freezing. Due to a lack of adequate foresight
and realistic planning, the Army’s actions instead resulted in a self-induced crisis.
This underscores the importance of evaluating possible second- and third order con-
sequences prior to executing decisions. Almost everyone can cite numerous examples
illustrating the effects of unintended consequences.
In summary, effective strategic leaders need to be involved in pre-crisis planning
that ensures such readiness is in place and that reflects approaches that help anticipate
and mitigate potential crises without losing the vision that should best define the orga-
nization following successful resolution of the crisis. While planning methodologies
such as COOP can assist during a crisis, many might suggest their true benefit derives
from discussions and information exchanges between the strategic leader and the
strategic leadership team. Building worst-case scenarios and perceived ramifications,
formulating strategies (including initial communication strategies), and gaming these
scenarios to test the planning all build vital insights, trust, and confidence among
crisis team members. The development and rehearsal of potential scenarios is espe-
cially valuable when the executive team expects additional organizational members

C h a pte r 12  4 51
or external stakeholders with certain expertise to be included in efforts to avert or
resolve the crisis. Having additional members participate helps enhance teamwork,
trust, understanding, and confidence among all members.

Suggestions for the Strategic Leader During a Crisis


(suggestive—not prescriptive)
1. Is the Strategic Leader Ready? Leaders should be ready and able to make tough,
timely decisions. As Chesley “Sully” Sullenberger indicated following his success-
ful water landing of a USAir Airbus A320 on the Hudson (the result of a bird strike
that damaged both engines on January 15, 2009), “[E]verything I had done in my
career had in some way been a preparation for that moment.”27 Put differently, he
had trained for the incident. Similarly, a strategic leader who is prepared and is
ensured the agility and resiliency of the organization is in good position to achieve
an equally successful outcome.
2. Strategic Leadership Team or CMT. The strategic leader should form the
strategic leadership team and/or CMT as quickly as possible. In many cases, members
of the strategic leadership team or CMT will not be within the geographical area. For
example, when 9/11 occurred, President Bush and many of his cabinet secretaries
were outside of Washington, DC. As part of the CMT, assigning someone to serve as
a process observer to provide ongoing advice regarding the efficiency and effective-
ness of the process, and to serve as the historian to collect the narrative of assump-
tions, decisions made, rationale, and results, will prove fruitful. The data provided by
this effort will be indispensable for postcrisis analysis and learning. For government
organizations that must work together in the interagency process to address a crisis,
see suggestion 11 below.
3. Sensemaking. Recognize that a crisis is typically characterized by hyper-
complexity, uncertainty, ambiguity, and unpredictability about what a leader and
the organization are facing, and what the leader knows and doesn’t know—thus
requiring the leadership’s direct efforts to better interpret affairs and to share these
understandings, as appropriate, with the stakeholders. Critically reexamine all
assumptions. The leader’s intuition, experience, and knowledge are essential as he or
she attempts to make sense of what is happening. The strategic leader will be receiv-
ing information and advice—much of it conflicting. The leader’s ability to “connect
the dots” quickly will improve the ability to mitigate damage to the organization
in the near term. Identify what other organizations or partners may be experienc-
ing the same crisis or can provide meaningful support to the organization during
a crisis. Finally, be aware that it is often difficult to know at the outset if one even is
in a crisis and, if so, when it started.
4. Be Authentic, Have a Strong Sense of Self, and Take Responsibility. Perceived
authenticity through actions and communications taken by strategic leaders during a

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crisis—upholding and acting based on core values, beliefs, and principles—generates
loyalty and support by stakeholders. For example, the leader should accept appropriate
responsibility and accountability for the organizational crisis and not blame others or
the external environment. The leader should evaluate those factors—personal and/or
organizational—that might have contributed to the crisis and acknowledge the same
to CMT to help assure them that it is safe to be candid and forthright throughout this
crisis—and their entire tenure. That will help collective efforts to find and evaluate
root causes for the organizational crisis—a critical process affecting the organiza-
tion’s sustainability and perhaps its survivability. It will also help identify potential
strategies to mitigate the near-term negative consequences and maximize longer-term
opportunities. In May 2010, BP and senior executives from its two major contractors,
Transocean and Halliburton, testified before Congress. Their testimony is an example
of executives not taking responsibility for their roles in a crisis. “[E]ach disowned
culpability while pointing fingers at one another.”28
Stakeholders, employees, and the public look to the organization’s leader (sup-
ported by the strategic management team) for guidance and answers. Rarely does
attempting to shift the blame to others enhance the leader’s position in the eyes of the
public. In any crisis, whatever the damage, the leader must communicate the reali-
ties and process of remediation in a context of complete, unwavering honesty to be
perceived as authentic.29 For example, Toyota, known for years for its strong manufac-
turing process and quality of its cars, suffered significant reputation damage in 2010.
First, the company denied culpability regarding stuck accelerators in its automobiles;
second, they eventually had to recall thousands of vehicles.
Being authentic also requires a clear sense of one’s identity and values. This is
especially true during crisis leadership—an emotionally and physically demanding
process. Leaders should try to stay “above the fray” since an overarching perspective
allows them to maintain the ability to think and, as Weiss explained, “not become
entangled in a swirl of anxiety that threatens to take over the system . . . because you
can’t hold steady to a strategic goal if you can’t think.”30
Typically, leaders face moral and ethical issues in a crisis while formulating
strategies to resolve or to develop and deploy decisions attempting to transmute the
crisis into enhanced sustainability. Leaders and their leadership teams must have
the courage to do what is right, legal, and ethical regardless of the consequences. By
remaining authentic, transparent, and ethical, authentic strategic leaders retain—or
even enhance—their positive personal and organizational reputations. As Bill George
suggested, “When you approach public issues from that point of view, instead of wor-
rying about your image and the impressions you create, people respect you as a leader
they can count on and will make sacrifices for the good of the whole.”31 Personal and
organizational reputations, credibility, and legitimacy are at stake based on the actions
and decisions the leader makes.

C h a pte r 12   4 5 3
5. Stakeholders—Initial Focus. An important initial focus during crisis manage-
ment should be the organization’s stakeholders. For example, verify all stakeholders
and, depending on the dynamics of the crisis, attempt to identify their concerns,
potential responses or actions, and expectations of the leader and the organization.
As Krulak argued:
The focus initially in any crisis is to reassure your stakeholders. Believe me,
that’s your first mission: reassure the stakeholders . . . whether that stakeholder
be within the company or external. You’ve got to get out there and say, “We
understand we’ve got a major problem here. We are going to be working hard on
it. We understand its impact on you, the customer. We understand the impact
on you, the shareholder. We understand the impact on the people internal to
this company, and we’re going to do the right thing as best we can, and we’re
getting on it right now.”32
Union Pacific Corporation owns one of America’s leading transportation com-
panies, General Krulak explained. Its principal operating company, Union Pacific
Railroad, links 23 states in the western two-thirds of the country. After warm rains
fell and melted snow-packed mountains, a mudslide occurred on January 19, 2008
in the Cascade Range of Oregon. The mudslide covered 3,000 feet of Union Pacific’s
(UP) mainline railroad track in three separate locations with snow, mud, and downed
trees—many were more than 20-feet deep—resulting in the closing of the entire
northern route. The resulting financial problems “could easily turn into reputational
crisis, because all of UP’s customers, for example the coal coming out of the Powder
River, were at risk.”33
“The first thing that a good strategic leader does is to personally get hands on
the problem,” Krulak continued. “There were big mistakes in Katrina; big mistakes
in Gulf oil; but not a big mistake with Union Pacific. . . . Jim Young [Chairman and
CEO for Union Pacific] got on the plane and got on the ground, so that when the first
news release came that showed that a third of the track for the United States east-west
shipping was down, the face they saw was the face of the leader. He talked not just to
the people that had to repair it, but also to the shareholders and the customers, and
he gave time lines. He said he would keep them posted. He was out there doing what
needed to be done. Contrast that with the President during Katrina, or the CEO dur-
ing the BP Gulf oil situation.34
The whole idea is to communicate. In a crisis, Krulak succinctly explained, the
first thing is the immediate: “How do you put a cork in it?”35
Following the initial assessment and announcement, the CEO or strategic leader
gathers the crisis management team and focuses on situational analysis, evaluation
of potential courses of action, and action—appropriately communicated to all stake-
holders. For example, again referring to UP, the CEO and his leadership team can

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ask, “Can I restore the track?” Clearly, Young had an incredible challenge. This was
not a snow bank, but a mountain! “The slide was as wide as a football field and the
equivalent height of the Sears Tower.”36 Young faced two major challenges: rerouting
all railroad traffic via Bend, Oregon, and Salt Lake City, Utah, inducing 24- to 72-hour
delays; and, rebuilding the track in a very remote area in Oregon that did not have any
serviceable roads. In fact, the area was so remote that UP had to construct a road for
crews to reach the area.
Once at the site, workers discovered that the mudslide was mostly very fine silt
that proved useless for rebuilding the railroad bed. Consequently, UP had to bring
in rock and rebuild the mountain! This effort included the removal of more than one
million tons of material (including 19 million cubic feet of mud), and replacing it with
700,000 tons of rock (an estimated 153,000 truckloads). It took UP management and
employees, supplemented by hundreds of contractors, working around the clock to
remove logs and unsuitable material from the site and to bring in the rock to rebuild
the mountain. On May 6, 2008, after 105 days, UP reopened the northern line. In
accomplishing this enormous task, UP reported the following impressive numbers:
• 2 00: number of workers at the site during the peak of construction
• 1 50: number of construction equipment items at the site
• 660,000 board feet of timber: total number of timber salvaged from the site—which is
the property of the national Forestry Department—enough timber to build approxi-
mately 66 three-bedroom houses 
• 7 00,000 tons: amount of rock it took to stabilize the mountain
• 1 million tons: amount of unsuitable material removed from the site—about the
weight of 25 U.S. Navy super carriers
• 4 2–76 hours: the typical delay to customers due to the mudslide
• 1 5: number of daily trains rerouted
• 3 0: daily average of the number of UP work train round trips
• 1 : helicopter used to remove timber
• 0: number of available hotel rooms in Oakridge, Oregon, during the construction.37
After reviewing the UP mudslide crisis, the UP board and the management team
recognized that returning to normal was not the answer. Krulak recalled they learned
“you’ve got to be able to take what you would call your choke points, the railroad
yards, and you’ve got to do something to increase the flow through of the yards. This
is because we couldn’t use that track for a number of weeks, and we had to bring all
those trains down through Los Angeles and Los Angeles is a choke point.”38 Therefore,
Krulak continued, “over the past 3 years, [UP has] been building additional lines. We
have triple-tracked and double-tracked coming out on the Sunset Corridor, so if you
have a problem, you can shift very rapidly. Now, it’s not going to be as rapid as a straight

C h a pte r 12   4 5 5
line, but those types of things we learned and we worked on, and we’re continuing to
work on them.” Krulak concluded:
However, at the end of the day, what saved our bacon was that Jim Young went
out there. They have the video of this mountain collapse, and Young is stand-
ing there telling his customers what is going on. We packed that thing up and
we sent it to every customer we had. This is Jim Young, and this is what he is
saying. We gave it to the shareholders. We sent the video to shareholder meet-
ings. Everybody got an opportunity to see what we were doing, and what could
have turned into a reputational risk really turned into something that was very
positive. The customers and shareholders applauded us.39
6. Crisis Communications. As illustrated in the UP study, during a crisis, communi-
cation with the organization’s stakeholders, customers, and those who can influence events
and actions is critical. How these parties perceive the leader will either help or hinder the
leader’s efforts during the crisis. The strategic leader is the face of the organization as well
as its spokesperson. It is through the crisis communication strategies and actions that the
leader will influence perceptions and affect—positively or negatively—the organization’s
reputation and legitimacy—and their own. Consequently, the strategic leader must exer-
cise great care when preparing or conducting any communication—internal or external.
Remember that the media will likely have information—both accurate and dubious—that
will influence and shape—frame—the agenda before the leader’s message is declared.
The crisis communications focus, in both content and tone, should be on the
audience. In 2007, FEMA made a feeble attempt to “stage” a press conference regard-
ing the wildfires in California. It resulted in further damage to the agency’s already
discredited post-Katrina reputation (e.g., FEMA staff pretended to be reporters during
the “press conference”). Certainly, BP’s 2010 crisis communication efforts during the
Gulf spill inflicted additional damage to its tarnished public reputation. As Good-
man explained, comments made by Tony Hayward, then CEO of BP, to a television
interviewer were interpreted by most audiences as reflecting his disregard for the
public—and for victims of the crisis:
‘‘There’s no one who wants this thing over more than I do,” he said. “I’d like my
life back.” With this, Mr. Hayward opened the gates to Sound-Bite Hell. Gangs
of reporters deployed to the spill now had a cartoonish narrative to lean on,
instead of the discomfiting mélange of scientific conjecture that had been their
story before: Here was the evil corporation, headed by an unfeeling rich guy
with a fancy accent (no matter that Mr. Hayward wasn’t born to wealth and
attended none of Britain’s patrician schools).40
As former Medtronic CEO Bill George stressed, “People are so nervous and
hungry for information that they hang on every word from their leaders, trying to

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glean clues from their body language, facial expressions, and even the color of their
ties and dresses.”41 Indeed, people criticized President Obama for wearing a dress
shirt and dress pants when he was standing at the Gulf shoreline examining the
oil damage to the beach. To help ensure a successful PR campaign, Garcia noted
the strategic leader will need to be continuously aware of what “your stakeholders,
adversaries, the media, and others are saying about you.”42
7. Decisionmaking. Unlike typical normal operations, urgency does matter in
a crisis, Neglewski explained, and requires “rapid strategic, operational, and tactical
assessments and identification of numerous options, often based on incomplete data.”43
A strategic leader will need to ensure he or she remains informed and makes decisions
and communications based on meaningful situational awareness. While strategic lead-
ers work with and through their crisis management teams to obtain needed advice,
collaboration, and innovative approaches to the crisis, the public and stakeholders
expect such leaders to be in charge and seen as decisive when taking charge and mak-
ing tough, timely, and resolute decisions. As Garcia explained:
When a crisis looms, the usual business processes and decision velocities need
to be suspended and decisions need to be made in ways that reassure key
stakeholders that a company and its leaders: (a) understand that there’s a
problem; (b) take it seriously; and (c) are taking steps to address the problem.
But many leaders recognize too late that business-as-usual practices have to
be suspended.44
Furthermore, he emphasized that a strategic leader must, “Control the agenda:
don’t let the media, adversaries, or the rumor mill define your situation. . . . Develop
messages and tactics with a goal in mind: how do you want your key stakeholders
to think and feel, and what do you want them to know and do?”45 Jeremy Kaplan
explained it more forcefully: “Of course you must get your facts straight and work
the external situation carefully, but you also need to be clear and direct. If you behave
collegially in a crisis, people will not respect you; they will think you are an idiot.”46
Particularly during a crisis, an effective strategic leader depends upon a solid
leadership team. While listening is always a good attribute of a leader, in a crisis there
typically is not much time to listen. A leader is often compelled to make decisions
quickly and explain, “This is what we are going to do to take care of what has occurred.”
For example, James Koch suggested, “1) This is what we are going to do to stop the
flow of blood and here is how we are going to change this around and improve things
and communicate that message; 2) here are the people we need to talk to; and 3) here
are the kinds of messages we need to send.”47
An unusual aspect of crisis leadership is that the strategic leader must be prepared
to operate at the strategic, operational, and tactical levels—often almost simultane-
ously—and while under duress. However, it is also important that while operating

C h a pte r 12   4 5 7
simultaneously on these levels leaders not get “down in the weeds” (drawn into trivia)
or allow themselves to be overwhelmed with details. Furthermore, the leader needs to
make sure the strategy remains valid. As Dave Zuercher warned:
You still need to make sure your strategy can or will hold. You have to have
the ability to make sure that you are not leading the organization over the
cliff. So, you have to make sure your strategy remains solid. Because there are
a lot of doubts that come on you, both your own doubts because of the crisis
and whether or not you have hit an inflexion point, plus all kinds of doubts
are thrown on you by all kinds of forces from the outside, e.g., regulators,
accountants, economists, you name it . . . read the paper, it is there for every
minute . . . politicians, people setting new rules and things of that nature.48
Consequently, the effective strategic leader needs to be agile, adaptable, and able
to change as necessary, or to move in different directions. If a particular strategy is
not effective, the leader must be prepared to reassess and reorient strategies, plans,
and actions—and do it rapidly. For this capability to exist, a key strength for any
effective strategic leader is a knowledge of the entire organization—business acu-
men as discussed in chapter 3. It is important that decisions intended to mitigate
the crisis do not conflict with the organization’s long-term strategic vision and plans
as articulated by its values, ethics, and purpose. Finally, the strategic leader’s image
and messages should be uplifting and positive, fostering confidence by stakeholders
in the actions taken.
8. The Pre-Crisis Plan. Through vigilant, insightful pre-crisis planning and
rehearsing, the strategic leader and the strategic leadership team should help establish
the creative and open mindset necessary to help reduce the typical anxiety and confu-
sion surrounding the initial phase of a crisis. A word of caution: although undoubtedly
helpful, the existing crisis or disaster readiness plan is not the answer to the current
crisis. The information, bias, and frames of reference, analysis, and choices that influ-
enced the plan’s development final content are not the same as the reality during the
emerging crisis. For example, current resourcing may be significantly different from
that outlined in a plan. Consequently, the strategic leader (and CMT) must remain
open and aggressively focused on determining the dimensions of the current crisis,
which includes openness to feedback and a willingness to alter plans.
9. Plan for the Long Haul. Bill George’s fourth lesson pertaining to crisis leader-
ship is: “Don’t be eager to claim success or to declare the crisis over. . . . Look at the
impact of President George W. Bush’s landing on the deck of the aircraft carrier USS
Lincoln in a green flight suit and declaring that the war in Iraq was over in front of a
giant ‘Mission Accomplished’ sign. . . . The lack of credibility of this event undermined
support for the war, as well as for President Bush’s leadership.”49 Again, crises are
unpredictable in both duration and outcomes. As a corollary, it is important to plan for

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long-term solutions when leading during a crisis. Anne Mulcahy, selected as CEO of
Xerox Corporation in 2001, was facing a major crisis: a significant drop in stock prices,
lack of customer confidence, and poor employee morale—all threats to the company’s
sustainability and survival. Yet she turned Xerox around. Mulcahy explained that
during a crisis, the strategic leader must continue to invest in the future, for example,
through research and development. She continued, “Two-thirds of our revenue today
comes from products and services we’ve introduced in the last two years. . . . So I’d
hate to think where we would be had we not invested.”50
10. Eye on the Short and Long Term. During the short term, the leader’s focus
should be on mitigating the crisis and reassuring stakeholders. In the short term,
inspiring leadership is necessary to reassure internal stakeholders and to sustain or
even redouble organizational momentum. Focus should be on reducing instability
and anxiety, as well as identifying reasonable and desirable outcomes. Regarding this
point, Patrick Lagadec pointed out:
With very little information available and even less of it verified, the leader must
have the conviction and the vision to lead the community [or organization] out
of its initial disorientation, and to avoid the two pitfalls that are always present
in extreme crises: bureaucratic inertia (where each organization waits until the
crisis fits its codes and rules), and the general loss of nerve (not only within the
public, but along the entire chain of command). It is only by inspiring confi-
dence that we can get through the ordeal, renew our energy, and come up with
innovative plans and concrete roads to success.51
While this short-term approach is essential, it is also important that the leader’s
focus not be on returning to the status quo. Rather, the focus should be on where the
leader wants the organization to be once the crisis is resolved. A common risk when
everyone is working 24/7 to mitigate the crisis is the danger of losing focus on the
future. The leader should take advantage of the crisis—“lemons to lemonade”—by
developing a strategy that sustains and inspires the uplifting vision for the future.
Clearly, the leader wants to demonstrate a steady course through confidence in his
or her near-term crisis strategies. However, based on new information, feedback, and
reasoned analysis, leaders and stakeholders should be mentally and organizationally
prepared, agile, and flexible enough to change course.
American Express, for example, is doing reasonably well considering it could
have gone out of business during the financial meltdown beginning in 2008. Prior
to the financial crisis, decisionmaking at American Express was decentralized and
senior leaders had a lot of autonomy. During the crisis, “a lot of that decentralized
decision making became quickly centralized.”52 According to Kevin Cox, “We had
to make decisions about taking away 401(k)s and all the policy kinds of things, to
save a couple hundred million bucks. We had to figure out ways to do that, and that

C h a pte r 12   4 5 9
wasn’t something that you could allow 12 different businesses to vote on.” Cox further
explained that:
I think, honestly, this was a near-death experience for this company. There were
scenarios where we could have gone out of business. People at the two-down
level knew that. Therefore, there was not a lot of resistance to it. There was a
tremendous amount of trust in Ken [Chenault, CEO of American Express],
and I think, residually, the senior team gets some of that benefit. However, in
particular, there were a lot of feelings of “if that’s what Ken thinks, that’s what
we ought to do. We trust him.” It was a feeling of bailing quickly, and taking on
a fair amount of water.53
As a result of Chenault’s direct efforts, Cox believes that at the end of 2010 Ameri-
can Express was “a year ahead in the recovery versus Bank of America or Citi or some
of these other guys, mostly because we took more urgent action.”54 Furthermore,
referring to Chenault, Cox continued:
I think one of Ken’s tendencies is he uses that Napoleon quote about how a
leader’s job is to define reality and to give hope. He has used that a lot and that
is his cover story for taking on tough choices right now. Bad information isn’t
going to get any better, so what do we need to do? Let’s deal with it. If the risk
guys are telling us we’re going to have to write off several billion dollars of bad
debt we’re never going to collect, take the pain versus deny it or rationalize it or
hope it gets better. Take the pain.55
Consequently, American Express did have a “brutal 2009, but as a result of that,
we cleaned things up pretty quickly, and we have been recovering at a faster rate.”56

Crisis as Catalyst—Strategic Sciences Working Group


As a crisis evolves past the initial state of confusion and anxiety, it is important to
identify and evaluate different approaches and strategies having the potential to
conclude the crisis with a stronger organization. Creativity, innovation, challeng-
ing assumptions, and exploring new ideas are essential approaches that the strategic
planning team can use to help ensure a stronger postcrisis organization. One such
approach noted previously is scenario development. Although less commonly used
than during a pre-crisis period, scenarios are a valuable technique to use during a
crisis to help explore possible opportunities and outcomes during recovery, as well as
to evaluate promising strategic and operational candidates that may lead to a stron-
ger, more viable organization. For example, in May 2010 during the Gulf oil spill, the
U.S. Department of Interior established a Strategic Sciences Working Group (SSWG)
that included scientists from Federal, academic, and nongovernmental organizations
to assess how the “oil spill may impact the ecology, economy, and people of the Gulf

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of Mexico.” The purpose of the SSWG was to “provide rapid scientific assessment of
potential consequences of the spill that could provide usable knowledge to decision-
makers.”57 The SSWG began with “specific scenario parameters, group members
examined variables in the coupled natural-human system model, developed chains of
consequences,” and performed “online literature searches and input from additional
subject-matter experts.”58 Through these scenarios, the SSWG was able to identify
potential intervention points for strategic decisionmakers.59
The SSWG scenario-building efforts led to “potential surprises that might be
initially overlooked by decisionmakers (e.g., fishing closures leading to rebound of
previously stressed fish populations or the impact of re-introducing compromised
birds into migratory bird populations).”60 Discussing the benefits of scenario building,
Gary Machlis, SSWG’s lead scientist, commented:
The scenarios can identify potential new monitoring needs (e.g., advanced
monitoring technologies for mid-water pollution, new protocols for monitor-
ing re-release of sequestered oil, and/or long-term monitoring for occupational
exposure or financial stress). Such advances can support ongoing inventory
and monitoring programs, inform modeling efforts, help develop future NRDA
[Natural Resource Damage Assessment] protocols, and contribute to incident
command training. Chains of consequences with their approximate levels of
scientific uncertainty can help prioritize research and policy needs by identify-
ing important, but not yet well understood, relations (e.g., the relation between
landfall hurricanes, oiling of marshland, and ecosystem stress).61
Subsequent to the successful shut down of the flow of oil, the SSWG continued to
build scenarios focused on recovery and restoration.
When facing a crisis, the strategic leader should examine the opportunities imbed-
ded in or that result from the crisis; to identify and evaluate strategies that resolve
the crisis and complement and align long-term vision and guiding principles of the
organization, even as they focus on sustaining a competitive advantage. In short,
identify approaches through which the organization might use the crisis as a catalyst
that improves its ability to accomplish its vision and mission, including the possibility
that both may require reevaluation. This also requires effective tactical action in the
short term to mitigate adverse effects of the crisis.
11. Interagency or Multiple Organizational Requirements. Effective strategic
leadership, especially in a crisis, requires the ability to inspire those whose actions and/
or support is necessary for an appropriate and meaningful outcome to rally behind
and supporting a common purpose, and to retain the trust, loyalty, best efforts, and
confidence of those who report to the strategic leader. Equally important, the leader
must depend on people who do not “report” to them to be accountable and effective
in performing their duties in a timely and ethical manner. This is especially true in

C h a pte r 12  4 61
the interagency (dispersed) environment of government, or the multiorganizational
entities that frequently characterize global organizations (e.g., suppliers, supporting
outsourced organizations, etc.).
In government, much of the interagency business includes facilitating and coordi-
nating actions of those who do not report to a specific strategic leader, and where strate-
gic leaders rarely have clear authority to direct action. Ambassador Bob Loftis, former
Special Representative for Pandemic and Avian Influenza at the U.S. State Department,
explained, “It’s not about telling other people how to do their jobs. It’s working with them
so that you create a sense of common purpose.”62 It is the strategic leader’s responsibility
to define success. It is also important to gain buy-in from those whose contributions are
important to achieve the desired outcome. This is especially true should many or most
of those supporting the effort not work for the responsible strategic leader.
It is essential that the strategic leader, in defining the mission and outcome effec-
tively, communicate with all involved regarding how their direct contribution fits into
the larger initiative. That does not necessarily mean that everyone has to understand
all the ramifications, but they should understand that they are not operating in isola-
tion. Furthermore, they should understand (and support) the larger goal and how
their efforts contribute to achieving that goal. In essence, regardless of their level in
or outside the organization, all involved should understand the strategic objective and
how their contributions add value to its accomplishment.
“The key to effective interagency focus and decisionmaking is trust and build-
ing excellent working relationships,” explained Loftis. It is important to build those
relationships ahead of time so that people know each other; they must know each
other’s capabilities, and they should trust each other. Building trust is not something
that happens overnight.

H1N1—A Mini Case Study


For example, many of the key decisionmakers and their staff involved in handling the
H1N1 outbreak in 2008–2009 devoted 3 to 4 years working to develop a national response
plan. Because many of these people were still in place, knew one another, and used
their knowledge, trust, relationships, and expertise as they implemented the plan, the
process worked much better than in previous pandemics.
When the initial H1N1 outbreak occurred, the U.S. Government set up a number of
task forces under the overall direction of the National Security and Homeland Security
Council staffs, including one chaired by Ambassador Bob Loftis of the State Department.
A myriad of information and aid requests bombarded the government in Washington,
DC, as well as the Centers for Disease Control (CDC) in Atlanta. The following questions
were typical:

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•H
 ow will we deal with requests for assistance from abroad?
•W
 ho will get testing kits?
•W
 ho will approve various requests for aid?
•W
 ho was going to respond regarding the disease itself?
•W
 ho will advise travelers abroad?
•W
 ho will determine screening and diverting of transportation assets?
These are only a representative sampling of the significant body of issues facing
the State Department task force, as well as similar task forces at the U.S. Agency for
International Development (USAID), the Departments of Health and Human Services and
Homeland Security, and the National Security Council staff. For example, questions arose
regarding who would get testing kits (which cost approximately $3,000 per kit), and who
would approve their distribution. Ambassador Loftis and his counterparts recognized
that typical (noncrisis) bureaucratic processes and procedures required numerous forms
and layers of approval, and thus represented a significant impediment to effective and
efficient responses to the outbreak. They decided early on that, “there is absolutely
no reason for CDC [Center for Disease Control] to send to a coordinating committee a
request for approval to answer this call for help.” Ambassador Loftis emphasized that,
“We trusted CDC, implicitly and explicitly, that they would handle these requests appro-
priately and effectively. They trusted us to deal with the international repercussions.”

The only time we set it up where even minor requests for assistance had to be
vetted at a higher level was if it involved a politically sensitive country. One, for
example, where we had embargoes; or on the other hand, countries where we
had troops engaged and active combat. Those we would treat a little bit differ-
ently than we would others. However, the idea was let’s not clutter the Deputies
Committee’s time with decisions that could be made at a much lower level.

Consequently, a consensus evolved that the U.S. Government responded quite


well during the H1N1 outbreak. The government CRT decided very early on that there
would not be multiple spokespersons addressing the same subjects. Unlike previous
crises that created confusion as to who was making the decisions and who represented
“the government” on a specific issue or topic, the team decided that the H1N1 outbreak
would have a single spokesperson who would come from the CDC. Therefore, the State
Department, which had responsibilities for issuing travelers’ advisories offering advice
to people on medical conditions overseas, immediately made the decision to link the
CDC site for H1N1 to the travelers’ advisories. Additionally, DOD and DHS decided they
would not write their own descriptions of developments; they simply put links on their
Web sites that went directly to the CDC site on H1N1. Instead of three or five different
departmental spokespeople, all of government knew that CDC was the sole official voice
for the U.S. Government.

C h a pte r 12   4 6 3
Likewise, the Department of Transportation (DOT) was the voice regarding trans-
portation issues associated with H1N1. DOT Secretary Ray LaHood attended several
press conferences and spoke about international transportation during the pandemic.
There were a number of White House meetings where discussions centered on how the
government would institute personal screening if it was deemed necessary. In addition
to State, participating agencies included DOT, the Federal Aviation Administration, and
Health and Human Services, as well as airline and airport representatives and associa-
tions—all cooperating and reviewing scenarios and options should events require such
disruptive actions as instituting screenings, or what would be possible if flights needed
to be diverted. In such cases, decisions would need to address where to hold screenings
and what airports to use.
Governmental response to a crisis may not depend on funding, but could instead rest
on available resources, such as the tangibles and the logistics of those resources. As is
often said, today’s military fights with the equipment the previous Secretary of Defense
decided to fund and build. It takes years to design, build, and equip modern weapon
systems. It also takes years to prepare for responding to crises. The tangibles available
that can be brought to bear on the situation may affect resolution more than what to buy.
Therefore, in preparing for crises, it is not so much the amount of money available as
it is the resources on hand. In facing the H1N1 outbreak, the questions were: How much
medication do we have? Where is it located? How many gallons of sterilizing alcohol are
available? How many surgical gloves and respiratory masks are available? If things really get
bad, how many ICU-respirator type units are available? If Mexico receives a certain number
of doses of medication, what will be the amount of doses available to provide elsewhere?
“These were our constraints. . . . We knew that if we needed it we could go for addi-
tional funding.” In addition, “Even with the quick ramping up, they don’t just appear out
of nowhere.” The real constraints were material, not financial.
Further influencing the decisionmaking was the awareness that pandemics usu-
ally come in three waves. The government task force was facing only the first wave.
After a respite, there was likely going to be a second wave and a third, including
incidents in developing countries where people “could really be dropping like flies
if it really looks the way it did earlier on.” While it was fortunate that H1N1 did not
progress as expected, clearly the members of the task force had to think and plan for
the potentiality.

12. Organizational Change and Transformation. Machiavelli stated, “Never


waste the opportunities offered by a good crisis.”63 While most leaders view crises as
a major threat to or disruption of current organizational performance, and focus on
the urgent need for damage control, no organization will return to “normal” following
a crisis. No organization experiencing a crisis should be the same following a crisis.

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Adept leaders who recognize the potential latent within any crisis will not hesitate to
use such development as the burning bridges (“not going back”) to excite and motivate
their employees to change.
Rahm Emanuel and Hillary Clinton echoed this sentiment during the nadir of
the 2008 recession. Referring to the economic crisis, Emanuel noted, “You never want
a serious crisis to go to waste. What I mean by that, it is an opportunity to do things
that you think you could not do before.”64 Similarly, addressing young Europeans at
the European Parliament in March 2009, and noting that the “global economic turmoil
provided a fresh opening,” Clinton suggested, “Never waste a good crisis. . . . Don’t
waste it when it can have a very positive impact on climate change and energy secu-
rity.”65 Yet a number of political opposition leaders jumped on Clinton’s and Emanuel’s
comments as evidence that President Obama desired to govern in a crisis atmosphere.
For example, on his blog, Jack Ward stated, “All the policies that he [Obama] wants to
implement will be wrapped in the blanket of solving the financial crisis.”66 To Ward,
the Obama administration welcomed crises in order to gain an advantage to a point
of view or specific set of decisions or actions. In other words, Ward believed Obama
was an opportunist. Not that Obama manufactured or desired a crisis; rather he used
crises to legitimize his agenda.
Almost all of the interviewed strategic leaders shared the view that organizations
facing a crisis will not return to normal. In addition, they recognized the inherent risks
during crises to their organizations’ legitimacy, financial well-being, reputation, and
even survival. They argued, however, that often there are significant opportunities
embedded within a crisis. They also agreed that through diligent and focused scanning
and sensemaking, a strategic leader could change and even strengthen the organiza-
tion. While dealing with the immediate needs of a crisis, focusing on activating and
reinforcing strong organizational values and refining a clear vision for the future, a
successful strategic leader remains alert for opportunities within the crisis and then
decisively moves the organization forward. Therefore, faced with a crisis, successful
strategic leaders look for opportunity outcomes. As professor and business scholar
John Kotter noted, strategic leaders should not focus on blaming others but rather on
how to make advantageous use of the crisis to position the organization to be stronger
and more competitive in the future.67
As explained earlier, Andy Grove faced a business crisis—Intel was losing money.
He and the CEO made the decision to change course and focus on a different and more
promising line of products to ensure the long-term survival of the firm. Clearly, Grove
did not waste a crisis. No organization will return to “normal.” If it does, it will likely to
repeat the crisis in the future. Viewing a crisis as a developmental opportunity allows
the strategic leader to appropriate the crisis as a catalyst and as a vehicle to adjust a
flawed policy, change organizational direction, align organizational processes, and
energize the workforce.

C h a pte r 12   4 6 5
13. Individual and Organizational Resilience. During a crisis, everyone will be
working 24/7 to resolve potential negative impacts to the stakeholders, customers, and
the organization. Those in the military often refer to this as “rallying around the flag.”
For example, after 9/11 many government and military people and their leadership
worked nonstop to head off another attack on the United States. Dedicated people
operating with a keen sense of urgency often kept going solely through adrenalin. No
one wanted to leave his or her assigned duties during a crisis.
However, sleep deprivation and stress will eventually exact their price, potentially
resulting in a collective loss of energy, focus, and sound judgment and decisionmaking.
The strategic leader must ensure key people get adequate rest to help avoid “burnout.”
Employees will look to the leader as the example. If the leader does not take time off
when exhausted, the team will follow the example, and eventually they will all burn
out. As Jerrold Post stated, “Stories abound of senior officials during crises walking
around like living zombies—taking in information but being utterly unable to make
decisions—with a consequent paralysis of decisionmaking.”68
During any crisis, no one knows how different people will react. While research
suggests that most people will react calmly, it is important that the strategic leader
(and other leaders and supervisory personnel) be on alert for employees who may be
experiencing shock and distress. Some of these employees may need reassurance that,
by working together, the organization will survive. As appropriate, medical person-
nel and/or qualified counselors should be available to assist those in need. All should
be encouraged to seek such help if it would be beneficial. Ambassador Paul Simons
reflected on his assignment in Israel with a pertinent comment:
Attending to the psychological needs of your people—this was a huge issue in
Israel when we had all the terrorist bombings. We had to make sure that people
felt comfortable with the security precautions, that they were following the
security precautions, that they were okay with what was going on . . . town hall
meetings, counseling, if people had any special needs. You really have to take
care of your own people in these crises. That’s lesson number one.69
Suggestions for the Strategic Leader Following a Crisis
(suggestive—not prescriptive)
After a crisis has passed, organizations should study their experiences and extract any
lessons for the future. Again, crises are unpredictable and it is difficult to know when
one starts and ends. A key objective following a crisis is to learn from it. That requires
those involved—stakeholders, customers, organizational leaders, and members—take
the time to reflect and review:
•w
 hat happened and why the crisis erupted
•w
 hat steps worked or didn’t work

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• what the leader and the leadership team could have done differently to prevent,
mitigate, or take advantage of the crisis more effectively.
Timing is critical when performing an effective after action review (AAR). Strate-
gic leaders should ensure AAR efforts occur while everyone is “still sweating from the
effort.” Any delays will begin to cloud participants’ memories. Questions could include:
• Were there unintended consequences to any of the decisions made during the crisis?
• Because no organization ever really returns to status quo following a deep crisis, how
was the organization changed?
• Were the previously developed and used strategy and strategic objectives modified?
• I s the organization stronger as a result of the crisis? How would it know?
•W  hat are we now doing that is different? How are we different?

Process Observer
One of the objectives of a post-crisis comprehensive review and AAR is to anticipate
and/or prevent future crises. “One needs only to look at NASA’s second shuttle disas-
ter to see the human and institutional costs of failure to learn.”70 Gilpin and Murphy
suggested that many fail to learn because of “cognitive limitations” and “recollection
biases.”71 Rather than replaying a videotape of the crisis, unknowingly the leader and
others may be internalizing a new, subjective, and inaccurate script for what really
happened. As they pointed out, “Various forms of hindsight bias may negatively affect
the value of objective retrospective sensemaking and learning.”72 Because of these
reconstruction biases, the process observer can add clarity to the AAR effort—enhanc-
ing the individual and organizational learning necessary for long-term growth and
survival. The sensemaking skills discussed previously are just as important during
the postcrisis phase. Equally important while conducting the AAR is the process of
developing possible alternative scenarios and counterfactuals, e.g., results if there
was a change in strategy, focus, or strategic objectives at the time. Developing these
scenarios helps to avoid the solving of this crisis scenario at the expense of learning
other alternative approaches and outcomes. Gilpin argues, “The fact that the identical
crisis never happens twice makes it all the more necessary for managers to acquire
skills of adaptation, improvisation, and tolerance for uncertainty.”73
In summary, being effective strategic leaders during a time of crisis requires
flexible and complex mental models and frames of reference that enable them to be
agile, flexible, and adaptable; in short, able to embrace uncertainty. Communication
strategies are critical, especially in the beginning of a crisis. Effective strategic leaders
must have both a long-term and short-term perspective and strategy as survival of the
organization is the primary objective. It is clear that prescriptive measures do work
for the “expected” crisis, where forethought must include pre-positioning material
and supplies such as water, food, medicine, fuel, and building materials to ensure

C h a pte r 12   4 6 7
timely response actions by those providing logistics. However, preparing for any crisis
(expected or unexpected) requires rehearsal and practice to enable various leaders to
get together to build relationships and trust. This also requires that leaders understand
one another’s preferences, decisionmaking approaches, personalities, problem-solving
skills, and other characteristics. Answering the question “What does success look
like?” is the strategic leader’s challenge and it is made more difficult by their constantly
shifting, volatile environment. Future success or failure in a crisis will rest on how agile
and resilient the leader, the leadership team, and the organization are.

JetBlue—“Valentine’s Day Crisis”—A Mini Case Study74


Keeping the above discussion in mind regarding what it takes to be an effective strategic
leader in a crisis, we shall now examine the commercial airline JetBlue and its “Valen-
tine’s Day Crisis.” As you read this case study, consider what you would do if you were
in the place of CEO David Neeleman. There will be several “pause” segments to help
you reflect on what you have read.

Background
In 2000, David Neeleman, with a history of success in the airline industry and being
driven by what he considered the noble cause of helping others, set out to create JetBlue
Airways from the ground up. His goal was to establish a low cost/high quality airline
company that put people first. Neeleman envisioned an egalitarian customer culture and
implemented such amenities as leather seating, increased leg room, unlimited snacks,
no center seating, and free direct TV for all seats.
Neeleman explained, “There are so many things you can do as a CEO to set an
example,”75 and he followed those words with action. Neeleman insisted that those
who purchased JetBlue tickets were customers, not passengers, and those who worked
for Jet Blue were crewmembers, not employees. Neeleman also made it a practice to
fly JetBlue once a week and serve customers snacks, load luggage, take out trash, and
chat with crewmembers and customers in his efforts to continually gather feedback
and touch those he vowed JetBlue would put first.
For bookings, JetBlue offered a self-service, Web-based ticketing option, as well
as a reservation phone line for customers to speak with a live agent. Although there
was a customer-service call center in Salt Lake City, Utah, reservationists working
from their homes in and around Salt Lake City took 90 percent of JetBlue’s customer
calls. Neeleman, himself a Mormon, took advantage of the high concentration of stay-
at-home moms within the Mormon population of the greater Salt Lake City area. For
these women, JetBlue offered flexible hours in jobs that allowed them to be home with
their children. As a result, job satisfaction was high, productivity was high, and both
turnover and overhead were low.76

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Through these innovative practices, JetBlue succeeded in creating a customer-centric
culture that, by mid-2004, had brought 16 consecutive quarters of profit and by 2007 had
landed JetBlue at the top of J.D Power and Associates customer satisfaction survey.77

—Pause—Take a moment to reflect on the following question and capture your


initial thinking and insights.
Based on the above, what are your perceptions of JetBlue as an airline and of its
organization’s leadership?

The Crisis
JetBlue Airways faced a crisis on Valentine’s Day 2007. As a winter storm moved in over
JFK, JetBlue officials followed the National Weather Service’s prediction that the snow
would turn to rain, not ice. As a result, the flight schedule continued to run at JFK as
usual. Unfortunately, the National Weather Service forecast was wrong.
The ensuing ice storm left nine JetBlue flights stranded on the tarmac at JFK with
passengers stranded inside those aircraft for up to 10 hours. The storm was so severe
that only 17 of 156 JetBlue departures actually took off from JFK that day. Not only was
that a customer relations nightmare, but it became an operational/logistical nightmare
when JetBlue aircraft could not make timely connections at other airports and JetBlue
flights incoming to JFK were unable to land. This resulted in the displacement of a num-
ber of JetBlue’s planes and more than 1,100 crewmembers.78 The backlog snowballed
throughout the organization and, for the next 2 days flight schedules were chaotic.
JetBlue leadership finally made a drastic decision to halt travel on 25 percent of the
fleet for 2 days.79 That allowed time for the company to get its fleet and people back in
place, catch up with stranded customers, find lost baggage, filter through clogged call
center logs, and deal with the media-driven public relations disaster.
A week after the ice storm, flight schedules were back on track, but the crisis took
its toll. During the 6 days following the Valentine’s Day crisis, there were more than
1,200 canceled flights, and more than 131,000 JetBlue customers experienced delays,
diversions, or cancellations.80 These actions resulted in a loss of approximately $20
million in revenue.81

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. Considering JetBlue’s strong reputation as an airline company and its stellar
reputation for customer service, why did the media lambaste JetBlue, almost to
the exclusion of the other scheduled airlines that experienced similar weather-
related disruptions that day?
2. What went wrong?

C h a pte r 12   4 6 9
The external and uncontrollable ice storm event of February 14, 2007, served as a
means of exposing several internal inefficiencies JetBlue had not previously consid-
ered. Until then, the airline was a media darling and operated using practices viewed
as “the model of customer service and operating efficiency.”82 However, factors such
as JetBlue’s low cost and highly efficient reservation system, once hailed as the way of
the future, turned out to be vulnerabilities in a crisis.
During the ice storm, when thousands of customers were trying to get flight infor-
mation and re-book flights simultaneously, neither the Web-based system nor the call
center system could handle the volume, and both broke down.83
Another vulnerability surfaced in the use of JetBlue’s EOM (Emergency Operation
Manual). The EOM turned out to be inadequate. It stipulated protocols for communica-
tion with external and internal stockholders as well as the media,84 but proved to be lack-
ing in that it failed to establish an adequate communication process for crewmembers
during an emergency. For example, crewmembers who were dislocated and wanted to
help actually ended up stuck in hotels for days without instructions—this as a result of
not having a protocol for communicating with their home base during crisis.
Furthermore, JetBlue did not adequately train most of its crewmembers to deal with
crisis management. Reflecting on the crisis, even Neeleman admitted in a New York
Times interview that, “We had an emergency control center full of people who didn’t
know what to do, because they lacked the necessary systems and were ill-equipped
to handle a crisis of this magnitude.”85 Furthermore, “We had so many people in the
company who wanted to help but who weren’t trained to help.”86 Although JetBlue
crewmembers did demonstrate creativity, innovation, and a strong willingness to work
to salvage their company image and to serve their customers, postcrisis analysis con-
cluded they were not trained to handle this crisis.

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. Identify the top three key issues you believe Neeleman and his leadership team
must address to be successful in saving the airline.
2. If you were Neeleman, what would be the first three steps taken by you and your
crisis management team to deal with the crisis? Please note these in the margins
of this book or on paper to compare with the actions Neeleman took.
3. What did the JetBlue leadership do to handle the crisis?

Bruce L. Blythe, CEO of Crisis Management International says, “The single most impor-
tant thing a company needs to show in a crisis is that it cares. . . . That is not a feeling. It is
a behavior.”87 David Neeleman recognized the importance of being out front and center.
On the evening of February 14, 2007, CEO Neeleman launched a crisis communication
media blitz when he stepped up and accepted responsibility for the actions of JetBlue that

470  L e a d in g a t t h e S t r a te g i c L eve l
day: “This was an operational failure.”88 Not only did he apologize repeatedly, he made
the media rounds with morning and late TV shows. He also posted a video on the JetBlue
company Web site admitting internal mistakes and outlining how the airline would work
to win back customer confidence. He posted this video on YouTube and it became a fea-
tured video on that site. YouTube leadership wanted to make it a feature video because
it was “the first time a company [used] our media to talk directly to their customers in
crisis.”89 Through it all, Neeleman never once blamed the JetBlue crisis on the ice storm.
He accepted responsibility and accountability for JetBlue’s inadequate response.
Neeleman was ingenious and creative in his use of social media to his advantage.
He used Web videos as well as email, Web letters, and blogs. Through these media,
Neeleman not only apologized, but also outlined specific compensation plans, includ-
ing cash, refunds, and free round-trip flight vouchers for any customers affected by the
events of February 14, as well as any customers affected by delays or cancellations in
the future. In a Customer Bill of Rights issued on February 21, 2007, Neeleman identified
these specific compensation plans to the public. This bold public move garnered almost
as much media attention as the crisis itself.90
Further, JetBlue did more than offer apologies and compensation plans; its senior
leadership team developed and instituted significant operational changes. For example,
the airline developed systems to better track JetBlue crewmembers, made upgrades
to the Web site, and established comprehensive employee training programs. Conse-
quently, the airline became a stronger organization by learning from its failures and
taking actions to ensure that those failures would never happen again.91

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. What did Neeleman do right, if anything? What did he do wrong, if anything?
2. What additional actions should he have taken?
3. What does this case study illustrate for strategic leaders?

The Aftermath
As noted previously, the main role of a strategic leader is to ensure the future viability
of the company, organization, or agency. Crises can make organizations vulnerable to
future sustainability problems because of potential loss of public and stakeholder trust
and credibility that diminishes the organization’s reputation and legitimacy.
JetBlue firmly established itself with a base of loyal, satisfied customers. The
public now held JetBlue in even higher regard and expected equally effective crisis
management from then on. While other major airlines suffered similar crises that day,
because of the public perception that JetBlue was a step above in customer service,
it expected this type of dysfunction from other airlines. But it came to respect how
JetBlue handled the crisis.92

C h a pte r 12  471
This case study illustrates that Neeleman focused on three key areas in dealing
with the crisis. First, solving the immediate operational crisis as quickly as possible to
get passengers moving; two, mitigating the damage to JetBlue’s reputation; and three,
transforming the airline’s operational procedures and processes in its dedicated efforts
to become stronger, more effective, and more efficient than prior to the crisis. In short,
Neeleman used the crisis as a learning event to improve JetBlue’s business operations,
crisis response, and customer satisfaction.
In addressing these three objectives, Neeleman gained public and customer con-
fidence that he was in charge, that the organization was working the problem, and that
they were serious about their efforts to “make it right” for the customers. He and his
COO made critical scheduling and personnel decisions to move airplanes and people
to their destinations as quickly as possible.
Using a variety of media, Neeleman’s authenticity and tireless efforts to restore public
confidence in JetBlue were remarkable. For example, some analysts commented that if
Neeleman could make good on his promise to regain customer confidence, “JetBlue will
indeed be a Customer Service Champ—and Neeleman need never again ask for forgive-
ness on late-night TV.”93 Neeleman made good on that promise through various com-
munications media and by gathering and sharing relevant information with his operations
personnel. In fact, in 2008, JD Power and Associates ranked JetBlue seventh. In 2009, they
ranked nineteenth. Significantly, even with the drop, this represented 5 straight years that
JetBlue had made the coveted JD Power and Associates Customer Service Champs list.94
JetBlue embraced the crisis. Neeleman proved to be an agile and adaptive leader
and led the airline to change the way it operated fundamentally. It simply could not
return to “normal.” Through his COO, Neeleman instituted major changes in JetBlue’s
internal organizational processes to improve its ability to handle multiple challenges
to reservations, as well as aircraft and crew scheduling. As Neeleman remarked, “This
was a big wake up call for JetBlue. . . . If there’s a silver lining, it’s the fact that our airline
is going to be stronger and even better prepared to serve our customers.”95 Demon-
strating the success of his efforts, two more storms hit JFK in the months following the
February crisis. Based on the lessons learned and changes implemented, JetBlue was
able to handle those subsequent storms more effectively. In the first, JetBlue was able
to route passengers flying from upstate New York to Florida directly to Florida without
a layover at JFK. For the second, JetBlue was one of the first airlines to cancel flights
the day of that storm, but it was also the first to have its flights resume operations at
JFK when the storm passed.96 Clearly, Neeleman used the crisis as both a personal and
organizational learning opportunity.

Neeleman’s Waterloo
Despite the success in saving JetBlue, Neeleman committed a serious mistake during
the crisis that ultimately cost him his job as CEO. With his time focused on the media

47 2  L e a d in g a t t h e S t r a te g i c L eve l
campaign and being the face of public apology for JetBlue, Neeleman neglected to
maintain close communication with his Board of Directors (BOD). It turned out that
some members thought Neeleman exposed too many of JetBlue’s internal problems
to the public and went too far in his apology. Others held Neeleman accountable for the
financial losses: $20 million in lost revenue, in addition to the $24 million in compensa-
tion offered through the Customer Bill of Rights. In the end, even though Neeleman’s
efforts essentially saved the company, the JetBlue BOD asked Neeleman to step down
only 3 months after the crisis.
In response to the BOD decision, Neeleman said, “I was so wrapped up in trying
to save the business and the brand . . . that I failed to communicate effectively with my
board.”97 Furthermore, Neeleman stated, “I didn’t have time to update the board on
everything. . . .” However, he added, “If you don’t, they develop their own perceptions
and start creating their own realities. . . . [Communicating with the BOD] is the CEO’s
responsibility, and I failed to do it.”98

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. W hat do you think of Neeleman’s performance as CEO? How did Neeleman’s
BOD view his performance as CEO? Do you agree with the BOD’s decision to fire
Neeleman? Why or why not?
2. How do you view strategic crisis leadership? Do you believe it is the strategic
leader’s responsibility to get out in front of the crisis? Why or Why not?
3. How prepared are you and the strategic leaders of your organization to deal with
a crisis? Knowing what you know now, what recommendations would you offer
to your senior leadership regarding preparations needed to face and learn from
a crisis?
4. What are your three takeaways from this chapter? Why are these three important
to you?
5. W hat three items will you focus on to improve your ability to function at the
strategic level when facing a crisis? What steps can you take to accelerate your
learning and growth that will enhance your ability to perform as a strategic leader
in a crisis?

In summary, this chapter examined the roles and challenges faced by strategic
leaders when dealing with and managing crisis. Their ability to prepare the organi-
zation for impending crisis, and to foster cultural agility within the organization,
will help them and their organizations address a crisis and, if possible, create new
opportunities.

C h a pte r 12  47 3
Notes
Dawn Gilpin and Priscilla Murphy, Crisis Management in a Complex World (New York: Oxford
1

University Press, 2008), 3.


2
W. Timothy Coombs, “Parameters for Crisis Communication,” in The Handbook of Crisis Communica-
tions, W. Timothy Coombs and Sherry J. Holladay eds. (West Sussex, UK: Wiley-Blackwell, 2010), 17.
3
Merriam-Webster’s Collegiate Dictionary, Tenth Edition (Springfield, MA: Merriam-Webster, Inc. 2002).
Ian Mitroff, Crisis Leadership: Planning for the Unthinkable (Hoboken, NJ: John Wiley & Sons, 2004), 63.
4

5
Christine Pearson and Judith Clair, “Reframing crisis management,” Academy of Management Review,
1998, 23(1), 12.
6
Gilpin and Murphy, 14.
W. Timothy Coombs, “Conceptualizing crisis communication” in R. L. Heath & H. D. O’Hair (eds.),
7

Handbook of Crisis and Risk Communication (New York: Routledge, 2009), 100.
Andrew Grove, Only the Paranoid Survive: How to Exploit the Crisis Points that Challenge Every
8

Company, (New York: Doubleday, 1999), 81.


9
Personal interview with General Chuck Krulak, President, Birmingham-Southern College; Board
of Directors for Union Pacific and non-executive director for Aston Villa British Soccer Club; former
USMC Commandant; former Vice Chairman of MBNA and Chairman & CEO for MBNA Europe Bank.
10
Krulak interview.
Richard Tedlow and Wendy Smith, “James Burke: A Career in American Business (B),” Harvard
11

Business School Case Study 9-390-030 (October 2005), 1.


Aldo Sesia, Jr., “James Burke: A Career in American Business Series (LCA),” Harvard Business School
12

Case Study Teaching Note 5-307-028 (September 2006), 12.


W. Timothy Coombs and Sherry Holladay, “An Extended Examination of the Crisis Situations: A
13

Fusion of the Relational Management and Symbolic Approaches,” Journal of Public Relations Research
13, no. 4 (2001), 335.
Summary of the various definitions of Situational Awareness, available at <www.raes-hfg.com/crm/
14

reports/sa-defns.pdf>.
15
Gilpin and Murphy, 114.
16
Grove, 3.
17
The quotes noted in this paragraph are from ibid., 88–95.
18
Ibid., 117.
19
Coombs, “Parameters for Crisis Communication,” 25.
20
Gilpin and Murphy, 136.
21
Grove, 5.
22
Krulak interview.
Gary Machlis and Marcia McNutt, “Scenario-Building for the Deepwater Horizon Oil Spill,” Science
23

329 (August 27, 2010), 1018.


24
Coombs, “Parameters for Crisis Communication,” 20.
25
Gilpin and Murphy, 137–138.
26
Ibid., 137.
Linda Shiner, “A&S Interview: Sully’s Tale,” airspacemag.com, February 18, 2009, available at <www.
27

airspacemag.com/flight-today/Sullys-Tale.html?device=other&c=y>.

474  L e a d in g a t t h e S t r a te g i c L eve l
Timothy Coombs, “Crisis communication and Its Allied Fields,” in The Handbook of Crisis Com-
28

munications, W. Timothy Coombs and Sherry Holladay eds. (West Sussex, UK, Wiley-Blackwell, 2010),
58.
Allan L. Schoenberg, “What It Means to Lead During a Crisis: An Exploratory Examination of
29

Crisis Leadership,” May 3, 2004, 13, available at <http://trevorcook.typepad.com/WEBLOG/FILES/


CRISIS_LEADERSHIP_ALLAN_SCHOENBERG.PDF>.
Ruth Palombo Weiss, “Crisis Leadership,” TD, March 2002, 31, available at <www.astd.org/NR/
30

rdonlyres/123775A0-80BC-496D-8819-A2E146786598/0/crisis_leadership_article.pdf>.
Bill George, Seven Lessons for Leading in Crisis (San Francisco: Jossey-Bass, 2009), 91.
31

32
Krulak interview.
33
Ibid.
34
Ibid.
35
Ibid.
36
J. Young, “Testimony Before the United States House of Representatives Committee on Transporta-
tion and Infrastructure Subcommittee on Railroads, Pipelines, and Hazardous Material,” January 28,
2009, available at <www.aar.org/NewsAndEvents/News/2009/01/~/media/AAR/NewsFiles/JRY%20
Testimony%20Jan%202009.ashx>.
Union Pacific Press Release. “Union Pacific Moves Mountains to Restore Train Service; Back on
37

Track after Major Oregon Mudslide,” May 6, 2008, available at <www.uprr.com/newsinfo/releases/


service/2008/0506_mudslide.shtml>.
38
Krulak interview.
39
Ibid.
Peter Goodman, “In Case of Emergency: What Not to Do: P.R. Missteps Fueled The Fiascos at BP,
40

Toyota, and Goldman,” The New York Times, August 22, 2010, BU.1.
41
George, 90.
42
Helio Fred Garcia, “Effective leadership response to crisis,” Strategy & Leadership 34, nos. 1, 9, 2006.
Ken Naglewski, “Are You Ready to Make Effective Decisions When Disaster Strikes?” Strategies for
43

Crisis Decision-Making, Spring 2006, 47.


44
Garcia, nos. 1, 5.
45
Ibid., 9.
Personal interview with Jeremy Kaplan, business consultant; former Director of Technical Integration
46

Services at the Defense Information Systems Agency (DISA) and the DISA Chair for ICAF.
Personal interview with James Koch, Board of Visitors Professor of Economics and President Emeritus
47

at Old Dominion University and coauthor with Jim Fisher on Presidential Leadership.
Personal interview with David Zuercher, Executive Vice President, International and Insurance
48

Services, Wells Fargo.


49
George, 61.
Anne Mulcahy, “From the Podium: Anne M. Mulcahy,” Dean’s Innovative Leader Series, MIT Lead-
50

ership Center, November 9, 2006, available at <http://mitleadership.mit.edu/r-mulcahy.php>. To see a


video of her presentation, go to <http://mitworld.mit.edu/video/412/>.
Patrick Lagadec, “A New Cosmology of Risks and Crises: Time for a Radical Shift in Paradigm and
51

Practice,” Review of Policy Research 26, no. 4 (2009), 480.

C h a pte r 12  47 5
Personal interview with Kevin Cox, Executive Vice President for Human Resources at American
52

Express.
53
Ibid.
54
Ibid.
55
Ibid.
56
Ibid.
57
Machlis and McNutt, 1018.
58
Ibid.
A full description of the methodology and scenario results is available in the group’s first technical
59

report, Department of the Interior, “Strategic Sciences Working Group Progress Report, 9 June 2010”
(Department of the Interior, Washington, DC, 2010), available at <www.usgs.gov/deepwater_horizon/>.
60
Machlis and McNutt, 1019.
61
Ibid.
Personal discussions with AMB Bob Loftis, Acting Coordinator for Reconstruction and Stabilization;
62

Former Leader for Pandemics and Status of Forces Negotiations, Department of State.
63
Richard Miller, “Money Is Not Wealth,” available at <www.millermicro.com/money.html>.
Seton Motley, “Rahm Emanuel: Don’t Waste a ‘Serious Crisis,’” Wall Street Journal Weekend Inter-
64

view, November 7, 2008, available at <www.mrctv.org/videos/rahm-emanuel-dont-waste-serious-crisis>.


Pete Harrison, “Never waste a good crisis, Clinton says on climate,” Reuters, March 7, 2009, available
65

at <http://in.reuters.com/article/2009/03/06/us-eu-climate-clinton-idINTRE5251VN20090306>.
Jack Ward, “Never waste a good crisis,” Enter Stage Right, web posted March 9, 2009, available at
66

<www.enterstageright.com/archive/articles/0309/0309itsallpartoftheplan.htm>.
John Kotter, “Chapter 6: Tactic Three: find opportunity in crises,” in A Sense of Urgency (Boston:
67

Harvard Business School Publishing, 2008), 119–143.


Jerrold Post, Leaders and Their Followers in a Dangerous World (Ithaca, NY: Cornell University Press,
68

2004), 119.
69
Personal Interview with AMB Paul Simons, State Department Chair for ICAF; former Ambassador
to Chile; former Deputy Assistant Secretary of State for Energy and Sanctions.
70
Gilpin and Murphy, 151.
71
Ibid., 152.
72
Ibid.
73
Ibid., 153.
74
The author expresses appreciation to Nicki Dover, Management Case Study Writer, for her collabora-
tion in the development of this case study.
Bill George and Matthew Breitfelder, “David Neeleman: Flight Path of a Servant Leader (A),” Harvard
75

Business School Case Study 9-409-024 (September 15, 2009), 7.


Barney Beal, “Is there a CRM lesson in JetBlue’s snafu?” Search.CRM.com, February 21, 2007, available
76

at <http://searchcrm.techtarget.com/news/1244592/Is-there-a-CRM-lesson-in-JetBlue-s-snafu>.
Jeff Bailey, “JetBlue’s CEO Is ‘Mortified’ After Fliers Are Stranded,” The New York Times, February
77

19, 2007, A11.


Robert Huckman, Gary Pisano, and Virginia Fuller, “JetBlue Airways: Valentine’s Day 2007,” Harvard
78

Business School Case Study 9-608-001 (June 16, 2010), 2.

476  L e a d in g a t t h e S t r a te g i c L eve l
Gregory Efthimiou, “JetBlue Airways: Regaining Altitude after the Valentine’s Day Massacre of
79

2007,” 2008 Arthur W. Page Society Case Study Winner, available at <www.awpagesociety.com/site/
resources/2008_winning_case_studies>, 127.
80
Huckman, Pisano, and Fuller, 2.
Jeff Bailey, “JetBlue’s Leader Is Giving Up Chief Executive Title,” The New York Times, May 11, 2011, C2.
81

82
Huckman, Pisano, and Fuller, 3.
83
Ibid., 6.
84
Efthimiou, 119.
85
Bailey, “JetBlue’s CEO Is ‘Mortified.’”
86
Ibid.
Chuck Salter, “Lessons from the Tarmac,” Fast Company, May 1, 2007, available at <www.fastcompany.
87

com/magazine/115/open_next-jetblue.html>.
88
Bailey, “JetBlue’s CEO Is ‘Mortified.’”
89
Efthimiou, 132.
90
Huckman, Pisano, and Fuller, 7–8.
Ibid., 8.
91

92
Salter.
Jena McGregor, “An Extraordinary Stumble at JetBlue,” BusinessWeek, March 5, 2007, 58–59, available
93

at <www.businessweek.com/magazine/content/07_10/b4024004.htm>.
94
Ibid.
95
Huckman, Pisano, and Fuller, 11.
“10 Questions with David Neeleman,” Fema.gov (April 4, 2007), available at <www.fema.gov/news/
96

newsrelease.fema?id=34934>.
97
Ibid.
98
George and Breitfelder, 1.

C h a pte r 12  47 7
CHAPTER 13 | Management Requirements
of a Strategic Leader

Prior discussions focused primarily on what the strategic leader needs to do to ensure
alignment and/or adaptation of the organization with its external operating environ-
ment—to either successfully react to or shape the external environment based on the
capabilities and adaptability of the organization. In other words, while focusing on the
external environment, the strategic leader must formulate a multifaceted strategy that
ensures organizational credibility and sustainability in the short term, and legitimacy,
competitive advantage, and viability in the long term. To deploy the strategy effectively
requires the strategic leader to then focus on the internal environment. Through this
focus, the leader seeks to ensure alignment of the organization’s systems, processes,
policies, roles, and responsibilities with its purpose, mission, and vision. These steps
enable the organization’s integrated, motivated workforce to accomplish the actions
required. The strategic leader must clearly understand the dynamic nature of the
organization’s internal environment and holistically conceptualize the organization.
Referring to figure 2-1, this chapter focuses on the three remaining sectors: Ensure
Execution, Control and Diagnose, and Ensure Feedback and Adapt.
The interviewed senior leaders stressed the need for the strategic leader to ensure
that the organization is fully capable of executing the strategy through sustained
organizational effectiveness as well as having the capacity to adapt to necessary future
changes. These senior leaders argue that the strategic leader’s skills and abilities to
inspire and motivate the organization’s members (a leadership function), coupled with
implementing a supporting infrastructure (a management function), help determine
organizational performance and ultimately whether success will be achieved.
Previous chapters noted that while strategic leaders can mold behavior, build a
high-performing strategic leadership team, and establish appropriate rewards and
incentives for desired behavior, the leader’s ability to influence organizational behav-
ior and effectiveness is more limited. Consequently, “To influence large numbers
of employees, [strategic leaders] . . . must be skilled organizational architects with a
thorough understanding of the systems, structure, policies, and processes that shape
how effectively individuals and groups perform.”1
Much of the day-to-day execution of planning, organizing, managing, controlling,
and sharpening mission accomplishment and improving supporting processes is the
responsibility of subordinate organizational leaders. However, overall organizational

C h a pte r 13  47 9
priorities and directions for strategic deployment and implementation remain the
responsibility of the strategic leader and strategic management team. Strategic leaders
and their senior leadership teams should be actively but appropriately involved in the
management of the organization’s business. This does not make them micromanagers.
Rather, they need the overall business acumen and skills to oversee translating for-
mulated strategies, allocating resources, and fashioning strategic objectives and goals
into effective strategic, operational, communication, and budgeting plans. This process
includes identifying and sourcing realistic and measurable key business indicators or
metrics to provide systems performance feedback regarding which processes are work-
ing as intended and are needed within designed parameters and which are not. This
important capability provides the ability to make course corrections or systems adjust-
ments as appropriate. It also means looking for worthy approaches or techniques that
will increase productivity, e.g., Jack Welch’s investment of Six Sigma at General Electric.
Consequently, strategic leaders should identify and establish channels and
approaches that enable them to stay informed—able to monitor and assess their
organizations’ progress during deployment and execution in close to real time. For
example, if planning is to be more than a paper exercise and is to be followed when
conditions dictate, then its preparation requires serious attention followed by peri-
odic reassessment of its assumptions, scenarios, and proposed courses of action. In
addition, the strategic leader and the strategic leadership team must identify and put
into place appropriate key business indicators or metrics that will provide both the
leading (predictive) and results-driven data necessary to provide accurate, assess-
able feedback on execution performance including providing the ability to identify a
need for intervention or a change in direction, strategy, or process. In identifying and
assessing performance metrics, the strategic leader gains the ability to determine and
communicate both the performance of key processes and progress toward individual
objectives and measurements. The leader must ensure alignment of the performance
metrics with the organization’s strategic objectives and goals.
A concern expressed by General George Casey is that the strategic leader’s leader-
ship team and/or supporting staff often have “the tendency to track the things that
are most easily measured, not necessarily what is most critical. I finally found that if I
forced the staff to answer the following three questions I came closer to getting what I
needed: What are we trying to accomplish? What will tell us if we are accomplishing
it? How do we measure that? It took a year of trial and error before I was satisfied with
the assessment process.”2
Choosing the wrong metrics can lead to unintended consequences. For example,
using “body count” during the Vietnam war resulted in many units claiming the same
bodies in their reports. It placed the focus on Viet Cong or North Vietnamese attrition
rather than winning the war. A misdirected metric can demoralize employees, drive
poor execution, and risk the organization’s viability. Properly selected, metrics should

4 8 0   L e a d in g a t t h e S t r a te g i c L eve l
provide a means to measure those processes needed to translate organizational strate-
gies and strategic objectives into specific actions (as illustrated in the NAVAIR Case
Study in the previous chapter). Choosing appropriate metrics is critical to successful
implementation of strategic plans and subsequent organizational performance.

Maintaining Focus on the Internal Environment


As many of the interviewed strategic leaders emphasized, strategic leaders must
know what is going on within the organization. John Yaeger, Vice President for Aca-
demic Affairs at NDU, emphasized, “At the strategic level, a leader focuses more on the
external environment than when he or she was leading at the lower levels. With that
said, there needs to be a good deal of focus on your internal environment in order to
make sense of what is happening and where things are going within the organization.”3
A firm understanding of the internal environment also helps reveal the full poten-
tial of the organization. For example, Lieutenant General Claude Christianson, USA
(Ret.), Director of the Center for Joint and Strategic Logistics at NDU, stated, “A lot of
attention is given to the internal environment because it defines what is possible. In
actively walking around among those on the lower level, there is a sense of awareness
about the morale of your workers.”4 Internal examination will allow leaders to under-
stand the concerns, weaknesses, and capabilities of people within their organizations.
Knowledge of the internal environment helps enable the strategic leader to
determine when to intervene and where, even when it may be many levels down in
the organization. For example, Gordon Smith, a former executive with American
Express, emphasized, “I like to stay on top of the details. I try to keep my eye on
as much as I can, and you get to learn all those important things to watch, and if I
see something that I think needs more attention, I’ll go down into a level of detail
which you would not expect a senior person to be into. I might be asking questions
to somebody five or six layers below me regarding what might be the answer to a
particular area of concern.”5
Smith argued that such an approach sends a huge message throughout the
organization that details are important. The strategic leader may not be expected
to know everything that is known at the lower levels; however, they should have the
business acumen and instincts to know where to look and what questions to ask when
a concern or issue is raised regarding execution. Smith noted, “Good analytic skills
tell you where there is a disconnect in data that you’re seeing, so you don’t need to
know what they know, but you do need to have a very good problem solving kind of
investigative, intellectually curious mind.” By asking the right questions, “You quickly
learn how credible the person is that is answering them. It’s very obvious when people
are grasping for answers.”6
Strategic leaders use a number of approaches, methods, and channels to stay
informed and monitor execution progress. For example, in addition to the expected

C h a pte r 13  4 81
strategy and operational meetings with key organizational leaders, the leader may
use tools such as “dashboards,” “balanced scorecards,” or other management per-
formance information systems to monitor and evaluate organizational progress and
productivity.
It is not within the scope of this chapter to address the various aspects of strategic
management or management science in detail. There are myriad books as well as MBA
and executive MBA programs that focus on these aspects of managing an organization.
Rather, the primary purpose of this chapter is to outline key variables that the strategic
leader must ensure are in place and aligned to gain maximum organizational effectiveness.

Key Actions Necessary for Effective Organizational Performance


Referring to the Strategic Leadership Model (figure 2-1), the strategic leader has both
a leadership and management role in translating strategy into action, executing the
strategy, and controlling and diagnosing progress—adapting as necessary. Figure 13-1
illustrates some of the key actions necessary for effective organizational performance.
While significant detail is illustrated, it is neither all-inclusive nor prescriptive. Review-
ing figure 13-1 can stimulate thinking regarding the significant variables that influence
organizational effectiveness and performance.
A crucial objective for the strategic leader is to ensure the organization’s internal
alignment provides the ability for it to execute the determined strategy. As noted in
figure 13-1, to address the remaining responsibilities of the strategic leader depicted
in the strategic leadership model would take several books. While the figure appears
complex, the elements depicted are but the basic ones required for execution and
illustrate the magnitude of the alignment requirement. This final chapter on the
strategic leadership model focuses on five essential organizational elements that are
responsibilities of the strategic leader: 1) Organizational Structure, 2) Organizational
Alignment—the 7-S Model, 3) Leveraging Information Technology, 4) Importance of
Effective Meetings, and 5) Engaging the Workforce.

1. Organizational Structure
Overall organizational design exerts significant influence on all work processes con-
ducted within its influence. A number of organizational designs exist—including
hybrids—all of which have strengths and weaknesses. Organizational structure exerts
a number of important influences on management and leadership. For example, it:
• determines where formal authority and power are located and suggests formal com-
munication channels
• provides a division of labor that defines specialization, standardization, and com-
partmentalization of tasks and functions
• enables coordination through integrating mechanisms such as hierarchical supervi-
sion, rules and procedures, and training and socialization

4 8 2   L e a d in g a t t h e S t r a te g i c L eve l
• defines the boundaries of the organization, including its interfaces with the operating
environments within which it must react
•p  rojects a message about what work is most important
• helps to facilitate the value system and desired culture established by the leadership.

Figure 13-1. Key Actions for Organizational Performance

Key Actions for Organizational Performance

Strategic Leader or Strategic Team

Strategic Leadership: Balance Change


Strategic Management
Organizational Focus and Status Quo

Align Values, Vision, and Mission to Strategy

Translate Strategic into Action Develop Strategic and Operational Plans


• Conduct Planning • Create Common Goals, Milestones, and Symbols to Rally Support • Select Short- and Long-term
Objectives and Performance Criteria • Prioritize • Develop Policies • Review Resource Requirements • Set Stretch Goals
• Develop Supporting Communication Plan • Leverage Technology for Organizational Effectiveness and Efficiency

Manage Execution
• Motivate • Think Creatively and Critically • Implement Policies • Manage Risk • Delegate Effectively
• Meet or Exceed Customer and Stakeholder Expectations • Optimize Use of Resources • Reward and Discipline Appropriately
• Ensure Continuous Process Improvements

Organize and Align Systems


Organize Assets and Activities to Achieve Goals

HR (People) Organizational Organizational Networks Leverage


Relationships Technology
• Recruit, Select, Train Structure Processes
Managers, Supervisor, • Build Effective Long-term • Knowledge
• Functional, Network, • Mission Critical, Support Relationships with Internal Management
and Workforce and Reward
• Develop and Foster Matrix, Divisional and External Stakeholders, • Intra/Internet
• Facilities • Implement Policies Suppliers and Customers • E-commerce
Shared Values • Standard Operating
• Develop Leadership • Flattened • Develop Internal • Connecting People
or Hierarchical Procedures Cross-functional • Planning and Budgeting
Benchstrength • Organizational Learning
• Assign Responsibility for • Joint Ventures, Networks and Relationships • Information Technology
Partnerships, Alliances, • Innovation and Creativity • Negotiate Effectively • Managers and Workforce
Task Accomplishments • Customer Relationship
• Establish and Promote Coalitions (Internal • Union/Worker Interest Technology Savvy
and External) Management Groups
Accountability • Supply Chain
• Provide Timely, • Safety and Health
Constructive Feedback

Control and Diagnose (Results, Processes, and Relationships)


• Perform Analysis and After-action Reviews • Measure and Monitor Processes, Progress, and Results • Performance Goals Met
• Accomplishing Mission, Achieving Vision • Effectively Responding to External/Internal Shocks and Crises
• Targeted Organizational Outcomes/Results Effectively Met or Exceeded

C h a pte r 13   4 8 3
The four basic organizational structures examined in this chapter include: basic,
functional, divisional, and matrix. Additional structures used by some organizations
include network (an approach when many organizational responsibilities are subcon-
tracted) and lattice (for maximizing creativity and innovation, e.g., W.L. Gore).7 These
structures are not mutually exclusive and their use may be in tandem, or morph from
one to another over time.
Regardless of the selected structure, there should be a continuing effort to examine
these structures and redefine them as necessary to make them more agile, flexible, and
adaptable to change. For example, many strategic leaders took steps to “flatten” their
organizations in their efforts to enhance collaboration, share information and learning,
and get closer to the level where the organization interacts with the customer. Some
unexpected and unintended side effects from these efforts included the expansion
of the strategic leader’s span of control as well as confusion regarding responsibility,
accountability, and allocation of resources.
Basic Structure. A basic structure is ideal for a small or entrepreneurial organi-
zation. Here, the strategic leader essentially makes the decisions, provides direction,
and controls resources. The basic structure is very flexible but is usually inefficient
and ineffective as the strategic leader is the primary node for communication and
coordination. Should the work become more complex, typically the strategic leader
is soon overwhelmed.
Functional Structure. The functional structure model allows the grouping of
activities based on shared functions, e.g., engineering, production, manufacturing,
logistics, marketing, sales, finance, etc. In functional organizations, subunits have
specified responsibilities and well-defined roles. Functional structures can accom-
modate any size of an organization. A functional structure works reasonably well in
a structured, relatively stable working environment—one requiring high efficiency
and precision. A functional organization has command and control centered in the
upper levels of the hierarchy and usually requires cross-functional teams to make
things happen (see figure 13-2). Some disadvantages of a functional organization
include duplication of effort; greater resource expenditures for similar processes (if
not centralized); less than adequate communication across functional stovepipes; and,
often, lack of agility and slowness to innovate.

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Figure 13-2. Functional Organizational Model

Functional Organization

Chief Executive

Staff Functions

Engineering Technical Services Production

• F ocus is on department goals


• Careers typically defined by experience within the function
• Values, goals, and orientations adopted within the function
• C ommonality encourages collaboration, efficiency, and quality—within a function
• C oordination with other departments requires procedures for cutting across functions
• A n appropriate structure when dominant issues and goals of organization stress functional expertise,
efficiency, and quality.

Divisional Structure. The divisional structure model appears similar to the dia-
gram for a functional structure; however, individual boxes indicating functional focuses
define specific business focuses. For example, in the military the subordinate divisional
boxes could be Navy, Marines, Army, and Air Force. A divisional chart for the Navy
could include Aviation, Submarines, SEALs or Special Forces, and Surface Warfare. In
business, divisions could include GMC, Cadillac, Chevrolet, and Buick. In a divisional
construct, specific units are virtually sufficient, incorporating all necessary resources
and functions, e.g., manufacturing, research and development, and marketing within
each division. Each division is responsible and accountable for different products, geo-
graphical markets, or clients. In a divisional structure, more efficient coordination results
because members identify with their divisions rather than specific functions. Some
downsides include the loss of economy of scale due to possible duplication of functions
and diffusion of expertise (unless centralized: contracting, financial, HR). Another
potential drawback is the possibility of less efficient intradivisional communication,
as well as challenges for members seeking to understand the total enterprise structure,
processes, and outcomes in comparison with their own specific businesses.
Matrix Structure. The matrix organization model is characterized by shared
responsibility for a task or project. It incorporates both the functional and divisional

C h a pte r 13   4 8 5
structures models. An important advantage conferred by the matrix structure model is
that it enables the organization to meet multiple demands from the external environ-
ment even as it flexibly reallocates resources to meet changing or emerging require-
ments. This structure reduces the “stovepiping” of information flow, while making
referrals across the hierarchy easier. This structure provides the opportunity to exploit
the expertise and capabilities both within functions and horizontally across functions.
It also helps facilitate innovation, information sharing, and learning. Some drawbacks
to a matrix organization include:
• difficulty in determining responsibility and authority between functional and project
managers—because authority and responsibility are shared
• when conflict arises, resolving the issues usually requires greater discussion and
coordination.
In some situations, matrix organizations may increase the need for additional
management and administration, thereby increasing organizational costs. A matrix
structure can lead to a greater use of organizational politics to solve problems and make
decisions. If the strategic leadership team decides to implement a matrix structure
(e.g., moving to a matrix organization from a divisional or functional structure), some
members of the organization may resist due to the perception of or the actual loss of
authority, control, and/or status. Figure 13-3 depicts the matrix organizational model.

Figure 13-3. Matrix Organizational Model

General Manager

Engineering Planning Construction Others

Project Project Responsibility


Manager X

Project
Manager Y

Project
Manager Z

Source: <www.fta.dot.gov/printer_friendly/planning_environment_1338.html>.

4 8 6   L e a d in g a t t h e S t r a te g i c L eve l
Strategy and Structure. Strategic leaders should remember that while structure can
influence strategy, designing the most effective organizational structure should follow
the formulation of strategy. As the strategic leader scans the environment and makes
decisions regarding future organizational direction, a changing strategy frequently
leads to changes in organizational design and function. If the organizational structure
is misaligned with the new direction, degraded performance will result. Further, chang-
ing the design will ultimately affect the shaping of organizational climate and culture.

2. Organizational Alignment—the 7-S Model


Originally published in their article “Structure Is Not Organization” in 1980 and later
in their 1982 book, In Search of Excellence, Tom Peters and Robert Waterman, then
McKinsey & Co. consultants, developed the 7-S framework.8 Since its initial publica-
tion, the 7-S model continues to serve as one of the best frameworks for analyzing
and evaluating organizations. Peters and Waterman argued that an organization is
not just structure; rather seven key elements comprise the essence of an organization:
Strategy, Structure, Systems, Staff, Skills, Style, and Shared Values (see figure 13-4).9
1. Strategy. As discussed in chapter 4, strategy is defined as a plan of action that
guides an organization or nation as it employs the means available to successfully
achieve goals.
2. Structure. As noted previously, a formal organizational chart defines and
illustrates interconnecting roles, responsibilities, and reporting relationships, com-
municating how work is coordinated within and through the organizational hierarchy.
3. Systems. As Bradach explained, systems includes those procedures and pro-
cesses “used to manage the organization, including the management control systems,
performance measurement and reward systems, planning, budgeting, and resource
allocation systems, information systems, and distribution systems.”10 W. Edwards
Deming, a leading authority in the quality movement, explained that “A fault in the
interpretation of observations, seen everywhere, is to suppose that every event (defect,
mistake, accident) is attributable to someone (usually the one nearest at hand), or is
related to some special event. The fact is that most troubles with service and production
lie in the system.”11 Deming estimated that 94 percent of the variation in any system is
attributable to the system, not to the people working in the system—and management
was responsible for the system.12
4. Staff. “The people, their backgrounds, and competencies,” Bradach continued.
“The organization’s approaches to recruitment, selection, and socialization. How
people are developed; how recruits are trained, socialized, and integrated; and how
their careers are managed.”13
5. Skills. The distinctive capabilities or dominating attributes of the organization
as a whole. That is, University of Virginia professor Jack Weber explained, “While most
large companies have a large reservoir of individual skills, the 7-S notion refers to a set

C h a pte r 13   4 8 7
of skills that the organization has been able to synthesize into something that sets the
firm apart, something the company is known to do well.”14 [Conversely, collections of
specialized skills can become liabilities, if and when the need for that particular col-
lection of skills is changed as the organization realigns its strategies and operations to
meet the challenges of a VUCA environment. In such cases, strategic leadership will
be faced with hard choices regarding the organization’s strategic best interests (e.g.,
reductions in force), versus initiatives that provide optional retraining and reassign-
ment to those workers willing to make that personal investment.]
6. Style. “The leadership style of top management and the overall operating style of
the organization. . . . Style captures how work actually gets done in the organization,” Bra-
dach explained.15 How strategic leaders and key subordinate leaders define and establish
priorities, and behave/act to accomplish the organization’s mission and strategic goals.
7. Shared Values. “The core or fundamental set of values that are widely shared in
the organization and serve as guiding principles of what is important,” Bradach contin-
ued. “[T]hey have great meaning because they help focus attention and provide a broader
sense of purpose.”16 Some organizational scholars and practitioners either renamed this
element, “Superordinate Goals” or subdivided this element into both shared values and
superordinate goals. For example, Weber suggests that shared values encompass two
distinct notions: “an aspirational, envisioned future; and the core values and purpose
of the organization.” He posited the former relates to superordinate goals and the latter
to shared values. Furthermore, he suggested that superordinate goals are similar to the
Big Hairy Audacious Goals (BHAGs) coined by author Jim Collins. He stressed that he
was not referring to an organizational goal but rather to a “daunting challenge.”17

Figure 13-4. The McKinsey 7-S Model/Framework

Structure

Strategy Systems The key premise to the framework is the


organization will be effective “to the extent it is
well-aligned; that is, each S is consistent with
Shared
Values and reinforces the other S’s.” Shared values is
placed in the center as it is perceived to be the
glue that holds all seven together.
Skills Style

Staff

Source: Jeffrey Bradach, “Organizational alignment: The 7-S Model,” Harvard Business School Note:
9-497-045, November 19, 1996, 7.

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In addition, in managing change, the framework illustrates that any change in one
element will have an effect on the other six. Consequently, making a change (e.g., in
the organization’s structure), will require some adjustment to the other six elements.
As indicated in figure 13-2, three of the “S’s” are considered by most analysts as
being “hard S’s.” Strategy, Structure, and Systems are viewed as easier to change than
the other four “soft S’s.” The “soft S’s”: Skills, Staff, Style and Shared Values typically
require more time to alter. Reflecting on the 30 years since codeveloping the frame-
work, in 2011 Tom Peters noted:
I continue to say, over 30 years later, that the power of the 7-Ss and In Search of
Excellence (1982) and my subsequent work can best be captured in six words:
“Hard is soft. Soft is hard.” That is, it’s the plans and the numbers that are often
“soft” (e.g., the sky-high soundness scores that the ratings agencies gave packages
of dubious mortgages). And the people (“staff”) and shared values (“corporate
culture”) and skills (“core competencies” these days) which are truly “hard”—
that is, the bedrock upon which the adaptive and enduring enterprise is built.
To state the obvious, we very much included the “Hard Ss” (Strategy, Structure,
Systems) in our framework, then added the “Soft Ss” (Style, Staff, Skills, Shared
values—or Superordinate goal); and insisted that there was no precedence
among them. Deal with all seven or accept the consequences—likely less than
effective implementation of any project or program or increase in overall orga-
nization performance.18

Alignment—The Message: “Salad or Cake?”19—


A Mini Case Study
Discussing organizational change and alignment, Mark Gerencser, Executive Vice Presi-
dent of Booz Allen Hamilton, suggested two ways an organization can integrate. The first
is “salad.” In other words, “I could take onions, tomatoes, and lettuce and nuts, and mix
them all together to get something that’s better than any of the individual ingredients,
because it’s better and it’s tastier.” He noted this is one level of integration. “Yet while
salad is good . . . cake is better. . . . Cake is a completely different level of integration.
Mix water, eggs, flour and baking powder, and add some heat. Each ingredient will go
through a transformation, and you no longer see the eggs, flour, and water anymore.
It’ll be something new and different, called cake; and cake is better than the eggs alone.
Of course, cake is also tastier than salad!”
He then pointed out that leading a large organization requires bumper stickers and
sound bites to help people stay aligned to the strategy. “If you talk to any of my folks,” he
says, “people can tell you the difference between cake and salad.” He reinforced his point:
“Why don’t we create a business unit that’s cake, not salad.” That became the analogy
he decided to use as a metaphor to communicate this important concept. Furthermore,

C h a pte r 13   4 8 9
“Now, I didn’t define what that cake was. I didn’t say it was layered cake or blueberry cake
or cheesecake or anything. I said I wanted cake. Then I said, ‘Now, it’s up to you, the lead-
ers of these units, to figure out what kind of cake we need to have or want to be.’ You talk
about the buy-in—I set the vector, if you will, for the strategic change around cake, without
defining the type of cake. I’m letting the team evolve that, but they know I want cake.”
In making his business case for Booz Allen Hamilton, he argued for an integrated
rather than “siloed” business model. He noted, “The kind of businesses we’re pursuing
and the things we choose to do now are more cake-like than salad-like. They’re more
integrative.” For example, providing support to the 2010 BP Oil Spill Commission was
“cake.” He made clear, “Integrating many perspectives [does not] set boundaries, but
it sets a vector, a cardinal heading, that the leaders can then bring their own creativity
in an aligned way with other leaders to get you where you want to go.”
Alignment also includes the organization’s culture. Gerencser concluded that, “Not
only is it aligning the activities, but also aligning the minds and, most importantly, align-
ing the hearts. That’s where culture comes into play. . . . Aligning the minds is influenced
by an effective reward system. Aligning the hearts is more inspirational.” In addition, he
believed that to align hearts requires an endstate which people are motivated to reach:
“I’m not worried about being the biggest or the fastest growing. We want to be the best
at what we do. Let’s stand for being the best. Who can sign up to that? Everyone! It’s
asking people to opt in, and it’s motivating people around an end-state, an aspiration
they all want to get to, and that’s how you align the hearts.”

—Pause—Take a moment to reflect and answer the below questions. Note your
initial thoughts and insights.
1. How does your organization communicate the need for integration and alignment?
In comparing your organization with Gerencser’s, does it focus on salad or cake?
2. Do you concur with Gerencser’s comments regarding alignment? Why or why not?

While the 7-S framework may, at first glance, appear to be simplistic, many do
not appreciate its complexity, or recognize the huge challenges it presents to leaders
seeking to improve the effectiveness of their organizations. In addition, there may be
confusion regarding the terms “alignment” and “agreement.” Alignment is not the
same as organization members agreeing on what they are going to do or what direc-
tion they are going. Organization leaders and members may agree on where they are
going; however, that does not necessarily mean they are aligned.

3. Leveraging Information Technology


Clearly, information technologies and systems permeate all aspects of organiza-
tional life and are essential to effective and focused strategic scanning, thinking and

4 9 0   L e a d in g a t t h e S t r a te g i c L eve l
planning, decisionmaking, and implementation. It is also true that such systems,
unless managed effectively, can lead to information overload. The key, however, is
how well the organization is leveraging such technologies and systems to gain and
sustain competitive advantage. For example, James Champy stated, “53 percent of
all spending on equipment in the United States today involves information tech-
nology. . . . [However,] estimates say that 40 to 50 percent of major information-
technology projects fail to deliver on their promises.”20
Effective integration and leveraging of information technologies is a strategic
enabler to help achieve organizational excellence, strategic advantage, and competi-
tiveness. Information technology can help build and enhance strategy and execution
by providing improved quality of and access to data and information within the orga-
nization, as well as help the organization redefine and support relationships with cus-
tomers, suppliers, and other organizations. Examples of internal applications include
networking, intranets, and enterprise resource planning (ERP) systems. Extranets,
e-commerce, and network structures are examples of external applications. However,
leaders are very aware that simply using information technologies in themselves should
not represent the desired result. As Richard Daft argued, “Having greater access to
information is useless unless that information is [used] to further the goals and suc-
cess of the organization. In today’s economy, the basic economic resource is no longer
capital, or labor, or natural resources, but knowledge.” Furthermore, Daft stated, “In a
world where any organization can purchase new technology, [it is] the motivation, skill,
and commitment of employees [that] can provide the competitive edge.”21 Likewise, in
addressing e-business, Susan Annuzio concluded, “Leadership ultimately is not about
connecting technology, but about connecting people.”22
While information technologies together can be enablers, they can do so effec-
tively only if implemented skillfully into the way people work in the organization.
Information technologies have become a commodity (similar to electricity), and the
Internet is ubiquitous in both today’s work and personal worlds. Nicholas Carr argued
that technology’s potential for differentiating one company from the pack—its strategic
potential—inexorably declines as it becomes accessible and affordable to all.23
In other words, similar to electricity being an enabler for those organizations using
machines and appliances to leverage human work to enhance competitive advantage in
the industrial age, so too information technology initially provided important advan-
tages when it used the collective power of the human mind to establish competitive
advantage in the information age. Jim Collins warned that, “thoughtless reliance on
technology is a liability, not an asset.”24 Collins concurred that technology is an enabler
when it is used correctly, and when aligned with the organization’s strategic objec-
tives. However, he argued that when wrongly or incorrectly used, or “when grasped as
an easy solution, without deep understanding of how it links to a clear and coherent
concept—technology simply accelerates your own self-created demise.”25

C h a pte r 13  4 91
Clear, effective, and judicial use of information technology is critical to achieving
organizational excellence. Therefore, it is essential that leaders at all levels be savvy
about information technology. Champy argued, “most managers don’t have that kind
of technology sensibility. They make large capital investments in information technol-
ogy without half the knowledge or thought they would insist on if they were building
a plant or production line. Technology awareness has become a core competency for
everyone. Even in companies that outsource information-technology development and
operations, managers must have a thorough, up-to-date knowledge of how informa-
tion technology works in their industry. . . . I know managers aren’t going to become
information-technology experts, any more than they will know every wrinkle of tax
law or antitrust policy. But just as they understand the impact of those rules on their
strategy and operations, they have to become knowledgeable enough to understand
how information technology will affect their business.”26

4. The Importance of Effective Meetings


As noted by virtually all the interviewed strategic leaders, more than half of their time
is consumed by various forms of meetings—formal face-to-face, virtual, one-on-one,
groups, or informal (e.g., at lunch, in the hallway). Research suggests that one-third of
all meetings are unnecessary. Effective strategic leaders set the parameters regarding
how meetings should be planned and conducted, what meetings strategic leaders are
required to attend and why, and what standardized/scheduled meetings are held by
the organization. Far too frequently, senior leaders attend and participate in unfocused
meetings that are of little or no value and/or have the wrong players in attendance. To
avoid these enormous wastes of time, the strategic leadership team should regularly
review scheduled meetings in which senior leaders usually participate to ascertain if
the meetings are truly adding value. If they do not, leaders should either discontinue
or reframe the meetings. In essence, such meetings often represent a cultural micro-
cosm—strategic leader, strategic leadership team, and the organization. By improving
the results and outcomes of such meetings—effectiveness and efficiency—the strategic
leader can help ensure more effective strategic deployment and implementation and
a more collaborative culture.
Most successful meetings are characterized by such well-known techniques as a
pre-determined agenda, carefully identified participants whose purposes and con-
tributions are functionally required, and ensuring that those participants receive a
carefully constructed agenda prior to the meeting—with time enough to adequately
prepare, including review of “read-ahead” documents and materials. The agenda
should include the purpose of the meeting and the desired outcome, e.g., “By the end
of this meeting, we will have. . . .” The agenda should also indicate for each agenda item
the process (e.g., brainstorm, clarify, check for agreement, etc.), who is leading that part
of the agenda, and the time allotted. Prior to holding the meeting, the strategic leader

4 9 2   L e a d in g a t t h e S t r a te g i c L eve l
should conduct a stakeholder analysis to make sure the right people will attend. The
leader should avoid the need to call another meeting because of the failure to invite
all key participants or having the wrong people attend. Making the effort to plan and
conduct meetings more efficiently and effectively can free up significant time for both
the strategic leader and all participants.

5. Engaging the Workforce


A leadership factor for all strategic leaders to consider is employee engagement. For
example, in 2002 the Gallup Organization surveyed more than 3 million workers in
government and private industry. Marcus Buckingham and Curt Coffman reported
many of the results in First, Break All the Rules.27 The Gallup data review identified
three distinct levels of organizational members’ engagement: engaged, not engaged,
and actively disengaged. The authors explained the difference:
The “engaged” employees are builders. They use their talents, develop produc-
tive relationships, and multiply their effectiveness through those relationships.
They perform at consistently high levels. They drive innovation and move their
organization forward. The employees that are “not engaged” aren’t necessarily
negative or positive about their company. They basically take a wait-and-see
attitude toward their job, their employer, and their coworkers. They hang
back and don’t commit themselves. This brings us to the “actively disengaged”
employees—the “cave dwellers.” They’re “Consistently Against Virtually Every-
thing.” We’ve all worked with an actively disengaged employee who is not just
unhappy at work; he acts out that unhappiness. Every day, actively disengaged
employees tear down what their engaged coworkers are building.28
Their 2002 research results indicated that 55 percent of the American workforce is
physically but not emotionally engaged in its work; 16 percent of U.S. employees show
up for work but remain disinterested. These data suggest that 71 percent are not engaged
at work. Another key finding is that the longer workers stay on the job, the more they
become disengaged in their work. In August 2009, Gallup surveyed 42,000 randomly
selected adults and had similar results. Thirty-three percent of workers were engaged
in their jobs, 49 percent were not engaged, and 18 percent actively disengaged.29
In 2009, Harvard Business School professor Teresa Amabile “asked 600 managers
to rank workplace factors that they thought engaged employees. ‘Recognition for good
work’ topped the list; [work] ‘progress’ came in dead last.” Yet, in analyzing 120,000
journal entries from her multiyear research “tracking day-to-day activities, emotions
and motivations of hundreds of knowledge workers in a variety of settings,” she found
that “Progress ranked No. 1 on the list of engagement factors related to performance.”
According to Amabile, “workers reported feeling most engaged on days when they
made headway or received support to overcome obstacles in their jobs. They reported

C h a pte r 13   4 9 3
feeling least engaged when they hit brick walls. Small dents in work meant as much as
large achievements.”30 Consultant Julie Gebauer, managing director of the New York
consulting firm Towers Watson, explained “People don’t go the extra mile because
of base pay or health benefits or life insurance . . . [t]hey go the extra mile because of
leadership’s interest in their well-being, development opportunities, or recognition.”31
Clearly, leadership is a critical factor in changing these dynamics.

Bureaucracy—Providing Order and Standardization—


A Mini Case Study
In view of the above discussions focused on organizational structure and align-
ment, metrics, leveraging technology, and an engaged workforce, a logical question
becomes: “Is bureaucracy an appropriate approach to achieving vision, mission, and
strategic objectives?”
Today, there is much criticism of bureaucracies and of the bureaucrats who work
within them. Among the criticisms are: too much red tape, too many rules and proce-
dures, and too many people in an approval process where a single “no” vote along the
way can stop everything in its tracks. Yet most large organizations are bureaucracies,
especially those associated with public service.
Those who support bureaucracies often cite as a basis for their support that bureau-
cracies provide standardization and order to a system. Leaders hire people because
there are clearly defined roles and responsibilities, and the new hires are purported to
have the necessary expertise and skill sets required for their positions. This standardiza-
tion also provides organizational stability and sustains status quo.
In the 1920s, Max Weber became the first scholar to identify the core benefits of
organizational bureaucracy. In general, Weber argued that bureaucracies were the best
way to organize large groups to produce goods or services in a stable manner. Such
organizations would be most efficient because the assigned tasks of all members would
be in compliance with strict rules and codes of conduct. Weber believed that in adhering
to strict rules and procedures, workers would be more inclined to be impartial and fair
in their dealings with others.
In essence, a bureaucracy benefits large organizations. The hierarchical leadership
and management framework (power at the top—pyramidal) allows coordinated effort
for complex projects by those with the specialized skills and knowledge to perform
the work. Standard operating procedures (SOPs or formal policy), procedures, or rules
routinize much of the decisionmaking process. Regarding the U.S. Government, for
example, one could argue that a President has little power to change government. Gen-
eral directions or specific priorities may be changed by different administrations and/
or individual agency heads. However, the various government agencies will continue
“steaming as before,” providing necessary services without accepting much influence

4 9 4   L e a d in g a t t h e S t r a te g i c L eve l
from Congress or the President. Another point of view is that the Congress through
its oversight and budgetary authorities tends to overregulate executive performance,
sometimes to extremes.
Of course, many view the bureaucratic model as having numerous negative aspects.
The fact that leaders within this model typically train and evaluate employees on their
record of adhering to accepted, approved procedures and maintaining good records
and files often impairs the organization’s ability to respond quickly to changing circum-
stances; that is, reactions are often inflexible and slow. Additionally, due to the require-
ment to follow procedures, people desiring resources or support must understand and
comply with the rules as they submit the “paperwork” needed to gain access to the
organization’s authorization and sponsorship. Furthermore, during strategic change
initiatives when organizational leadership identifies the need to alter the organization’s
focus, that leadership may consider organizational realignment and even transforma-
tion to be necessary to achieve the new vision, mission, and/or strategic objectives.
Most members within the bureaucratic organization are accustomed to working
within their comfort zones (of stability) and are satisfied with their reputation of being
competent in performing their current (well known, routine) tasks. Thinking and oper-
ating outside of their personal bureaucratic boxes becomes a challenge, and these
organizational members typically find it very difficult to change.

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. When has your organization benefited from a bureaucratic structure? When has
your organization needed to act quickly but found its ability to react slowed by
organizational rules and procedures? Do you believe employees are engaged or
just “doing their job” in a bureaucratic organization?
2. As a strategic leader, how would you go about promoting and getting buy-in from
employees when change is needed in an environment so heavily reliant on the
structure and procedures?

Hurricane Katrina—A Mini Case Study32


Hurricane Katrina, which hit Louisiana on August 28, 2005, provides an excellent
example of the challenges involved when navigating a bureaucratic process. In this
instance, numerous bureaucratic organizations including FEMA (Federal Emergency
Management Agency), DHS (Department of Homeland Security), and the state, city,
and parish governments of Louisiana as well as nonprofit and private sector companies
were all involved in trying to render aid to those in need. Each encountered its own
bureaucratic challenges.

C h a pte r 13   4 9 5
FEMA and DHS are clearly structured bureaucratically. This structure lends itself
to a commitment to such factors as legal jurisdictions that can hinder efforts in an
emergency.33 FEMA operates under organizational control of DHS since its creation
in 2002. However, as is outlined in U.S. law, state and local authorities must request
assistance before Federal organizations such as FEMA may intervene.34 This has been
governmental practice for more than 200 years 35 (as noted in the Hurricane Katrina
example in chapter 4). FEMA director Michael Brown demonstrated this strict adher-
ence to legal jurisdiction. For example, he ordered fire and emergency services “not to
respond to counties and states affected by Hurricane Katrina without being requested
and lawfully dispatched by state and local authorities under mutual aid agreements and
the Emergency Management Assistance Compact.”36
Even jurisdictional control of the National Guard troops became an issue. Those
troops fall under gubernatorial control and the President normally will not federalize
them unless requested by a state governor.37 Therefore, when Active duty forces arrived
in the New Orleans area, those personnel were under Federal control while the National
Guard units on site remained under state control. For several days, efforts were ham-
pered due to inadequate situational awareness between the peacekeeping forces.38
Further, since Governor Kathleen Blanco retained control over the Louisiana National
Guard force, she had to follow established procedures when surrounding states offered
their National Guard troops for assistance and then obtain approval from the Federal
Government before those troops could move into Louisiana.39 Completing this process
took several days.40
As illustrated by the relief efforts following Hurricane Katrina, the tedious process
for requesting aid and assistance, as well as breakdowns in communication within the
multiple layers of these governmental organizations, served to confuse and muddle
much of the relief effort, thereby delaying assistance for the victims of the catastrophic
storm. As stated by the then Mayor-President of Baton Rouge, Melvin Holden, “require-
ments for paper work and form completions hindered immediate action and deployment
of people and materials to assist. . . .”41 For example, on Monday, August 27, Governor
Blanco requested an emergency declaration from the Federal Government. Federal
officials responded that for maximum Federal aid she needed to request “a presidential
disaster declaration instead of a lower-level presidential declaration of emergency.”42
Consequently, on August 29, more than 24 hours after the devastating storm hit, Gov-
ernor Blanco made the disaster declaration to the Federal government to receive the
Federal support she needed.43
The Katrina disaster not only demonstrated breakdowns between state and Federal
bureaucracies, but within city and parish governments as well. In one instance, Jefferson
Parish Sheriff Harry Lee asked for citizen boats to help with rescue operations, but the
head of Louisiana’s Department of Wildlife and Fisheries said the extra help was not
needed and turned the volunteers away.44

4 9 6   L e a d in g a t t h e S t r a te g i c L eve l
—Pause—Take a moment to reflect on the following questions and capture your
initial thinking and insights.
1. What compels some leaders within an organization to retain power and control
of their piece of the bureaucracy even when it is counterproductive to the strategic/
fundamental goal of the organization?
2. At what point should the organizations’ top leaders step in? What do you think
the strategic leaders should do?
3. When they do intervene, what factors/criteria should leaders consider when pri-
oritizing operations and delegating control?
4. Do these factors apply only in a crisis? If so, how and why?

Efforts to gather information outside the bureaucratic structures also proved to be


a significant problem for FEMA during Katrina. In a September 2 interview with CNN,
FEMA’s Michael Brown admitted that he had only learned about many of the problems
facing those on the ground through media reports.45 This underscored the fact that
FEMA had no idea what the need was, the locations needing it, or who needed it. Fur-
thermore, as reports that trailers for temporary housing facilities for victims were not
shipped, FEMA declined Amtrak’s offer to provide transportation for victims out of New
Orleans. The agency also refused generators donated to hospitals.46 Even as other offers
of assistance arrived for FEMA leadership via email, the emails circulated from one
agency bureaucrat to another asking questions such as “Can we use these people?”47

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. In a typical bureaucratic organization, the scope and breadth of the people, pro-
gram, and chain of command is so vast, how can its leadership ensure the orga-
nization takes advantage of the opportunities noted above rather than missing
them or consigning them to a communications merry-go-round?
2. How do you establish efficient communication and information technology
systems within a bureaucratic environment without adding more rules and pro-
cedures to the structure or without requiring the organizational leader to micro-
manage communications, a challenge for which they have neither the specialized
skills nor the time?

Bureaucracies can be enormous and have multiple layers, with each layer having
its own process. With so many layers, the people operating within them have a hard
time seeing beyond their individual roles within the organization. Most organizations
are simply not organized, nor are the leaders within them properly trained, to look out-
side their own bureaucratic space. In a disaster such as Katrina, where quick response
is necessary, people tend to rely on the processes with which they are familiar within

C h a pte r 13   4 9 7
their own organizations even if they are ineffective. These actions lead people to act
according to what they have been trained to do within their operating structure, not
necessarily in ways that would be most effective or make the most sense given the
overall circumstances.48
Michel Crozier elaborated on this issue in The Bureaucratic Phenomenon. He
referred to it as “the development of parallel power relationships.”49 Crozier concluded
that when a typical bureaucratic organization faces crisis, it becomes dysfunctional and
displaces its goals. He argued that when the goals of a rigid bureaucratic organization
are displaced, decisionmakers within the organization tend to follow “a greater elabora-
tion of the rules . . . they attempt to use dysfunction to reinforce their position . . . within
the organization. Their struggle . . . is not directed toward helping the organization to
adapt better to the challenge of the environment, but rather toward safeguarding and
developing the kind of rigidity that is protecting them.”50 This is exactly what happened
with many of the organizations responding to Hurricane Katrina.
For example, FEMA workers halted trailers delivering water to New Orleans from
Arkansas because the drivers did not have the “tasker number” needed to unload.
When asked, they did not even know what a tasker number was.51 Also, FEMA seized
the fuel Jefferson Parish ordered while trucks were delivering it to the parish. FEMA
told the parish that local New Orleans emergency management had to “go through a
bureaucratic process to get that fuel released to the Parish.”52 Even when the U.S. Forest
Service offered water tankers to fight fires on the waterfront and civilian aircraft began
responding to evacuation requests, FEMA officials waved both off because they did not
have the proper authorization.53

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. Is there a point when leaders must disregard bureaucratic regulations and proce-
dures? If so, when? Who makes that decision? Is it just the leader of the organization
or should lower level leadership have that decisionmaking authority? What factors
have to be present? Who is responsible for the consequences of those decisions?
2. Is a cross-training program a reasonable solution for a bureaucratic organization?
If so, how would you structure it? If not, what would you do to help your employees
learn to look beyond the department or organization where they work? How would
this be beneficial during “noncrisis” times?

Certainly, New Orleans is not a corporation, but from a strategic leadership perspective,
it was an organization required to work through a crisis, and it generated a number of
lessons learned.54 In today’s organizations, leaders face many complex and difficult
issues. To compete globally, an organization must provide opportunities for learning,
growth, and development as well as training on how to be flexible while managing crisis
and diversity. While no plan will cover every scenario, organizations must be responsive,

4 9 8   L e a d in g a t t h e S t r a te g i c L eve l
considerate of outside information, and flexible and swift when managing emergencies,
as well as having addenda to existing plans and contingency procedures available if the
current plan is not viable in a given situation.55

In summary, this chapter has outlined a number of factors the effective strategic
leader must manage effectively. Using both leadership and management skills and
abilities, the strategic leader fulfills his or her responsibilities to ensure the organization
is fully capable of executing the strategy with sustained organizational effectiveness
as well as having the capacity to adapt to future challenges and necessary changes.

Notes
1
Michael Beer, “Note on Organizational Effectiveness,” Harvard Business School Note: 9-493-044,
September 22, 1994, 1.
Personal interview with General George Casey, Chief of Staff of the U.S. Army 2007–2011 and Com-
2

manding General, Multi-National Force in Iraq, 2004–2007.


3
Personal interview with John Yaeger, Vice President of Academic Affairs, National Defense University
(NDU) (Provost Equivalent).
4
Personal interview with LTG Claude Christianson, USA (Ret.), Director of the Center for Joint and
Strategic Logistics, NDU; former Director for Logistics, the Joint Staff.
5
Personal interview with Gordon Smith, former executive with American Express.
6
Ibid.
7
See <www.gore.com/en_xx/aboutus/culture/index.html>; and Cathy Benko and Andrew Liakopou-
los, “The Corporate Lattice,” Talent Management, February 2011, 28–31.
Tom Peters and Robert Waterman later published the framework in In Search of Excellence (New
8

York: HarperCollins, 1982).


9
For an excellent interactive presentation on the 7-S framework, see Lowell Bryan, “Enduring Ideas:
The 7-S Framework,” McKinsey Quarterly, March 2008. For a review of the history of the model, see
Tom Peters, “A Brief History of the 7-S (‘McKinsey 7-S’) Model,” March 8, 2011, available at <www.
tompeters.com/dispatches/2011/03/>.
Jeffrey Bradach, “Organizational alignment: The 7-S Model,” Harvard Business School Note: 9-497-
10

045, November 19, 1996, 4.


11
W. Edwards Deming, Out of the Crisis (Cambridge: Massachusetts Institute of Technology Center
for Advanced Engineering Study, 1986), 314.
12
Ibid., 315.
13
Bradach, 5.
Jack Weber, “A Leader’s Guide to Understanding Complex Organizations: An Expanded ‘7-S’ Per-
14

spective,” Darden Business Publication # UVA-OB-0659, 1998, 13.


15
Bradach, 6.
16
Ibid.

C h a pte r 13   4 9 9
17
Weber, 4.
18
Tom Peters, available at <www.tompeters.com/dispatches/2011/03/>, March 8.
Personal interview with Mark Gerencser, Executive Vice President, Booz Allen Hamilton, coauthor
19

of Megacommunities.
20
James Champy, X-Engineering the Corporation (New York: Warner, 2002), 147.
21
Richard Daft, Organization Theory and Design (Mason, OH: Cengage Learning, 2001), 373.
22
Susan Annuzio, Eleadership (New York: Simon & Schuster, 2001), 4
23
Nicholas Carr, “IT Doesn’t Matter,” Harvard Business Review (May 2003), 42.
24
Jim Collins, Good to Great (New York: HarperCollins, 2002), 159.
25
Ibid.
26
Champy, 149.
Marcus Buckingham and Curt Coffman, First, Break All the Rules: What the World’s Greatest Manag-
27

ers Do Differently (New York: Simon & Schuster, 2000).


28
Barb Sanford, “Interview with Curt Coffman: The High Cost of Disengaged Employees,” Gallup
Journal, 2002, available at <www.gallupjournal.com/CA/ee/20020415.asp>.
Adrienne Fox, “Raising Engagement,” HR Magazine 55, no. 5, May 1, 2010, available at <www.shrm.
29

org/Publications/hrmagazine/EditorialContent/2010/0510/Pages/0510fox.aspx>.
30
Ibid.
31
Ibid.
The author expresses appreciation to Nicki Dover, management case study writer, for her research
32

and collaboration in developing this case study.


Margaret Takeda and Marilyn Helms, “Bureaucracy, meet catastrophe, Analysis of Hurricane Katrina
33

relief efforts and their implications for emergency response governance,” International Journal of Public
Sector Management 19, no. 4, 2006, 407.
34
Ibid., 400.
Thomas Birkland, “Disasters, Catastrophes, and Policy Failure in the Homeland Security Era,” Review
35

of Policy Research 26, no. 4 (July 2009), 423–438.


36
Takeda and Helms, 405.
37
Ibid., 407.
38
Frances Townsend, The Federal Response to Hurricane Katrina: Lessons Learned (The White House,
February 23, 2006), available at <http://georgewbush-whitehouse.archives.gov/reports/katrina-lessons-
learned/chapter5.html>.
39
Birkland, 423–438.
40
Takeda and Helms, 402.
41
Townsend.
42
Birkland, 423–438.
43
Ibid.
44
Takeda and Helms, 405.
45
Ibid., 403.
46
Tom Shoop, “Embracing Bureaucracy,” Government Executive, April 1, 2006, 64.
47
Ibid.

5 0 0   L e a d in g a t t h e S t r a te g i c L eve l
48
Ibid.
49
Michel Crozier, The Bureaucratic Phenomenon (Chicago: University of Chicago Press, 1964), 192.
50
Ibid., 193.
Takeda and Helms, 408.
51

52
Shoop, 68.
53
Takeda and Helms, 405.
Jack Welch, “The Five Stages of Crisis-Management,” Wall Street Journal (eastern edition), September
54

14, 2005, A20.


55
Takeda and Helms, 408–409.

C h a pte r 13  5 01
CHAPTER 14 | Four Key Reasons Why
Strategic Leaders Fail

Successful strategic leaders need to have a keen and actionable appreciation regard-
ing how senior leaders and organizations fail. This final chapter examines some of
the causes behind or contributors to failure by strategic leaders (and at times their
organizations). Armed with these insights, strategic leaders can avoid similar fates for
themselves and their organizations.
Much can be learned from a review of factors contributing to perceptions of fail-
ure by many strategic leaders, i.e., they do not meet their stakeholders’, customers’,
or constituencies’ expectations. As David Dotlich and Peter Cairo explained in Why
CEOs Fail, “we know for a fact . . . that perhaps two-thirds of the people currently in
leadership positions in the Western world will fail; they will then be fired, demoted,
or kicked upstairs.”1 Disregarding the obvious reasons for strategic leaders’ failings
attributed to ethical, moral, or criminal misdeeds, what are some of the major factors
behind their significant failure rate? Sydney Finkelstein asked in Why Smart Execu-
tives Fail, “How do leaders who have been successful for years suddenly start getting
everything wrong?”2
Addressing this question is the focus of this chapter. There are four key reasons
strategic leaders who are otherwise successful begin to fail. By studying these destruc-
tive syndromes—executive mind-set failures, delusional attitudes, communication
systems breakdowns, and unsuccessful leadership habits—future leaders can better
understand not only what practices or behaviors to avoid, but also what should be done.

Theories of Failure
Finkelstein attributes four destructive behavioral patterns to failures, including:
1. flawed executive mindsets that throw off a company’s perception of reality
2. delusional attitudes that act to keep inaccurate realities in place
3. failure of communications systems intended to handle potentially urgent information
4. leadership qualities that keep a company’s executives from correcting their course.3
Dotlich and Cairo identified eleven “deeply ingrained personality traits” that make
CEOs and strategic leaders vulnerable. They suggested that statistically every leader pos-
sesses at least one of these traits. They offered an example of a leader who is brilliant at
analysis—which has been useful in keeping the organization from making mistakes—yet

C h a pte r 14   5 0 3
“a penchant for analysis may become warped when . . . under stress.” The strategic leader
can “become so analytical that [he or she] freeze[s] when [he or she] should be taking
action. When you should be deciding, you’re still analyzing.”4 They argued that by learn-
ing what these derailers are, strategic leaders arm themselves with sufficient information
to recognize and manage them before their careers or organizations are hurt. The eleven
derailers Dotlich and Cairo consistently found in senior leaders and CEOs are:
• Arrogance. You’re right and everybody else is wrong.
• Melodrama. You always grab the center of attention.
• Volatility. Your mood swings drive business swings.
• Excessive caution. The next decisions you make may be your first.
• Habitual distrust. You focus on the negatives.
• Aloofness. You disengage and disconnect.
• Mischievousness. Rules are made to be broken.
• Eccentricity. It’s fun to be different just for the sake of it.
• Passive resistance. Your silence is misinterpreted as agreement.
• Perfectionism. Get the little things right even if the big things go wrong.
• Eagerness to please. Winning the popularity contest matters most.5
Contributing additional insights, leadership scholar Owen Jacobs offered the fol-
lowing derived derailing factors:

• Inability to get along. Poor interpersonal skills, especially in early and mid-career,
and particularly with subordinates:
• not being a good listener
• inability to give and receive criticism (feedback)
• viewing conflict as bad rather than something to be managed
•b  eing arrogant.
• Failure to adapt
• sticking to a once-successful strategy or style that no longer works
• not getting out of the box.
• “Me only” syndrome
• excessive concern with one’s own outcomes
• narcissistic dependence on others.
• Fear of action
• fear of failure
• r isk avoidance
• study to death, e.g., analyze without deciding.

5 0 4   L e a d in g a t t h e S t r a te g i c L eve l
• Unable to rebound
• overcome by setbacks
• defensively blame others.6
Through more than three decades of research and practice, preeminent leadership
researchers Michael Lombardo and Robert Eichinger identified 67 leadership com-
petencies and enumerated various learning strategies that enhance a leader’s quest to
become more effective. Similar to Dotlich and Cairo, they point out that a strength
used to extreme can turn into a weakness. In addition, Lombardo and Eichinger
identified 19 “Career Stallers and Stoppers” that can “derail a person’s career.”7 Unlike
working to improve one or more of the 67 leadership competencies, when leaders
receive feedback or recognize they are exhibiting one of the 19 stallers or stoppers,
“this is a serious problem, and [the leader’s] goal should be to neutralize this potentially
career-stopping issue.”8 Table 14-1 illustrates the 19 career stallers and stoppers.9 Note
that of the 19 identified derailers, more than half relate to a leader’s social capacity.

Table 14-1. 19 Career Stallers and Stoppers

Arrogant Insensitive to Others Overdependence on a Single


Betrayal of Trust Lacks Ethics and Values  Skill
Blocked Personal Learner Lacks Composure Overly Ambitious
Defensive Key Skill Deficiencies Over-managing
Failure to Build a Team Non-Strategic Performance Problems
Failure to Staff Effectively Overdependence on an Political Missteps
 Advocate Poor Administrator
Unable to Adapt to
 Differences

Source: Michael Lombardo and Robert Eichinger, FYI: For Your Improvement, 5th ed. (Minneapolis:
Lominger International, 2009), 417–526.

In some cases, because a strategic leader’s behavior was acceptable at the lower
levels of the organization, that leader might escape a specific derailer. However, if the
leader demonstrates similar behavior at the strategic level, the behavior may no longer
be acceptable. For example, Dotlich and Cairo point out that:
Until arrogance leads to derailment, a leader may be seen as extremely self-
confident. It is only when self-confidence goes over the edge to arrogance that
trouble strikes. Every trait has a positive side that helps people achieve success.
It’s only when you are unaware of the trait, deny its existence, or fail to see its
downside that you run into problems.10

C h a pte r 14   5 0 5
Moreover, they point out that CEOs and strategic leaders are more vulnerable to
derailers than other leaders. They suggest that this is due, in part:
to the pressures that confront the leader at the top of the pyramid. Being in the
spotlight, feeling responsible for the careers of thousands of employees, dealing
with intense pressure for short-term results while investing in the long term,
leading in an era of incredible speed and complexity—all of this can activate
derailers.11
Additional factors that can lead to derailment include: 1) at the strategic level,
it may be much more difficult to mitigate unintended consequences than at lower
levels; 2) a leader’s existing derailing traits may not manifest themselves until that
leader is in a position with no constraints on his or her behavior. Hence, it is more
likely at the strategic level that one’s bellicosity or arrogance can go unchecked in the
formulation of policy. Though the stakes are higher at the strategic level, this point is
not to suggest that there are psychological factors that stress someone into excessive
dependence on these derailing traits and behaviors. Rather, it is to illustrate that the
ramifications of decisions and policies—whether positive or negative—are amplified
at the strategic level.

Additional Factors: New Data from Senior-Leader Interviews


Interviewed senior leaders identified a number of factors that could derail a strategic
leader. Collating their responses—many identified by more than one of these lead-
ers—resulted in a list of 20 factors:
1. Being unhealthy (mentally or physically).
2. Suffering from intellectual stagnation. Similar to hubris, this influences leaders
to guide their organizations based on their experience, which by definition is the
old way of doing something. Consequently, their ability to apply relevant solutions
to the problem diminishes quickly.
3. Losing focus. Not paying attention; loss of energy and getting tired.
4. Being self-serving. Perceptions that leaders are in it for themselves, and not for a
greater good, can compromise strategic decisionmaking. Understandably, this sets
a bad example for other leaders and subordinates within the organization.
5. Being unable or unwilling to be collaborative. Leaders who demonstrate this trait
are unable to build rapport and relationships. This is a problem because the higher a
leader progresses in an organization, the more need there is for collaboration—being
a team player, in a sense.
6. Being unable to communicate effectively. Communication is critical to being a
strategic leader both when acting internally and when dealing with external stake-
holders. Inadequacies relating to this ability decrease transparency, buy-in, and an
organization’s reputation.

5 0 6   L e a d in g a t t h e S t r a te g i c L eve l
7. Being closed-minded. Success at the strategic level requires that a leader appreci-
ate the quality of an idea, give credit to its source, and/or take action based on its
merits—irrespective of its origin.
8. Being egotistical. Egotism can manifest itself in manifold ways, from leaders
appreciating their own brilliance and reveling in their previous accomplishments,
to self-promotion and self-aggrandizement. An example of this behavior, given by
a senior military leader, referenced President Obama’s firing of his Afghanistan
commander, General Stan McChrystal, in June 2010:
First, it wasn’t just his ego; it was the fact that his ego got to the point where
he could set an environment within his leadership that would make the types
of comments that they made. It wasn’t the case that he made that many com-
ments; his people did, and he allowed it to happen. He created the climate and
the environment. Second, his own ego came into play when Rolling Stone sent
the article back to him and said, “Are there any additions, deletions? Did we get
it right?” He came back and said, “Yeah, you’ve got it right.”
9. B eing incapable of working within time constraints. Because the VUCA strategic
environment often requires leaders to operate while facing severe time compressions
or constraints, two flawed approaches are often adopted: overdeliberation and haste.
When leaders are overly deliberate, they make decisions too slowly—potentially
resulting in loss of momentum or being overtaken by events. Conversely, rushing
through the decisionmaking process may result in a failure to consider important
second- or third-order consequences, or to overlook significant ethical concerns.
10. Misunderstanding the culture of the organization. Not understanding an orga-
nization’s culture can have deleterious consequences for a strategic leader. When
leaders fail to understand their organizations’ cultures, they run the risk of mak-
ing decisions or instituting policies that run counter to their cultures with a high
probability of disruptive results.
11. Possessing an inability or unwillingness to listen to others. Coming in with the
answer while ignoring what others are saying typically results in losing virtually
all support and participation by and within the strategic leadership team.
12. Being a jerk. An integral component to successful leadership is having a positive
attitude and outlook. Arrogant leaders who look down on their coworkers or are
rude or boorish often create a hostile work environment contributing to disaffec-
tion instead of productivity.
13. Inability to build and lead a team. “Can’t do everything by yourself as a strategic
leader.”
14. Being excessively proud. While strategic leaders typically have several accomplish-
ments of which they can take justified pride, becoming absorbed in these successes
can lead to loss of focus and the vital need for collaborative—proactive but also
sometimes humble—leadership, especially during a crisis. “People lose perspective
on that, and so suddenly it’s all about ego, and it’s about the wrong things, or it’s
about things that distort what they’re trying to do.”

C h a pte r 14   5 0 7
15. Being a poor judge of people. Not having the right people in the right jobs and
not holding those in the jobs accountable, often resulting in less than acceptable
organizational performance.
16. Being disloyal. Similar to being ego-driven, strategic leaders can be led astray
by a lack of alignment between their personal and professional goals. As Vice
Admiral Norm Ray, Spectrum Group Executive and former President, Raytheon
International Europe, explained:
One of the largest destroyers of upward mobility is disloyalty. And that can be
either overt or indirect. When a leader senses that a subordinate—and this
can be a CEO subordinate to a board—is hearing without listening and is not
working in a focused way on the agenda and the known wishes of the leader or
the board, when that perception is allowed to take root, for me, that’s the big-
gest destroyer of careers. The person for whom you are working, the board for
whom you are working, they have to believe that your focus is on their success.
And sometimes that can be the mission, that can be the vision, or that can be
the growth. They need to believe that your focus is on whatever they told you to
focus on. They believe that you are not operating in self-interest, that you are
not a careerist. That’s an oxymoron, because I am telling you the way to be a
careerist is to be loyal and look after the boss.12
17. Lacking courage or conviction. Consistently standing up for one’s beliefs, prin-
ciples, and people can be one of the most important characteristics an effective
strategic leader possesses. Conversely, lacking these behaviors can be incredibly
damaging to any strategic leader. Even the appearance of timorousness or cow-
ardice will diminish the stature and reputation of any strategic leader. A strategic
leader has to be a very strong person. He or she must be willing to stand up for
what is right no matter what. Even if they do not win they must speak up. They
must remind people to think about the other side.
18. Failing to appreciate the importance of leading by example. Although “leading
by example” has become a cliché approach to leadership, there are nonetheless
many significant ramifications for presenting an image of one’s leadership style to
employees. Strategic leaders need to recognize that everything they do is amplified
and even their virtues may be vastly overplayed or over-invested in and cause real
problems. For example, if they are very macho and energetic, they may drag the
whole organization into macho and energetic problems. Or they may be extremely
patient and cause the whole organization to work too slowly.
19. Lacking confidence in others. Not sharing responsibilities or recognition. People do
their best work when they feel valued and are accomplishing meaningful tasks. Lack-
ing confidence in others may lead to setting lower expectations of their abilities and
performance, devaluing their efforts, and micromanaging, thus stunting their ability
to grow and build their sense of self-worth. Professional performance by people who
feel undervalued will lead to suboptimized organizational performance and in all
likelihood failure to meet expectations by stakeholders, customers, and constituents.

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20. Being indecisive. The strategic leader is there to make decisions. If the leader
continues to defer tough decisions, or chooses to create yet another steering com-
mittee or task group to study the issue, the leader is not making needed decisions.
Without timely decisions, the organization will suffer.

—Pause—With the above derailer discussions in mind, review the three following
mini case studies. Reflect on the traits or behaviors that may have contributed to
these strategic leaders’ failures.

“It’s Always Worked, So Why Change?”—A Mini Case


Study
Adrian Fenty, the youngest mayor in the history of Washington, DC, accomplished
much of what he set out to do upon winning the mayoral race in 2006 at the age of 35.
Although he strongly supported Michele Rhee—the controversial chancellor of DC’s
public schools systems who fired hundreds of teachers and dozens of principals for
what she said was poor performance—he believed District residents appreciated that
overhauling the school system was a meaningful endeavor. In addition, he believed that
“Building swimming pools and soccer fields affected people’s lives. His handpicked
police chief was popular across the city. When it was time to vote, the mayor was con-
fident the substance of his administration’s work would trump all.”13
Fenty felt confident that the tactics that won him the mayoralty in 2006 and his sub-
sequent accomplishments were sufficient to win his reelection primary bid. For example,
contrary to advice from Tom Lindenfeld, the mayor’s chief political strategist, Fenty
did not “pay for pollsters to measure the public mood. . . . [Rather he] relied on what
had delivered him to the apex four years earlier: door-to-door campaigning and that
internal compass that no longer seemed to work.” Fenty stated, “I’ve never polled. It’s
a decision I made 12 years ago. It’s always worked, so why change? I ran this campaign
like I ran all my campaigns.” Lindenfeld stated, “His campaign’s failing resulted from
a combination of tenor, hubris, pride and political malpractice. . . . Campaigns that win
are ones that are nimble. He’s got only one play in his playbook: knocking on doors.”14
Advisers informed Fenty that independent polls indicated that his popularity was dwin-
dling, yet he did not seem fazed. Many black voters expressed anger regarding “Fenty’s
failure to appoint African Americans to top administration posts, his approval of the mass
firings of teachers . . . and his apparent lack of concern for their struggles during an economic
downturn.” On August 29, 2010, the Washington Post published a poll showing that Fenty
trailed his primary challenger, Vincent Gray, by 17 points among likely Democratic voters.
“His wife, Michelle, later described herself and the mayor as ‘shocked’ at the poll.”

Three days later, at the last of the debates, Fenty asked for forgiveness and a
second chance and said that “even mayors can make mistakes and that people

C h a pte r 14   5 0 9
can learn from their mistakes,” words not unlike those his advisers had pro-
posed he tell voters more than two months before. . . . By September, though,
an electorate once electrified by Adrian Fenty’s youth and energy no longer
seemed to be listening.15

Tom Diemer of Politics Daily regarded Fenty’s loss to Gray as “a sobering reminder
that counts for something in politics, even when one has numerous accomplishments to
boast about.” Diemer suggested that “Fenty’s prickly personality and stand-offishness
turned off black voters.” Although Fenty had a solid record, he “also displayed a brash,
aloof personality and squabbled with the city council.”16 Two commentators suggested
Fenty squandered the success and goodwill that catapulted him to office. This was
because he “misread an electorate he was sure he knew better than anyone . . . ignored
advisers’ early warnings that key constituencies were abandoning him . . . shut out con-
fidantes who told him what he did not want to hear . . . and began to listen only when
the race was all but lost.”17

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. What derailed Adrian Fenty?
2. Reflecting on the discussion in this chapter, what do you believe were some of
Fenty’s derailers and how did they affect this case?

The Rise and Fall of Robert Nardelli—A Mini Case Study


In 2000, Robert Nardelli, Jim McNerney, and Jeff Immelt were in competition to succeed
Jack Welch as head of General Electric. Welch chose Immelt to take the position. As a
result, McNerney took the CEO post at 3M (and later at Boeing), and the Home Depot
board of directors asked Nardelli to be its new CEO.
Home Depot’s reputation as an entrepreneurial culture with knowledgeable and
friendly staff had served its founders Bernie Marcus and Art Blank well. Yet when
Nardelli came in, he sought to change the culture to one with a strong command and
control structure focused on numbers. He invested more than $1 billion in new technol-
ogy to increase store efficiency and provide data for managing processes. “[Nardelli]
declared that he wanted to measure virtually everything that happened at the company
and hold executives strictly accountable for meeting their numbers.”18 Kenneth Langone
(the third cofounder of Home Depot, a member of its board of directors, and a strong
Nardelli ally) stated in 2004, “This guy is maniacal about goals, objectivity, [and] accom-
plishments within the boundaries of the values of the company.”19

510  L e a d in g a t t h e S t r a te g i c L eve l
Nardelli’s strategy to regain and sustain competitive advantage focused on three
key areas: 1) improving profitability in existing markets, 2) offering new services such
as home installation of Home Depot products, and 3) expanding into new markets,
particularly the construction contractor business.
Victoria Griffith reported in 2005 that during Nardelli’s first 4 years, “Home Depot
revenues grew by $19 billion, or 42 percent, and earnings per share . . . increased by 71
percent. With the U.S. construction sector heating up—and with the company setting
its sights on the $50 billion China market—Home Depot seems well on its way to meet-
ing its aggressive growth objectives.”20 In fact, one of Home Depot’s board members,
renowned business consultant and author Ram Charan, stated that, “Deep, lasting
culture change requires an integrated approach that remodels a company’s social sys-
tems. The leadership team of Home Depot employed a remarkable set of tools to do
that.”21 Charan stated of the culture in 2005, “the Home Depot culture…with its focus
on process, hard data, and accountability—is different from what it was five years ago.
And there are concrete signs of its acceptance by employees.”22 He concluded, “Home
Depot’s experience shows—in perhaps the best example I have seen in my 30-year
career—that a cultural transition can be achieved systematically, even under less than
favorable conditions, not simply through the charisma of the person leading the change
but through the use of mechanisms that alter the social interactions of people in the
organization.”23 Yet, shortly thereafter, in January 2007, the board of directors forced
Nardelli to resign as CEO.
The lack of confidence Nardelli related to his executives did not stop with words.
Nardelli actively reassigned executives he believed were not successful. As one report
in 2007 stated:

Managers who weren’t hitting their numbers—”making plan” in Home Depot


parlance—were routinely culled, their posts often filled with former executives
from GE. That led some bitter insiders to dub the company “Home Gepot.” In
fact, since 2001, 98 percent of Home Depot’s top 170 executives are new to their
positions; 56 percent of the changes involved bringing new managers in from
outside the company.24

As a result, “100 percent of [Nardelli’s] top 170 managers left during his tenure.”25
As Business Week reported, during the period from 2000 to 2006, Home Depot’s
stock price declined by 6 percent, whereas its smaller archrival, Lowe’s Companies, saw
its stock price soar by more than 200 percent. Consequently, Nardelli “could no longer
rely on other sterile metrics to assuage the quivering anger his arrogance provoked
within every one of his key constituencies: employees, customers, and sharehold-
ers.”26 With respect to the first of these constituencies, most of Home Depot’s 355,000
employees resented the replacement of many thousands of full-time store workers with
legions of part-timers (many of them ex-military).

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At the customer level, two factors compromised Home Depot’s position. First,
Nardelli’s strategy of expanding into the contractor supply business, while cutting
costs and streamlining operations, pushed individual customer service lower on the
company’s priority list. At the same time, the loss of experienced employees who pos-
sessed the skills to provide support to its thousands of do-it-yourself customers resulted
in a decline in Home Depot’s customer-service ranking. In fact, they fell to “dead last
among major U.S. retailers, 11 points behind Lowe’s.”27 This diminution of the com-
pany’s reputation worried shareholders.
Brian Grow of Business Week reported that on Thursday, May 28, 2006:

[T]he half-hour that defined Nardelli’s tumultuous tenure began at 9 a.m. . . .


That was the time set for the giant home-improvement retailer’s 2006 annual
meeting in a Wilmington [Delaware] ballroom. . . . But something strange soon
became apparent. . . . The board was not there. Citing time constraints and the
imperative of working on important matters back home at Atlanta headquarters,
the eminent overseers of Home Depot failed to show up at their own event.
That left Nardelli to handle the meeting on his own. He did that in an abrupt 30
minutes. Shareholders were limited to just one question each. A digital clock
timed them: One minute, then the microphone cut off.28

Shareholders, business press, and analysts were not impressed, and their responses
were scathing. “He seemed unaware or unconcerned that he had embarrassed his
board, enraged his shareholders, turned off his customers, and reinforced his reputa-
tion for arrogance and a tin ear.”29 Nardelli left abruptly in 2007, but not without first
negotiating a $210 million severance package.
Lee Bolman and Terrence Deal noted, “Nardelli’s old boss, Jack Welch, called him
the best operations manager he’d ever seen.” They concluded, however, “as talented
and successful as he was, Nardelli flamed out at Home Depot because he was only
seeing part of the picture. He was a victim of one of the most common afflictions of
leaders—seeing an incomplete or distorted picture as a result of overlooking or misin-
terpreting important signals.”30 Diane Brady of Business Week describes this myopia:

Nardelli clearly cared about Home Depot. When it came to measures like profit-
ability, his push was paying off. What he neglected was the touchy-feely stuff:
the enthusiasm of his people, a sense of humility before his board, the care and
feeding of his shareholders. It all seems so soft and irrelevant, until the injured
egos decide to fight back.31

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. What derailed Robert Nardelli? “Nardelli arrived at Home Depot full of bombast,
standing up at one meeting to say ‘you guys don’t know how to run a f…ing business,’

512   L e a d in g a t t h e S t r a te g i c L eve l
according to a former senior executive at Home Depot.”32 As a senior executive at
Home Depot, how would you feel if in one of your first meetings with the new CEO,
the CEO told you that he or she did not value your business knowledge?
2. Reflecting on the discussion in this chapter, what do you believe were some of
Nardelli’s derailers and how did they affect this case?

What Happens in Vegas Doesn’t Always Stay in Vegas: A


GSA Mini Case Study33
I will mourn for the rest of my life the loss of my appointment and its role in leading a
vital and important part of the government of the United States of America.
—Martha Johnson, Resigned GSA Administrator, Speaking to the House Oversight
and Government Reform Committee Hearing, April 16, 201234

On April 2, 2012, the Office of the Inspector General (OIG) of the U.S. General
Services Administration (GSA) issued its final report of an investigation of the admin-
istration’s Public Buildings Service (PBS) unit. The OIG found that expenditures by
the administration’s Public Buildings Service (PBS) unit for its 2010 Western Regions
Conference in Las Vegas were “excessive and wasteful.” Furthermore, “that in many
instances, GSA followed neither federal procurement laws nor its own policy on con-
ference spending.”35 Subsequently, Martha N. Johnson, GSA Administrator from 2010
to 2012, resigned.
Two of the 46 strategic leaders interviewed for this book are Johnson and Darren J.
Blue, an Associate Administrator at GSA and an Industrial College of the Armed Forces
alumnus. Johnson’s interview and follow-up discussion took place prior to the Las Vegas
scandal; Blue’s occurred afterwards.36
This case study clearly illustrates the risk of derailment taken by strategic leaders
who fail to focus adequately—and simultaneously—on strategic leadership and opera-
tional accountability.

Background
General Services Administration
Established by President Harry Truman in 1949 to streamline the administrative
work of the federal government, GSA consolidated into one federal agency the task
of administering supplies and providing workspaces for federal employees at least
cost. Its mission was to achieve cost savings by reducing redundant services and
expenses, and gain greater buying and leasing savings through economies of scale.
GSA is organized into two primary offices—The Public Buildings Service, serviced

C h a pte r 14  513
by 11 regions throughout the country, and The Federal Acquisition Services. GSA
employs more than 12,000 workers; and had an operating budget in 2012 of approxi-
mately $26 billion. Annually, it manages $500 billion in assets; 9,600 federally owned
or leased buildings; 215,000 owned or leased vehicles; and 478 historic properties. The
services it provides pay for more than 98 percent of its budget; the remainder comes
from congressional appropriations.37
The Public Buildings Service (PBS), provides workspace for more than one million
workers across all three branches of government. It establishes policy for and manages
the design, construction, leasing, and maintenance of office buildings, courthouses,
laboratories, border stations, data processing centers, warehouses, and childcare
centers. In addition, it repairs, alters, and renovates existing facilities and disposes of
surplus government properties. A leader in energy conservation and sustainable design,
PBS commissions the country’s most talented artists to provide artwork for new federal
buildings, and conserves a substantial inventory of artwork from the past.38
The Federal Acquisition Service (FAS) facilitates federal agencies’ purchase of high
quality, low-cost goods and services from vetted commercial vendors. This includes
real and personal property use and disposal; transportation, travel, fleet, supply, credit
card, and communication management; and the management of a government-wide
information systems resources program.39
Historically the two Services have enjoyed a high degree of autonomy as co-
equals with separate concerns and little unity of effort. According to Associate
Administrator Blue, the differences result in a lack of communication and collaboration
between PBS and FAS employees and senior leaders. “Which is too bad,” said Blue,
because, “when you look out across the agency, the most successful and influential
leaders are those who have expertise in both mission areas.” Blue also pointed out
that most PBS regional senior executives involved with the Western Regions Confer-
ence were in their jobs for extremely extended periods. Consequently, “They had a
great deal of autonomy to operate within their sphere of authority and influence—and
we’re talking about a significant sphere of influence controlling large budgets and
a large number of personnel, and having influence with other senior executives of
government and industry.”40

Martha Johnson’s Leadership Experience


Johnson was GSA’s chief of staff during the Clinton administration from 1996 to 2001,
under then-administrator David Barram. Between 2001 and 2009, she was vice president
of SRA International, a strategic consulting group that served federal clients, and vice
president of culture for Computer Sciences Corporation, managing corporate change
for a 90,000-person organization. Prior to 1996, she served as assistant deputy secretary
for the Department of Commerce. Immediately before her 2009 GSA appointment, she
served as a co-lead for the Obama Presidential Transition Agency Review Team for GSA.

514  L e a d in g a t t h e S t r a te g i c L eve l
Recent GSA Leadership History
Despite the unanimous approval of Johnson’s Presidential nomination in 2009 by the
Senate Homeland Security Committee, Sen. Kit Bond (R-Mo.) used his senatorial “privi-
lege” to block her nomination for nearly 10 months. In the two years between Johnson’s
eventual confirmation in 2010, and the resignation of its previous confirmed administrator,
Lurita Dolan, in April 2008, the organization churned through four acting administrators.41
Johnson noted that that while she was serving as chief of staff to Barram, GSA
had a strong leadership team in place; but by the time she took her post in February
2010, the agency was not the same. “A quarter of the executive positions were empty,
strategy was non-existent, major customers viewed our partnership askance, labor
relations were acrimonious, the information technology infrastructure was inadequate,
the schedules and other contract vehicles were burdensome, the Federal Acquisition
Institute had atrophied, government-wide policy lacked focus, and a more expensive
leasing portfolio had ballooned.”42

Johnson’s Approach
Johnson considered herself the ideal person for the top job. As a former GSA chief of
staff and vice president of culture at Computer Sciences Corporation, she expressed
confidence that she possessed the insight and wisdom to change culture and perfor-
mance at GSA.43 Johnson’s key leadership and management themes included:
Strategic Level Focus: Johnson defined strategic leaders as focused on the overall
organization—including the external operating environment—and operational leaders as
focused within the organization. Johnson asserted that strategic leaders must balance
between two competing functions, how they change and motivate the organization
towards the visionary future state and how they ensure the organization accomplishes
its current and near-term requirements. “It’s the art of helping people stay on track,
perform, and produce while in motion. It’s changing out the engine as the train’s going
down the hill.”44
Redefining GSA: When President Obama issued guidance requiring federal agen-
cies to become more sustainable, Johnson announced GSA’s BHAG (Big Hairy Auda-
cious Goal) of “zero environmental footprint.” Her reasoning was that many employees
felt the federal government lacked respect for GSA, and that the BHAG would rally them
around the idea of re-branding themselves as an innovative organization, valued and
appreciated by its major stakeholders and customers. “You throw that up to an organiza-
tion and you see if it sticks,” she said. “I’m not running a command and control organi-
zation. I’ve got to lead through strategy and influence.” Johnson said she immediately
gained the support and buy-in of both senior leaders and employees. “They said, ‘Yeah,
we’re going to do this.’ They were all waiting for a shared direction,” she said. “We have
to do a whole lot of work about really understanding what [the BHAG] means and so on,
but we’re going to the moon. We know we’re going to the moon.”45

C h a pte r 14  515
Strategic Leadership Team: Johnson said it was “very clear in [her] mind that the work
of the first nine months was getting the right people in the job.” She replaced most senior
leaders, and now met weekly with them individually and as a team. Johnson admitted that
while she sometimes dug “deep into the organization” and “fussed around with” things,
she had to trust her senior team. She emphasized, “I can’t know everything”46
SLAM—A Tough Problem-Solving Technique: Johnson used what she called a
SLAM (not an acronym) to bring the right people to the table for a day to solve a tough
problem, so the organization did not have to deal with it over a prolonged amount of
time. According to Blue, Johnson would “put everybody in that community of interest
in a room and say ‘we’re not leaving until we fix it.’” He perceived Johnson as having “a
consensus decision-making approach based on realities, rather than on people’s per-
sonal opinions or the impact on their specific organizational entity or pet programs.”47
Blue offered two examples of Johnson’s problem-solving success: GSA’s information
technology upgrade from “eight years behind” to “10 years ahead” of other federal
agencies, and her early advocacy for a mobile workforce—measuring productivity by
results, rather than by attendance. “She embraced the concept of being where you
need to be.” According to Blue, in these cases she helped shape the beginnings of a
“new management environment.” Johnson “forced change, and used technology to
usher it in.”48
Taking Initiative and Making Mistakes: Johnson said she exhorted her leaders and
employees to “fail fast, fail forward, and fail fruitfully,” while assuring them that—if they
were taking innovative risks—she had their backs.49
Organizational Metrics, Data, and Feedback: Johnson admitted that, while GSA
was “measuring the nickels and the dimes, we haven’t got the $100 right. We haven’t
got the $1,000 right. We can measure out the wazoo, but it’s not attached to anything
that has any meaning.”50 Johnson noted that while she relies “on all kinds of people
to talk to her,” she “doesn’t want to hear a whole lot of data and detail, because I feel
as if the library is out there and I can go learn it if I need it.” Rather than scanning data,
she was “more interested in spending my time trying to scan people and identify what
they have, what they think, what they’re offering, and what they’re uncovering. That’s
additional helpful information for me.”51
The Risks of Government Leadership: Johnson said one risk factor inherent to gov-
ernment—and not corporate—leadership is “the potential for something to come out
of left field and take you down. Lord knows what it might be, but it can be some crazy
aspect of some operational part of the organization, and it turns into a political firestorm
and it takes you down. I do think you have to have a stomach around that.”52

The Scandal
The biannual PBS Western Regional Conference (WRC) for Regions 7, 8, 9, and 10 typi-
cally hosts about 300 people selected from thousands of Western Regional employees.

516  L e a d in g a t t h e S t r a te g i c L eve l
The stated purpose of the WRC is to provide an opportunity for job skill training and
the exchange of ideas between participants from the four regions. From October 25-29,
2010, Region 9 hosted the 2010 WRC at the M Resort Spa Casino just outside Las Vegas,
Nevada. Some time afterwards, Susan Brita, GSA deputy administrator, requested that
the GSA OIG investigate allegations of possible excessive expenditures and employee
misconduct in connection with the 2010 WRC. Questionable costs included those for
eight off-site planning meetings, food and beverages, and entertainment that featured a
comic, a clown, and a mind reader—totaling $823,000. Unbelievably, GSA also awarded
Jeff Neely, PBS’s Region 9 commissioner who organized the conference, a $9,460
bonus—months after top GSA officials knew about the OIG’s initial findings of excessive
spending. On April 2, 2012, the release date of the final OIG report, Johnson resigned
her position as administrator, saying that she was stepping aside to “allow a new team
to lead GSA as it rebuilds itself from major missteps.”53
Johnson testified before the House Committee on Oversight and Government
Reform on April 16, 2012, that the WRC had been an economical, straightforward set
of training sessions in the late 1990s, but that things had changed. By the time she
took GSA’s helm, the event had “evolved into a raucous, extravagant, arrogant, self-
congratulatory event that ultimately belittled federal workers and would stain the very
work that other committed staff and I were preparing to do.” Johnson testified that
GSA leaders “apparently competed to show their people how much entertainment
they could provide, rather than how much performance capability they could build.”
As for her own leadership and management role, she told Committee members “the
expensive planning for that conference was well underway when I entered GSA, and I
was unaware of the scope.”54

What Went Wrong?


A review of Johnson’s initiatives shows which strategic leadership activities received
her primary attention and focus, and which she gave only scant focus and oversight.
A few examples follow.
Senior Leadership Team: Although GSA’s senior leaders may have viewed Johnson
as motivating and inspiring, that sense of urgency, excitement, and dedication did not
extend to GSA’s line managers and employees—and certainly not to the degree exhib-
ited by NASA employees focused on “going to the moon.”55 As Johnson admitted, she
needed the strong support of her leadership team, because she could not “know every-
thing.” She stressed the importance of getting the right leaders into the right jobs, and
she moved some team members into different positions. However, despite Johnson’s
efforts, Blue contended that she was never able to gel a senior team. “She had a couple
people, primarily staff that surrounded her, who generally bought in and supported
her vision. Unfortunately, these people had nothing to do with the core business lines
or shaping that environment for the future.” Moreover, “There was zero connection

C h a pte r 14  517
between her 12th floor [which housed Johnson’s office] and the rest of the organization.”
Blue argued, “Those not on the 12th floor couldn’t see how they could get there, as they
were constrained by current missions, responsibilities, and commitments.”56
Leadership Tenure: The long tenure of many GSA executives resulted in enclaves
of subordinate empires, and a culture in which leaders are “entrenched in . . . strategies
and processes and defending costs.”57 Blue suggests that environment fails to allow for
the seepage of new thought and ideas. In addition, the high turnover of Acting Admin-
istrators between 2008 and 2010, and policies enacted during those years, resulted in a
“structure that allowed the regional leaders to lead and manage their regions without
any oversight and to spend funds and take actions as they deemed appropriate,” Blue
said. “Many of these acting people were well versed in GSA mission, but lacked stra-
tegic vision.”58
Grasp of the Agency’s Primary Business Processes: Although Johnson asserted
that she did not “want to hear a whole lot of data and detail,” and that she could gain
information as she needed it, Blue stated, “Johnson disregarded her own need for a
thorough understanding of the deep functions of GSA.” Blue pointed to Johnson’s Over-
sight Committee testimony as evidence of this misstep. “When you can’t sit in front of
committee staff members—who are by no means experts in your agency—and answer
basic questions, it doesn’t bode very well for your command over your organization.”
Blue noted, “She was not able to answer with any degree of certainty how the budget
worked, how the performance management system worked, how the executive review
board worked that granted the bonus to a leader who was under investigation.” The
fact is, according to Blue, “She failed to respond effectively because she was divorced
from day-to-day operations.”59
Big Ideas: As noted in Chapter 1, General David Petraeus emphasized, “Stra-
tegic leadership is fundamentally about big ideas and about four tasks connected
with those big ideas. First, getting the big ideas right; second, communicating them
effectively; third, ensuring that they are executed properly; and fourth, capturing,
sharing, and institutionalizing lessons learned, and best practices identified during
the execution of those big ideas.”60 Blue said Johnson “focused most of her time on
the big ideas, but never addressed the consequences of the big ideas and the oppor-
tunity costs to the business.” For example, “Because of the zero-footprint initiative
[BAHG], there was a downturn in the income stream for capital funds. No one was
keeping his or her fingers on the pulse until it was bad.” Blue said that, while the
BAHG was a good idea, setting the goal and even developing an online dashboard
to track employees’ progress “can’t change the fact that there are vacant buildings
in Washington, D.C. and you’re paying a light bill, the security, the heat and cooling,
etc.” While “saving the environment was great,” Blue stated, “it was an idea discon-
nected from the realities of mission and performance goals, and accomplishing daily
tasks efficiently and effectively.”61

518   L e a d in g a t t h e S t r a te g i c L eve l
Metrics and Performance Factors: Johnson and her staff were meeting self-set
milestones on workforce mobility, the use of new technology, converting federal fleets
to green technologies, and publicly addressing GSA’s vision for supporting the federal
government more broadly. However, the ability of GSA’s business units to benefit from
those goals was dubious at best, according to Blue. While GSA was telling federal cli-
ents, “These efforts will help you reduce your need for square footage,” PBS was still
evaluating executives’ performance based on their ability to manage revenues gener-
ated on price per square foot.”62 “Consequently,” Blue contends, “the vision to make
buildings more efficient and reduce the number of square feet managed by PBS senior
managers resulted in their concern that revenues would drop, as every square foot
lost equated to lost dollars.” The managers feared that such loses would translate into
inadequate measures of effectiveness, and even worse, poor performance ratings.63
According to Blue, Johnson never communicated to senior leaders or managers that
she understood how the new efficiencies would affect revenue and performance evalua-
tions, or reassured them that it was all part of a planned and managed change process.64
Being Wary: Johnson’s warning to other government leaders that a “crazy aspect
of some operational part of the organization can turn into a political firestorm and take
you down” was a premonition of what was to come. As a direct result of the Las Vegas
scandal, Johnson resigned from her position as GSA administrator.

Bottom Line
There was clearly a deep divide in GSA between the work happening on Johnson’s “12th
floor,” and the daily business of the agency. To their credit, executive staff members
were being forward thinking, and spending time on new and emerging initiatives. Ulti-
mately, strategic leaders must shape their organizations and mold their leaders into the
forms they envision—an iterative process that does not happen overnight. However, as
underscored throughout this book, a strategic leader cannot be divorced from opera-
tions and be successful. Blue believes Johnson and her staff suffered from that lack of
connection. “Without that bridge between the day-to-day goings on and the strategic
thinking and envisioning the organization’s future, the strategic leader can create a
divide that results in neither areas of a strategic leader’s focus and responsibility per-
formed adequately.” As examples of those activities at GSA, Blue listed: budget develop-
ment and analysis; senior-leader evaluation processes; dealing with people who were
not supporting the vision; and failing to extract performance from current structures.”65
In the end, Johnson was visionary, and she worked an aggressive agenda. She
created changes in organizational culture, shifted the workforce, and established new
metrics for evaluating progress and success. Yet, she did these things without shaping
or paying much attention to what her President or Congress asked of her. Blue argues,
“What she cared for was the new vision, attending to that vision, and shifting culture
to that vision, while ignoring all the things for which she was inherently responsible.”66

C h a pte r 14  519
Johnson failed to recognize that her first responsibility as a strategic leader was the
health, viability and sustainability of GSA.

—Pause—Take a moment to reflect on the following questions and capture your


initial thinking and insights.
1. What insights did you gain from this case study?
2. Reflecting on the discussion in this chapter, what do you believe were some of
Johnson’s derailers and how did they affect this case?
3. What are some of the leadership strategies covered in this book that Johnson could
have employed to prevent her derailment?

Organizational Failure
The previously discussed derailers are traits of individual strategic leaders. Similarly, an
organization’s attributes can compromise its future success. Researchers and practitio-
ners link most organizational failures directly to the strategic leader or executive team.
Yet there are other reasons for organization failure, e.g., a deep and strong culture that
was unable to adapt to the changing external environment in which skill sets became
obsolete quickly. According to Jim Collins:
Every institution is vulnerable, no matter how great. No matter how much
you’ve achieved, no matter how far you’ve gone, no matter how much power
you’ve garnered, you are vulnerable to decline. There is no law of nature that
the most powerful [organization] will inevitably remain at the top. Anyone can
fail and most eventually do.67
Collins suggested that the decline in organizational excellence and success pro-
ceeds in sequence through five distinct stages, including:

Stage 1: Hubris born of success. Very successful organizations—and their lead-


ers—can get caught up in their own success, often becoming insulated by their achieve-
ments. The momentum gained from that success can sometimes continue to move the
organization in a positive direction even though its leaders may “make poor decisions
or lose discipline.” Collins cautioned, “Stage 1 kicks in when people become arrogant,
regarding success virtually as an entitlement, and they lose sight of the true underlying
factors that created success in the first place.”68
Stage 2: Undisciplined pursuit of more. In Stage 2, organizations “stray from
the disciplined creativity that led them to greatness in the first place, making undis-
ciplined leaps into areas where they cannot be great or growing faster than they can
achieve with excellence, or both.” Collins noted that the organization is setting itself
up to fail when it “grows beyond its ability to fill its key seats with the right people. . . .”

5 2 0   L e a d in g a t t h e S t r a te g i c L eve l
Furthermore, he suggested, “Although complacency and resistance to change remain
dangers to any successful enterprise, overreaching better captures how they might fall
[italics in original].”69
Stage 3: Denial of risk and peril. Moving into Stage 3, “internal warning signs
begin to mount, yet external results remain strong enough to ‘explain away’ disturb-
ing data or to suggest that the difficulties are ‘temporary’ or ‘cyclic’ or ‘not that bad,’
and ‘nothing is fundamentally wrong.’” During this stage, typically leaders fail to
acknowledge or discount negative data and look for and amplify data that reinforces
(rationalizes) their positive view of organizational direction and competence.70
Stage 4: Grasping for salvation. Collins states that in this stage, “The cumulative
peril and/or risks-gone-bad of Stage 3 assert themselves, throwing the enterprise into a
sharp decline visible to all.” This leads to the strategic leader seeking a way to respond.
Does the leader get the organization to respond, “By lurching for a quick salvation or
by getting back to the disciplines that brought about greatness in the first place?” If
the leader chooses salvation, then Collins argues that they have entered Stage 4. He
states, “Common ‘saviors’ include a charismatic visionary leader, a bold but untested
strategy, a radical transformation, a dramatic cultural revolution, a hoped-for block-
buster product, a ‘game changing’ acquisition, or any number of other silver-bullet
solutions.” Though these drastic action approaches may seem to have merit, he argued,
“they do not last.”71
Stage 5: Capitulation to irrelevance or death. Collins warns that, “The longer
a company remains in Stage 4, repeatedly grasping for silver bullets, the more likely
it will spiral downward.” It is in Stage 5 that hope is eventually lost as the setbacks
accumulate and false starts become expensive drains on the organization both finan-
cially and spiritually. As a result, “leaders abandon all hope of building a great future.”
Moreover, Collins explained, “In some cases, their leaders just sell out; in other cases,
the institution atrophies into utter insignificance; and in the most extreme cases, the
enterprise simply dies outright.”72
The following two abridged case studies illustrate the strategic leader derailers and
their intersection with the stages of organizational failure presented by Collins. As you
read and reflect on the first case study (Swiss Watches), identify what stages the watch-
makers entered and the stage you believe they are in now. With the second case study
(Rubbermaid), reflect on the various stages the organization encountered and when it
entered the fifth stage. Both of these examples show how organizational hubris led to a
number of missed opportunities in the first case and to ultimate demise in the second.

Swiss Watches—A Mini Case Study


Prior to the late 1960s, Switzerland clearly dominated the global watch-making world.
The estimated Swiss world market share in 1968 was 65 percent and accounted for

C h a pte r 14  5 21
more than 80 percent of its profits. Just 10 years later, its market share plummeted
below 10 percent.73 While Japan had very little market share in 1968, shortly thereafter
it dominated watchmaking. The advent of the quartz-movement watch was responsible
for this sudden global shift.
In 1962, the Swiss formed the Centre Electronique Horloger (CEH) in Neuchatel,
Switzerland, to develop electronic watches. In 1967, they developed the world’s first
quartz watch prototypes.74 “ Yet, when the researchers presented this idea to the Swiss
watch manufacturers in 1967, it was rejected. After all, it didn’t have any bearings. It
didn’t have any gears. It didn’t even have a mainspring. It couldn’t possibly be the future
of watches.”75 In fact, “So confident were the manufacturers in that conclusion that they
didn’t even protect the idea.”76
In 1967, the CEH researchers “displayed the watch to the world at the annual watch
congress. Texas Instruments of America and Seiko of Japan walked past, took one look,
and the rest is history.”77 The Seiko 35 SQ Astron was the first quartz watch to enter pro-
duction and was commercially available December 25, 1969. Despite the significant head
start, the Swiss watch industry as a whole failed to see the enormous market potential of
the quartz watch and the Swiss watch industry remained moribund throughout the 1970s.78
Futurist Joel Barker asks, “Now, why didn’t the Swiss appreciate this wonderful
invention that their own people had created? They were blinded by the success of their
old paradigm and all their investments in it. And, when confronted with a profoundly
new and different way to continue their success into the future, they rejected it. Because
it didn’t fit the rules they were already so good at.”79
However, in 1983, Switzerland’s watch-making industry began to rebound under
the leadership of Nicolas Hayek, who developed a new, bold style of wristwatch identi-
fied as the “Swatch.”80 To date, Switzerland remains the leading exporter of watches
(based on overall value).81

The Demise of Rubbermaid—A Mini Case Study


In 1994, Fortune reported that Rubbermaid was the most admired company for innova-
tion.82 Wolfgang Schmitt, Rubbermaid’s CEO, focused on providing new and innovative
products. Finkelstein noted:

For years the organization had been infused at all levels with a raison d’etre—
to meet consumer needs with new products and continuous improvement
in product design. With this single-minded devotion to product innovation,
Rubbermaid lived for decades in a cushy world of premium prices, ineffective
competition, and malleable customers.83

5 2 2   L e a d in g a t t h e S t r a te g i c L eve l
Rubbermaid was constantly praised for its extraordinary rate of innovations
in products and designs. Journalists liked to call the company a “new product
machine.” Management gurus loved to cite the amazing number of new prod-
ucts Rubbermaid had introduced in each previous year. Gradually, the company
itself adopted these kinds of descriptions in its public statements and annual
reports. In assessing its own performance, Rubbermaid let the rate of new
product innovations take priority over almost everything else.84

Furthermore, this singular focus . . . encouraged Rubbermaid to add to the capa-


bilities it already had in abundance, while further neglecting the capabilities
it had never bothered to develop. Rushing new products so rapidly to market
left little time for market research and no time for market testing. As a result,
Rubbermaid grew more and more out of touch with what its customers wanted,
which was often lower prices.85

To make matters worse, Rubbermaid’s powerful retailers (such as Wal-Mart, which


represented more than 20 percent of Rubbermaid’s sales) began to demand better prices
and services. Rubbermaid’s myopic strategy left many areas of its operations relatively
unattended. Inventory, accounting, waste, manufacturing processes, and distribution
were mismanaged and neglected. Rubbermaid’s leaders gave little scrutiny to streamlin-
ing their processes and reducing costs—it was not in their corporate DNA. Contributing
to their problems was a sudden increase by approximately 80 percent in the price of
resin, a major component in manufacturing any plastic product. According to their 1995
annual report, Rubbermaid lost $250 million on resin costs alone.86
Rubbermaid attempted to pass on the rising material costs to its retail customers.
Although some mass retailers agreed, Wal-Mart refused to absorb the price increase. CEO
Schmitt flew to Arkansas to ask Bill Fields, head of Wal-Mart stores, to reconsider. Carol
Troyer, a former Rubbermaid executive, commented on Schmitt’s meeting with Fields:

I thought it was a vindictive kind of meeting that said, “Yes, you may be Rub-
bermaid and you’re big Rubbermaid and you got the great name and all that,
but you’re not going to tell us what to do. We’re not going to take your price
increase, and we really don’t care what it does to you.” And they dropped a
number of our products for a couple years, just dropped those products. That
impacts the company tremendously. To me, it was one of the first signs of the
decline of Rubbermaid.87

Schmitt refused to go along with Wal-Mart’s hard line on price. As a result, Wal-Mart
pulled Rubbermaid products off the shelf and replaced them with manufacturers will-
ing to jump into the void. For example, Sterilite, a little-known Massachusetts company
adept at making Rubbermaid look-alikes at lower cost, saw double-digit sales increases in

C h a pte r 14   5 2 3
1995 while Rubbermaid’s earnings fell 30 percent that year. Although Schmitt eventually
acceded to Wal-Mart’s demands for products that were cheaper and manufactured to its
specifications, long-term economic damage resulted. Wal-Mart’s pullback coupled with
rising material costs and poor operations management jeopardized the company’s future.88
Jim Collins noted that, “From 1994 to 1998, Rubbermaid raced through the stages
of decline so rapidly that it should terrify anyone who has enjoyed a burst of suc-
cess. . . . The company eliminated nearly six thousand product variations, closed nine
plants, and wiped out 1,170 jobs.” He also pointed out that Rubbermaid:

[M]ade one of the largest acquisitions in its history, recast incentive compensa-
tion, and initiated a radical marketing bet on the Internet as “a renaissance tool.”
Yet Rubbermaid continued to sputter, embarked on a second major restruc-
turing in a little over two years, and on October 21, 1998, sold out to Newell
Corporation, forfeiting forever the chance to come back as a great company.89

These latter two case studies clearly illustrate that organizational success and stra-
tegic leader blindness to a changing external environment devastated the Swiss watch
industry and Rubbermaid. Success can breed a strong confidence in some leaders that
they know what they are doing—which can lead to arrogance and unwillingness to listen
to those who are trying to warn them of dangers—until it becomes too late. As Ross
Perot espoused, “I want those three-headed snakes brought to me while they are still
babies—before they have a chance to multiply.”90

—Pause—Take a moment to reflect on the information in table 14-2: Comparison of


Strategic Leader Derailers. Provided as a tool, this table can aid in the explanation
of failures made by strategic leaders. It can aid in self-discovery by illuminating the
traits, habits, and behaviors that can serve as causes for strategic failure. If you have
experienced failure at the strategic level in the past, you should refer to this table in
an effort to gain perspective on the possible reasons for the failure.

Finally, it is incredibly important to note that these derailers are behaviors or traits
that are currently part of your personality—just because you become aware of them
doesn’t mean they will go away. However, the most successful route to managing these
derailing traits begins with awareness that one has them.

5 24   L e a d in g a t t h e S t r a te g i c L eve l
Table 14-2. Comparison of Strategic Leader Derailers
1. DOTLICH AND CAIRO 2. JACOBS 3. FINKELSTEIN 4. LEADERS 5. LOMBARDO 6. COLLINS
INTERVIEWED AND EICHINGER ORGANIZATIONAL
DERAILERS
1. Arrogance: You’re right and every- 1. Inability to get along. Poor inter- 1. Flawed executive 1. Health. 1. Unable to adapt Stage 1: Hubris—
body else is wrong personal skills, especially in early mindsets that cloud a differences Born of Success
2. Melodrama: You always grab the and mid-career, particularly with company’s perception of 2. Failure to keep 2. Poor Stage 2: Undisci-
center of attention subordinates: reality learning administrator plined pursuit of
• Not being good listener. More
• Inability to give and receive criti-
3. Volatility: Your mood swings drive cism (feedback) 2. Delusional attitudes that 3. Losing focus 3. Overly ambitious Stage 3: Denial of
business swings • Viewing conflict as bad, rather than keep the inaccurate reality risk and peril
something to be managed in place
• Being arrogant

4. Excessive Caution: The next deci- 2. Failure to adapt: 3. Breakdowns in commu- 4. Self-serving 4. Arrogant Stage 4: Grasping
sions you make may be your first. • Sticking to a successful strategy or nications systems devel- for salvation
style that no longer works oped to handle potentially
• Not getting out of the box urgent information

5. Habitual Distrust: You focus on the 3. “Me only” syndrome: 4. Leadership qualities that 5. Inability to be 5. Betrayal of trust Stage 5: Capitul-
negatives • Excessive concern with own keep a company’s execu- collaborative ation to irrelevance
outcomes tives from correcting their or death
• Narcissistic dependence on others course

6. Aloofness: You disengage and 4 . Fear of action: 6. Inability to com- 6. Blocked personal
disconnect • Fear of failure municate. learner
• Risk avoidance
• Study to death

7. Mischievousness: Rules are made 5. Unable to rebound 7. Wedded to a set 7. Lack of compo-
to be broken • Overcome by setback way of doing things sure
8. Eccentricity: It’s fun to be different • Defensively blame others 8. Caught up in their 8. Defensiveness
just for the sake of it own egos

C h a pte r 14   5 2 5
9. Passive Resistance: Your silence is 9. Time constraints 9. Lack of ethics and
misinterpreted as agreement values
Table 14-2. Comparison of Strategic Leader Derailers
1. DOTLICH AND CAIRO 2. JACOBS 3. FINKELSTEIN 4. LEADERS 5. LOMBARDO 6. COLLINS
INTERVIEWED AND EICHINGER ORGANIZATIONAL
DERAILERS
10. Perfectionism: Get the little things 10. Culture 10. Failure to Build
right even if the big things go wrong a Team
11. Eagerness to Please: Winning the 11. Not listening 11. Failure to staff
popularity contest matters most effectively
12. Being a jerk 12. Insensitive to
others
13. Inability to build 13. Key skill defi-
and lead a team ciencies
14. Pride 14. Non-strategic
15. Wrong people 15. Overdepen-

5 2 6   L e a d in g a t t h e S t r a te g i c L eve l
dence on an
advocate
16. Being disloyal or 16. Overdepen-
gossiping dence on a single
skill
17. Perceived as 17. Overmanaging
weak
18. Inappropriate 18. Performance
role modeling problems
19. Trying to do 19. Political mis-
everything yourself steps
20. Indecisive
1
David Dotlich and Peter Cairo, Why CEOs Fail (San Francisco: Jossey-Bass, 2003), xxii.
2
T. Owen Jacobs, Strategic Leadership: A Frame of Reference (Washington, DC: National Defense University, 2005), 76.
3
Sydney Finkelstein, Why Smart Executives Fail (New York: Penguin, 2003), 18.
4
Personal interviews with strategic leaders.
5
Michael Lombardo and Robert Eichinger, FYI: For Your Improvement, 5th ed. (Minneapolis: Lominger International, 2009), 417–526.
6
Jim Collins, How The Mighty Fall (New York: HarperCollins, 2009), 20–22.
In summary, this final chapter examined actions and traits that can lead to both
personal and organizational failure for strategic leaders. Remember that in the section
on self-awareness in chapter 3, part II, a critical component for success at the strategic
level is self-awareness, complemented by continual learning and self-development.
Successful, effective strategic leaders clearly identify and understand their strengths
and weaknesses. This chapter demonstrated how the failure to learn and mitigate per-
sonal weaknesses could derail a career and his or her organization. When a strategic
leader is able to identify personal weaknesses and build a team to make up for his or
her shortcomings, the chance of failure decreases dramatically.

Notes
1
David Dotlich and Peter Cairo, Why CEOs Fail (San Francisco: Jossey-Bass, 2003), xv.
2
Sydney Finkelstein, Why Smart Executives Fail (New York: Penguin, 2003), 8.
3
Ibid., 18.
4
Dotlich and Cairo, xix.
5
Ibid., xxii.
T. Owen Jacobs, Strategic Leadership: The Competitive Edge (Washington, DC: National Defense
6

University, 2005), 76.


7
Michael Lombardo and Robert Eichinger, FYI: For Your Improvement, 5th ed. (Minneapolis: Lominger
International, 2009), ii.
8
Ibid., iv.
9
Ibid., 417–526.
10
Dotlich and Cairo, xxiv.
11
Ibid., xxv.
Personal interview with VADM Norm Ray, Spectrum Group Executive; former president, Raytheon
12

International, Europe, and NATO Assistant Secretary General for Defense Support.
Nikita Stewart and Paul Schwartzman, “How Adrian Fenty lost his reelection bid for D.C. mayor,”
13

The Washington Post, Thursday, September 16, 2010, available at <www.washingtonpost.com/wp-dyn/


content/article/2010/09/15/AR2010091500834.html>.
14
Ibid.
15
Ibid.
16
Tom Diemer, “Washington Mayor Adrian Fenty Defeated by Council Chief Vincent Gray,” Politics
Daily, September 15, 2010, available at <www.politicsdaily.com/2010/09/15/washington-mayor-adrian-
fenty-defeated-by-council-chief-vincent/>.
17
Stewart and Schwartzman.
Brian Grow, “Out at Home Depot: Behind the flameout of controversial CEO Bob Nardelli,” Busi-
18

nessWeek, January 4, 2007, available at <www.businessweek.com/bwdaily/dnflash/content/jan2007/


db20070103_456441.htm>.
19
Quote provided by Grow.
Victoria Griffith, “Winning Hearts and Minds at Home Depot,” strategy+business, Spring 2005, 38,
20

available at <www.strategy-business.com/article/05107?gko=45088&tid=27782251&pg=all>.

C h a pte r 14   5 2 7
Ram Charan, “Home Depot’s Blueprint for Culture Change,” Harvard Business Review, April 2006,
21

61.
22
Ibid., 70.
23
Ibid., 62.
24
Grow.
David Herold and Donald Fedor, Change The Way You Lead Change (Stanford, CA: Stanford Business
25

Books, 2008), 123.


26
Grow.
Brian Grow and Susan McMillan, “Home Depot: Last Among Shoppers,” June 19, 2006, available at
27

<http://web.ebscohost.com/ehost/detail?vid=4&hid=18&sid=17de66ef-c4f9-4a85-85e2-829256feec60%
40sessionmgr10&bdata=JnNpdGU9ZWhvc3QtbGl2ZSZzY29wZT1zaXRl#db=buh&AN=21124686>.
28
Grow.
Lee Bolman and Terrence Deal, Reframing Organizations, Fourth Edition (San Francisco: Jossey-Bass,
29

2008), 4.
30
Ibid.
Diane Brady, “Being Mean Is So Last Millennium,” BusinessWeek, January 5, 2007, available at <www.
31

businessweek.com/bwdaily/dnflash/content/jan2007/db20070103_618602.htm>.
32
Ibid.
33
Case study ©Jim Browning 2012 and authorized for use in this publication. All rights reserved.
Thomas Ferraro, “Costly government conference became ‘raucous’ event,” Reuters, April 15, 2012,
34

available at <www.reuters.com/article/2012/04/16/us-usa-congress-gsa-idUSBRE83F13020120416>.
35
See <www.gsaig.gov/?LinkServID=90537F5B-FBF8-E39E-A4F0D09005742C28&showMeta=0>.
Information offered during interview with Darren J. Blue reflects his personal opinion, not an official
36

GSA position on the tenure of Martha Johnson as the GSA Administrator.


37
See <www.gsa.gov/portal/category/21354>.
38
Visit GSA’s Web site at <www.gsa.gov/portal/category/100000>.
39
See <www.gsa.gov/portal/content/103369>.
40
Personal interview with Blue.
41
See Robert O’Harrow, Jr., and Scott Higham, “Doan Ends Her Stormy Tenure as GSA Chief,”
The Washington Post, May 1, 2008, available at <www.washingtonpost.com/wp-dyn/content/arti-
cle/2008/04/30/AR2008043001271.html>.
42
Martha Johnson, “Statement of Martha N. Johnson, Annapolis, Maryland, Committee on Over-
sight and Government Reform April 16, 2012,” available at <http://oversight.house.gov/wp-content/
uploads/2012/04/4-16-12-GSA-Johnson.pdf>.
43
Personal interview with Martha Johnson, Administrator, General Services Administration (GSA);
former vice president of culture at Computer Sciences Corporation.
44
Ibid.
45
Ibid.
46
Ibid.
47
Personal interview with Blue.
48
Ibid.
49
Personal interview with Johnson.

5 2 8   L e a d in g a t t h e S t r a te g i c L eve l
50
Ibid.
51
Ibid.
52
Ibid.
53
Martha Johnson, “Statement.”
54
Ibid.
55
Personal interview with Blue.
56
Ibid.
Jay Partin, “Fixing the GSA,” American Thinker, May 22, 2012, available at <www.americanthinker.
57

com/2012/05/fixing_the_gsa.html#ixzz1vb9DD2ny>.
58
Personal interview with Blue.
59
Ibid.
David Petraeus, videotaped presentation to students at the Industrial College of the Armed Forces,
60

August 2009.
61
Personal interview with Blue.
62
Ibid.
63
Ibid.
64
Ibid.
65
Ibid.
66
Ibid.
67
Jim Collins, How the Mighty Fall (New York: HarperCollins, 2009), 8.
68
Ibid., 20.
69
Ibid.
70
Ibid., 21.
71
Ibid.
72
Ibid., 22.
Joel Barker, Discovering the Future: The Business of Paradigms Master Training Manual (Burnsville,
73

MN: Charthouse International, 1990), 80.


74
Smithsonian Institution, “The Quartz Watch,” available at <http://invention.smithsonian.org/cen-
terpieces/quartz/global/switzerland.html>.
75
Barker, 80.
76
Ibid.
77
Ibid.
78
Smithsonian.
79
Barker, 80.
The Swatch Group Ltd., “History of the Swatch Group,” available at <www.swatchgroup.com/en/
80

group_profile/history>.
81
Smithsonian.
82
Collins, 48.
83
Finkelstein, 61.
84
Ibid.
85
Ibid., 143.

C h a pte r 14   5 2 9
Mary Ethridge, “Blame Wal-Mart for this catastrophe,” Akron Beacon Journal (Ohio), December 10,
86

2003.
Hedrick Smith, “Is Wal-Mart Good for America?” Frontline, November 16, 2004 (transcript), available
87

at <www.pbs.org/wgbh/pages/frontline/shows/walmart/etc/script.html>.
88
Ethridge.
Collins, 48.
89

90
Personal interview with H. Ross Perot, CEO of Perot Systems, 1992.

5 3 0   L e a d in g a t t h e S t r a te g i c L eve l
APPENDIX A | Overview of the Dwight D.
Eisenhower School for National Security
and Resource Strategy

Located in Washington, DC, the Dwight D. Eisenhower School for National Secu-
rity and Resource Strategy (ESNSRS) is part of the National Defense University
(NDU). Formerly known as the Industrial College of the Armed Forces, ESNSRS
is the premier Department of Defense Joint Professional Military Education
institution that links national security strategy development and implementation
with an understanding of the U.S. industrial base and other resource factors in a
global context.
The school’s mission is to prepare a select group of high-potential leaders from
the top 10 percent of U.S. Government senior civilians, military officers, international
fellows (senior foreign military), and senior managers from national and international
corporations for strategic leadership positions—with a special focus on developing U.S.
national security strategy and in evaluating, marshalling, and managing resources
in the execution of that strategy. Upon successful completion of the college’s robust
and demanding requirements, students earn a Master of Science degree in National
Resource Strategy.
ESNSRS and NDU have compelling missions—specifically, the annual charge
to ESNSRS is to help more than 300 students develop into national leadership assets
(both government and private sector). Recognizing that the skills, knowledge, and
abilities required for success at the highest levels are different from those that these
high-performing students have experienced thus far in their careers, ESNSRS faculty
strive to produce highly motivated, capable graduates who possess:
• expertise in strategic critical thinking and decisionmaking combined with a
thorough understanding and commitment to ethical conduct and exemplary
leadership
• capacity for strategic vision—one that gains buy-in from organizational members,
stakeholders, customers, and key external leaders
•p  erspective that is thoroughly strategic, joint, and interagency
• a bility to evaluate and apply the lessons of history
• comprehension of the dynamics of international relations and formulation of foreign
policy
• comprehension of and commitment to the constitutional process of national security
decisionmaking

A p p e n d i x A  5 31
• understanding of national and international economics and the health and strategic
direction of the industrial base that supports national security and national military
strategies
• solid grounding in acquisition processes and resource policies and management, as well
as expertise in joint doctrine, logistics planning, and employment of military forces
• a bility to lead and manage organizational change (often transformational change)
• ability to build relationships and rapport and exercise influence in an environment
that is much more lateral (peer level) in nature and without clear subordination such
as that found at lower levels
• ability to build and maintain executive-level teams and guide these teams to effec-
tive performance
• a bility to lead and manage large organizations.
As part of this effort, ESNSRS develops courses and teaches these successful
operational leaders (the average age is in the mid-forties) the competencies and
strategies needed to be effective executive leaders. Its academic program consists
of a core curriculum and electives/research. The core curriculum covers National
Security Strategy, Strategic Leadership, Military Strategy and Logistics, Econom-
ics, Acquisition, in-depth study of international regions, and a field study of U.S.
industry in a global context. Additionally, the elective and research programs enable
students to explore selected topics in greater depth. A National Security Strategy
Exercise and production of analytical reports of various industries and specifically
identified public and private business enterprises enhance the integration of all the
learning opportunities.
In essence, the senior leadership team (commandant, deputy commandant, and
international affairs advisor along with deans, department chairs, and faculties)
designed the ESNSRS curriculum to enhance the ability of students to think stra-
tegically, develop strategic vision and strategic plans, and lead at the strategic level.
Furthermore, the designed curriculum and learning activities promote student skills
as future senior leaders to manage resources, develop and implement programs for
transformation, exploit emergent information technologies, and create environments
that put the highest value on ethical behavior. Intrinsic to these goals is the internaliza-
tion of a joint, interagency, and multinational perspective and a broad education that
places national security decisions in the context of historical, political, social, cultural,
economic, and military trends.
In general, ESNSRS uses the fall semester to emphasize the understanding of
domestic and international political-military and economic concepts in the develop-
ment of national strategy along with principles of strategic leadership and managing
change at the strategic level. These themes are still present in the spring semester, but
that part of the academic year provides increased emphasis on the analysis of defense
and other national security resource sectors, acquisition processes and policies, and

5 3 2   L e a d in g a t t h e S t r a te g i c L eve l
the assessment of how present and future private-sector capabilities and planning
influence, and perhaps alter, national strategy.
The current complex and uncertain security environment requires the broadest
possible understanding of the international and domestic contexts for U.S. national
security. This environment demands a thorough familiarization with all the instru-
ments of state power, as well as instruments that may be beyond the control of states.
Moreover, it demands creative strategic thinking and a strong ethical base. Due to
combined dangers to the homeland as well as international security, tomorrow’s
leaders and policymakers need to be effective in the widest range of settings—indi-
vidual Service, joint, interagency, intergovernmental, multinational, and the private
sector—in order to secure U.S. interests when confronting a wide variety of both old
and new security challenges that arise at an ever-increasing rate. ESNSRS is commit-
ted to ensuring that it executes a curriculum that fully meets these future strategic
leaders’ needs.
For example, one of the school’s objectives is to ensure that graduates understand
economic principles and processes and relate them to political objectives as policy
advisors and policymakers who confront contemporary problems. To strengthen this
learning objective, ESNSRS uses the Oxford Economics Ltd. Global Macro (economic
forecasting) Model in an economic policy exercise that asks students to develop recom-
mendations for U.S. tax and spending changes to deal with mounting fiscal deficits.
The Oxford Model is used by major corporations and financial institutions includ-
ing various departments of the U.S. Government, World Bank, Asian Development
Bank, government departments, and central banks around the world for economic
forecasting and policy planning. ESNSRS is one of the few academic institutions in
the world (including Oxford University’s Executive Education Program) to use this
highly sophisticated model to prepare future government leaders for real world stra-
tegic economic challenges.
Building upon the first semester’s study and development of national strat-
egy, the spring program of studies and research challenges students to assess the
interdependence of economics, acquisition, logistics, and technology in various
industrial sectors that support the Nation in both peace and conflict. Students
examine current policies and trends affecting the Nation’s ability to utilize its
resources for its national security, and they develop, evaluate, and recommend
alternative policies that may enhance the robustness and responsiveness of the
industrial and logistical bases to support and sustain national strategy. In addi-
tion, they study various industry sectors and undertake field trips throughout the
United States and foreign countries to study public and private business enterprises
related to national security.
Based on its robust, diverse, intense, rigorous, and highly successful educational
programs, both government and nongovernment leaders continue to perceive ESNSRS as

Appendix A 533
one of the best and most comprehensive executive development programs in the Nation.
For additional information regarding ESNSRS, NDU, the National War College, or
other information—including free publications—please visit <http://www.ndu.edu/>.

5 3 4   L e a d in g a t t h e S t r a te g i c L eve l
APPENDIX B | Senior Leaders Interviewed
in 2010–2012

INTERVIEWEE SENIOR-LEVEL EXPERIENCE


1 Ms. Renée S. Acosta President and CEO, Global Impact
2 Mr. Wayne Arny Former Deputy Under Secretary of Defense
(Installations and Environment) for Secretary
Robert Gates
3 ADM Stan Arthur, USN Former Vice Chief of Naval Operations; former President of
(Ret.) Lockheed Martin Missiles and Fire Control
4 AMB Joyce Barr Assistant Secretary of State for Administration; former Interim
Chancellor, Industrial College of the Armed Forces (ICAF);
Ambassador to Namibia (2004–2007)
5 Mr. Darren Blue Associate Administrator for Emergency Response and Recov-
ery, General Services Administration (GSA)
6 GEN James Cartwright, Former Vice Chairman of the Joint Chiefs of Staff; former Com-
USMC (Ret.) mander, U.S. Strategic Command
7 GEN George Casey, Former Chief of Staff of the Army; former Commanding General,
USA (Ret.) Multi-National Force–Iraq
8 LTG Claude Christian- Director of the Center for Joint and Strategic Logistics,
son, USA (Ret.) National Defense University; former Director for Logistics,
Joint Staff
9 Mr. Kevin Cox Executive Vice President for HR at American Express
10 Dr. Richard Danzig Chairman of the Center for a New American Security; former
Secretary of the Navy
11 Mr. Mark Foulon Professor of Economics at ICAF; former Acting Under Secre-
tary of Commerce for Industry and Security; Treasury Chief of
Staff for International Affairs; consultant with McKinsey
12 Mr. Mark J. Gerencser Executive Vice President, Booz Allen Hamilton, co-author of
Megacommunities
13 GEN Michael Hayden, Principal, The Chertoff Group; former Director of the Central
USA (Ret.) Intelligence Agency; Principal Deputy Director of National
Intelligence; Director, National Security Agency (NSA)
14 LTG Ron Iverson, USAF CEO of LGS Innovations (formerly Bell Labs); former 7 th Air
(Ret.) Force Commander and Deputy Commander of United States
forces in Korea

Appendix B 535
INTERVIEWEE SENIOR-LEVEL EXPERIENCE
15 Ms. Martha Johnson Administrator, GSA; former Vice President of Culture at
Computer Sciences Corporation
16 GEN George Joulwan, President, One Team, Inc.; former Supreme Allied Commander
USA (Ret.) Europe (SACEUR)
17 Dr. Jeremy Kaplan Business consultant; former Director of Technical Integration
Services at the Defense Information Systems Agency (DISA)
and the DISA Chair for ICAF
18 AMB Pat Kennedy Under Secretary for Management, Department of State
19 Dr. James V. Koch Board of Visitors Professor of Economics and President
Emeritus at Old Dominion University; co-author of Presidential
Leadership with Jim Fisher
20 GEN Charles Krulak, President, Birmingham-Southern College; Board of Directors
USMC (Ret.) for Union Pacific; nonexecutive Director for Aston Villa British
Soccer Club; former USMC Commandant; former Vice Chairman
of MBNA and Chairman and CEO for MBNA Europe Bank
21 Dr. John Langford President and CEO of Aurora Flight Sciences Corporation
22 VADM Conrad Vice President for Science, Computer Sciences Corporation;
Lautenbacher, USN former Director of NOAA; President and CEO of the Consortium
(Ret.) for Oceanographic Research and Education (CORE); Deputy
Chief of Naval Operations (Resources, Warfare Requirements,
and Assessments) in charge of Navy programs and budget
23 Mr. Michael Lawrence National Security Agency Chair at ICAF; NSA Chief of the
Legislative Affairs Office; former Director, Office of Strategic
Communications, Business Plans and Operations, National
Reconnaissance Office (NRO)
24 Mr. Ted Leonsis Chairman and CEO of Monumental Sports and Entertainment—
owns and operates the Washington Capitals (NHL), Washington
Wizards (NBA), Washington Mystics (WNBA), and Verizon
Center; former AOL senior executive; venture capital investor;
filmmaker and digital entrepreneur; philanthropist; and author
of The Business of Happiness
25 AMB Bob Loftis Acting Coordinator for Reconstruction and Stabilization; for-
mer Leader for Pandemics and Status of Forces Negotiations,
Department of State
26 VADM Wally Senior Director, Mission Assurance/Business Execution; Ray-
Massenburg, USN theon Integrated Defense Systems; former Commander Naval
(Ret.) Air Systems Command
27 Mr. John Matheny Office of Secretary of Defense for Policy (OSD-P); former
OSD-P Chair for ICAF; Military Assistant to VP Mondale and VP
George H.W. Bush; former Director of Operations and Equip-
ment Standards for the United States Golf Association
28 Mr. Bob McDonald Chairman, President, and CEO of Procter and Gamble

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INTERVIEWEE SENIOR-LEVEL EXPERIENCE
29 LTG Dave Melcher, USA President of ITT Defense and Information Solutions; former
(Ret.) Deputy for Budget, Assistant Secretary of the Army
30 GEN Richard Myers, Holder of the Colin Powell Chair of Leadership, Ethics, and
USAF (Ret.) Character, NDU; former Chairman, Joint Chiefs of Staff
31 AMB Nancy Powell Director General of the Foreign Service, Department of State
32 VADM Norm Ray, USN Spectrum Group Executive; former President, Raytheon
(Ret.) International, Europe; NATO Assistant Secretary General for
Defense Support
33 VADM Ann Rondeau, President of NDU; former Deputy Commander, U.S. Transporta-
USN tion Command
34 Dr. William Rupp, M.D. VP Mayo Clinic and CEO of Mayo Clinic Jacksonville
35 Mr. Mark Samson Operating Partner, Praesidian Capital; former Managing Direc-
tor, GetzlerHenrich, New York
36 Mr. Peter Schlote CEO of Tesat-Spacecom Gmbh and Co. KG, Backnang, Germany
37 AMB Paul Simons State Department Chair for ICAF; former Ambassador to Chile;
former Deputy Assistant Secretary of State for Energy and
Sanctions
38 Mr. Jay Sloan President of J.J. Sloan and Associates; former SES leader at
Defense Intelligence Agency (DIA): Director of Policy Sup-
port; Defense Intelligence Officer for East Asia and the Pacific;
Director of Estimates
39 Mr. Gordon Smith Former Executive, American Express
40 Mr. Bob Stevens Chairman and CEO of Lockheed Martin
41 Mr. Bob Stone Author and Speaker; former Director for Reinventing Gov-
ernment for VP Gore; former Deputy Assistant Secretary of
Defense for Installations; co-author of The Ethics Challenge:
Strengthening Your Integrity in a Greedy World and Confessions
of a Civil Servant: Lessons in Changing America’s Government
and Military
42 RADM Bob Sutton, President, Basic Engineering Concepts and Technologies;
USN (Ret.) former Vice President and Director of the Systems Engineering
and Ranges Business Groups (ITT Industries); Director, Navy
International Program Office
43 Ms. Cynthia Valles Executive Vice President, American Express; former Industry
Chair and Visiting Professor for ICAF from American Express;
Executive Vice President, Customer Service International,
American Express
44 Ms. Linda Washington Senior Policy Advisor for Community Initiatives, U.S. Depart-
ment of Transportation (DOT); Chair, Local Federal Coordinating
Committee Combined Federal Campaign of the National Capital
Area; former Assistant Secretary for Administration, U.S. DOT
45 Dr. John Yaeger VP Academic Affairs, NDU (Provost Equivalent)

Appendix B 537
INTERVIEWEE SENIOR-LEVEL EXPERIENCE
46 Mr. Dave Zuercher Executive Vice President, International and Insurance
Services, Wells Fargo and Company

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APPENDIX C | Executive Assessment at
NDU1

In the small unit he had commanded, everyone knew him, loved him, and
trusted him, and he was a success at his work. But with a larger unit, his
mistrustfulness, his air of gloom, and his silence prevented him from being
successful. Events proved clearly that he was only another example that every
leader has his limitations, which are fixed not only by his intelligence and his
learning, but to a great extent by his personality.
—General Aleksei A. Brusilov
Soldier’s Notebook

The driving force behind developmental assessment is the logic that (a) good
leaders add value to the units/organizations they lead, and (b) developmental assess-
ment is effective in improving both current effectiveness and long-term potential.
Especially at the higher levels, leaders add value by enhancing the competitive
advantage of their organizations. They do so by understanding, interpreting, and
mastering the strategic environment, on the one hand, and by integrating functions
and processes within the organization, on the other. This broad range of respon-
sibilities demands more in the way of knowledge and skills, particularly thinking
skills, than is needed for success at lower levels. Put another way, leaders advance
largely on the basis of successful performance in the positions they have occupied.
However, success at each higher level demands not only that which produced success
earlier, but also something new. Developmental assessment provides an in-depth
understanding of where a person now is and what may be needed in addition if
future challenges are to be met.
So developmental assessment is future oriented. To be successful, it must integrate
current assessment with the individual’s own personal goals. Development in some
areas is more or less continuous throughout life for most people. For example, they
develop somewhat greater wisdom, tolerance for diversity, and a time perspective as
they age. This kind of development may be relatively painless. However, development
in other areas may not be automatic with time. For example, gain in tolerance for
uncertainty and risk is not automatic. Nor is the capacity for divergent thinking, or
the skills required to extract the very best of everyone in a highly diverse executive
decision team. In these areas, development will take deliberate effort and may be hard;

Appendix C 539
it definitely will not be painless. It is for this reason that the full participation of the
individual is essential.
This, of course, raises a second important point about developmental assess-
ment. The counselor must never impose his/her personal values on the individual.
The counselor—and the developmental assessment itself—must always be an aid to
the individual, and the process must always be voluntary if the assumption is that the
individual fully and truthfully responds to the assessment instruments. Put another
way, the counselor must never invade the individual’s privacy. The counselor and the
assessment process itself are invited guests within the individual’s private space, and
must behave in this manner.
Therefore, the first step in developmental assessment is to understand the indi-
vidual’s goals, which define what the future will require. The second is to take a pro-
found look at the individual’s current assets and liabilities. Understanding where the
individual is now, in relation to where he or she wants to go, enables that person and
the counselor in conjunction to create a plan for development.
Most National Defense University students are at a transition point in their lives.
They are generally at the top of the tactical- or purely operational-oriented echelons
in their organizations and are pointing in the near-term toward the mid-range of
more general leadership and management with a longer term direction toward the
top levels. So the particular instruments chosen for inclusion in this assessment bat-
tery, and the attributes they assess, are designed to enable the discovery of specific
developmental needs at the middle and top levels. Typically, these will fall within one
or more of three broad areas:
1. Cognitive Capacities. As one progresses from lower to higher levels of an orga-
nization, perhaps the greatest change is in the thinking skills required. At lower levels,
mastery of detail and detailed procedure is essential. In many cases, leaders add value by
knowing “how the procedure goes” better than anyone else. That rarely is the case at the
highest levels. The progression of thinking skills goes from mastery of detail and fact to
mastery of analytic logic to mastery of integrative process. (The word logic deliberately
was not used in relation to integrative because logic itself is formal and integration may
need to occur “outside the box,” i.e., may need to consider options that logically should
not exist.) Similarly, tolerance for uncertainty and the capacity for reaching conclusions
that do not rest on complete fact must increase. For some, it is painful to move away from
the comfortable world of knowing what is absolutely and factually correct to the world
where factual correctness is sometimes of lesser importance. The assessment battery
contains several different measures of cognitive attributes.
2. Temperament. While we have all known top-level executives with explosive
tempers and/or the capacity to hold subordinates up to excruciating ridicule, we have
all known and much more deeply admired top-level executives who did not, but who
rather coached, built, enabled, and thus developed greater competence in others. By

5 4 0   L e a d in g a t t h e S t r a te g i c L eve l
so doing, they greatly enhanced the value of the organization’s human resources, in
most cases the organization’s most valuable asset. Therefore, temperament is hugely
important. Leaders with abominable temperaments may excel. However, those who
do are operating from the initial disadvantage of their own liabilities. They succeed
because their positive attributes not only compensate for their shortcomings but also
are enough to produce overall value. One might speculate about the success that they
might have had if the shortcomings had not existed. (Some may remember Patton as
a military genius; however, Bradley created the envelope in which Patton was able to
have perhaps what was his finest hour. Furthermore, Eisenhower was able to weigh the
incredible list of intangibles involved in the decision to put him inside that envelope.)
The assessment battery contains a number of measures of personal attributes—essen-
tially personality—that either directly or indirectly add value. In addition, it contains
measures of attributes that most likely “derail” rising leaders.
3. Perspective and Focus. This category may initially be confusing because it is
a lot like cognitive capacities. However, it differs in important ways. The cognitive
capacities are a bit like the mental tools a leader uses. Perspective and focus are more
like outcomes from using the tools. Another term for perspective would be frame of
reference. Another term for focus would be long-term vision. Here, they are separated
from cognitive capacities because both are the result of work, sometimes hard work.
They result from reflective thinking about experience and issues, and from study of
content domains related to but outside one’s own content domain. Three- and four-
star general officers in many cases are prolific readers, often in other than military
domains. Top-level executives typically have wide-ranging interests in all domains:
political, economic, sociocultural, technological, and information sciences. These are
not practitioner interests, but rather the broad-ranging quest for what may be relevant
to one’s own particular focus, either now or in the long term. Top-level executives
also typically are able to take a perspective on their own roles and their own actions in
relation to ongoing events. We call this metacognition, i.e., the ability to see one’s self,
one’s approach, and one’s actions in relation to the demands of the situation. Finally,
top-level executives typically have the capacity to separate out what is important from
what is tangential, and are thus able to work through the critical tradeoff decisions that
fall to higher level executives. To some extent, this could be a maturity factor. And the
assessment battery has some indicators of these attributes as well.

Executive Assessment Tools


The executive assessment battery includes several different instruments that provide differ-
ent kinds of measures as described. Each instrument offers a view of important attributes,
views, orientations, or preferences. When the separate pieces are integrated, they provide
a basis for assessing where an individual currently stands in his or her development. This
then is a foundation for charting a course that will accelerate development according to

A p p e n d i x C  5 41
the individual’s long-term interests and goals. In this section, we provide an overview of
these instruments and in the following section provide detailed descriptions of both the
instruments and the factors they measure.

1. Personality Profiler. According to Jungian psychology, people have preferences


for types of information, for sources they trust to give that information, and for pro-
cesses they use to evaluate that information. Some prefer to deal with hard facts (what
you see is what you get) and to come to a decision quickly (figure it out and get on with
it). Others prefer to probe for underlying dynamics, to understand the “big” picture,
and to look for contingencies before executing a given course of action. These factors
affect not only decision processes, but also the more fundamental communication
processes that may be even more important at higher levels. The MBTI® (Myers-Briggs
Type Indicator) is the instrument most often used to assess these preferences. We
use the Personality Profiler because it seems to offer a somewhat more finely grained
assessment and to have preferable psychometric properties. Specifically, it recognizes
that strength of preference is important in addition to nature of preference. (Type is
probably not a good concept.)
2. Leadership Profile Inventory (LPI). The LPI contains several individual mea-
sures, mostly of personality attributes. While probably not as important as concep-
tual skill, personality deficiencies can be fatal if they interfere with an ability to forge
strategic consensus and broad-based support for decisions. In recent years, evidence
has accumulated regarding personality dimensions. There is every reason to believe
they are important for strategic leaders (McGee, Jacobs, Killcullen, & Barber, 1996).
• Team Roles. This instrument identifies the type of group role one probably will play,
whether as leader or not. Eight role preferences are assessed: practical, driving, new
ideas, catalyst, consulting, supportive, detail, and critical judge.
• Basic Dimensions. This yields measures of the “Big Five” dimensions (see Barrick
& Mount, 1991; McCrae & Costa, 1987; Costa & McCrae, 1992; Hogan, Curphy, &
Hogan, 1994): surgency, agreeableness, conscientiousness, emotional stability, and
openness.
•L  eadership Indicators. This yields two sets of measures. One is oriented toward poten-
tial (openness and tolerance for ambiguity), and the other toward leadership motiva-
tion (dominance, emergent leadership, team orientation, and social understanding).
3. Modified Career Path Appreciation (MCPA). The Career Path Appreciation
(CPA) is a one-on-one interview designed to tap conceptual skills and to predict their
future growth. Originally developed by Stamp (1978; 1988), it provides two estimates:
One is current conceptual capacity or ability; the second is potential for growth in con-
ceptual capacity or ability. Administering a complete CPA is time and labor intensive.
For those reasons, a modified version of the CPA is used in this battery. Although not
as comprehensive, the MCPA is valid and reliable.

5 4 2   L e a d in g a t t h e S t r a te g i c L eve l
4. Strategic Leadership Development Inventory (SLDI). The SLDI provides a
thorough assessment of three broad areas (by former superiors, former peers, and
former subordinates) important to strategic leadership effectiveness: conceptual skills
and attributes, leadership skills and abilities, and negative attributes. The conceptual
skills and abilities are important for dealing with the more conceptually demand-
ing environment rising leaders will later face. The leadership skills and abilities are
measures of both leadership (e.g., transformational leadership) and personality (e.g.,
interpersonal competence). The negative attributes parallel “derailing” factors, which
sabotage leader effectiveness. The SLDI will give insights as to how individuals see
themselves and how others see them in these three areas.

Note
1
The “Executive Assessment at NDU” was written by Leadership Researcher and Scholar Dr. T. Owen
Jacobs and modified in 2011 by Dr. William Knowlton.

Appendix C  5 4 3
ABOUT THE AUTHOR

Twenty years ago, Captain James W. Browning


was Director of the Navy’s Command Excellence
and Leader Development Division, a unit for
both the Chief of Naval Operations and Bureau
of Naval Personnel, and was responsible for all
Navy officer and enlisted leadership development
policies and programs worldwide. At the time, he
was the only Active-duty Navy officer with a Ph.D.
in Leadership.
Following retirement, Dr. Browning served as
President and CEO of the Athena Group, Inc., a
leadership and management training and consult-
ing company based in the Washington, DC, area
from 1992–1996. In 1996, he joined the Library
of Congress to revamp and revitalize the training
and development function, develop the Library of Congress Corporate University in
1997, and serve as chief of the university until 2003. In 2003, he joined the faculty of
the Industrial College of the Armed Forces (ICAF) at the National Defense University.
While at ICAF, Dr. Browning served as Professor of Behavioral Science and faculty
member of the Department of Strategic Leadership—teaching the Strategic Leadership
core curriculum and the elective Lessons in Leadership. In addition, he designed and
conducted a two-part voluntary program for ICAF students, “Life after ICAF: Suc-
cess in the First 90 Days of Your Next Job.” He served as one of the faculty members
for Health Care, Transportation, and Manufacturing Industry Studies. In 2008, the
Dean of Faculty selected Dr. Browning to serve as the Chairman of the Department
of Strategic Leadership, which educates senior U.S. Government, foreign military, and
selected private-sector personnel in Strategic Leadership—developing those strategic
thinking skills and innovative approaches needed by senior leaders whose organiza-
tions face volatile, uncertain, complex, and ambiguous operating environments.
Dr. Browning is a graduate of the U.S. Naval Academy, and earned a Master of
Arts in Human Resources Management, a Master of Business Arts, and Ph.D. in
Leadership and Human Behavior. He is a member of the NeuroLeadership Institute.

A b o u t t h e A u t h o r  5 4 5
Browning

Leading

Leading
Strategic leadership has never been more important than it is
today—and never more difficult. The job of a leader is to infuse an
organization’s work with meaning that creates Purpose—and then
to make the few critical choices necessary to achieve that Purpose.
This job is simple to articulate but enormously challenging to do. I
recommend Leading at the Strategic Level to any leader trying to
step up to this challenge today. Dr. Jim Browning of the National
Defense University Eisenhower School—one of the great leadership

Strategic Level
institutions in the world—has captured the insights of scholars and

at the
the lessons of practitioners who, together, have reflected on what is
required for truly strategic leadership in a VUCA world.

—Bob McDonald, Chairman, President and CEO of Procter & Gamble


in an Uncertain World

at the
Dr. Browning skillfully mixes leadership theory with many clarifying
insights and examples from practitioners who actually performed
where the rubber meets the road. What makes this so valuable
is that his analysis focuses upon a broad spectrum of leadership
By James W. Browning

Strategic Level
situations—business, the military, education, politics and nonprofit
organizations. This is a leadership manual that will immediately
make current strategic leaders more productive and provide those
who aspire to become strategic leaders with a road map to success.

—Dr. James Koch, Board of Visitors Professor of Economics and


President Emeritus at Old Dominion University, and co-author of
Presidential Leadership with Jim Fisher

Dwight D. Eisenhower School for National Security and Resource Strategy


National Defense University

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