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 / Winter 2005 / Issue 41(originally published by Booz & Company)


Our 10 Most Enduring Ideas

5. Disruptive Technology (1,513; 39.0 percent). As Clayton Christensen noted in The Innovator’s Dilemma, technological innovation radically alters markets by undermining incumbent companies — which are vulnerable because their offerings are all tailored to the needs of their existing customers. Change feels like a betrayal of those customer relationships. Thus the makers of personal computers trumped Digital Equipment; Wal-Mart trumped Sears; and downloadable music is trumping the recording industry. “You can be doing everything for your customer,” one reader wrote, “and not see a market shift while it is occurring.” Professor Christensen’s idea lives on, to an extent, because of its two-part form. First, there is a warning: Your most cherished policies and practices — in this case, the hallowed sanctity of a successful customer relationship — can include the seeds of your undoing. Second, there is a way out: Preempt your own comfort zone, adopting a disruptive technology yourself before others beat you to it.
Related Articles:
Clayton M. Christensen, The Thought Leader Interview
Top-Down Disruption

6. Leadership Development (1,432; 37.0 percent): You don’t have to rely on “putting the right people in place.” You can train all employees to be better choosers, better strategists, better managers, and in the end, better leaders. More than a third of the respondents were drawn to this because they saw leverage here: Companies can be both more effective and more responsible with smart leadership development practices in place (several people referred to emotional intelligence in this vein). Leadership is important, not because of the leaders’ actions in themselves, but because of the actions that everyone else takes on their behalf. (For an extended view of this argument, see “The Realist’s Guide to Moral Purpose,” by Nikos Mourkogiannis, s+b, Winter 2005.) Skeptics protested that leadership development, as a concept, represented a veneer masking the dog-eat-dog realities of corporate life: “The person at the top doesn’t want an organization full of leaders and enthusiastic achievers. This puts too much strain on the CEO and his or her ability to control.” And some, like Michael Schrage, pointed out the dangers of leadership as a concept. (See “Leadership: Its Time Has Gone,” by Michael Schrage, below.)
Related Articles:
Can We Really Train Leadership?
Noel M. Tichy: The Thought Leader Interview

Leadership: Its Time Has Gone
by Michael Schrage

The bitterest business rivalry over the past decade hasn’t been the struggle between free trade and protectionism, between capital and labor, or between Microsoft and everyone else; the bitterest rivalry has been leadership versus management. Leadership won — but it’s been a Pyrrhic victory at best.

Harvard Business School’s Abraham Zaleznik articulated the difference in his classic 1977 essay “Managers and Leaders: Are They Different?” Proclaimed Professor Zaleznik, “Managers and leaders are two very different types of people. Managers’ goals arise out of necessities rather than desires; they excel at defusing conflicts between individuals or departments, placating all sides while ensuring that an organization’s day-to-day business gets done. Leaders, on the other hand, adopt personal, active attitudes toward goals. They look for the opportunities and rewards that lie around the corner, inspiring subordinates and firing up the creative process with their own energy. Their relationships with employees and coworkers are intense, and their working environment is often chaotic.”

With artfully hedged neutrality, Professor Zaleznik declared both management and leadership essential for organizational success. And thus he raised the critical business question: Which offered the superior return on investment?

Global markets provided an unambiguously clear opinion: They craved leadership. The Lord John Brownes, Jack Welches, Percy Barneviks, Carlos Ghosns, Andy Groves, and Bill Gateses are celebrated far more as innovative global leaders than as operational management exemplars. The leadership “brand” has become so powerful and compelling that successful managers are inherently considered “great leaders.” Ironically, however, people tagged as great leaders don’t have to be great business managers. Leadership is the value added; management is what gets automated, rightsized, or outsourced to Bangalore or Guangzhou.

Yet the bursting of the dot-com/telecom bubbles and the disgraceful collapses of Enron, Arthur Andersen, WorldCom, Tyco, Parmalat, etc., have cruelly constrained the brand trajectory of the leadership label. Where governance was once the longest and most elastic of leashes that let leadership stray with minimal attention, it is now a beautifully upholstered cage with 24-hour surveillance and legal advisors on call worldwide.

In other words, the global rise of governance as a business concern reflects the pathological failure of leaders to manage. Accountability, transparency, and oversight will mean something very different to CEOs and the boardroom over the next 10 years than they did in the past. A new ecology of interdependent management, leadership, and governance is arising. Striking a balance among these three imperatives will be a greater challenge in years to come. Will those who meet that challenge emerge with better leadership, better management, and better governance? Today’s “leaders” have lost the right to be the only ones with the authority and legitimacy to answer those questions.

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