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 / First Quarter 2001 / Issue 22(originally published by Booz & Company)


Monomaniacs with a Mission

Alchemists, like leaders, are formed — molded by experience — rather than educated: Education is necessary but not sufficient. Researchers at the Center for Creative Leadership, for example, have found that the best catalysts for leadership development are challenging assignments, significant bosses, and hardships that cover setbacks of all kinds. Mr. Handy discovers these types of facilitators in the family and working lives of his subjects. He cites Jean-Paul Sartre's quip that the best thing a father can do for his children is to die young! Although none of his sample experienced this tragedy, early responsibility and accountability seem to have been important.

His conclusions also support the now generally accepted finding that there is little correlation between creativity and IQ. Indeed, Mr. Handy suggests that his subjects support the theories of psychologists like Howard Gardner who contend that people possess multiple intelligences. (See "Howard Gardner: The Thought Leader Interview," s+b, First Quarter 1999.)

In particular, alchemists (again like leaders) are often distinguished by their awareness of their own feelings and empathy for others, a capacity that's been described as emotional intelligence. Some start their ventures out of a sense of outrage at what's happened to them or to others. "My businesses grow out of my experiences, usually my bad experiences," says Richard Branson, the founder of the Virgin group of companies, and probably the British alchemist best known outside Britain. "I see something done badly, which I know that we could do better — like an airline. No one was offering their customers a decent service. I was sure that whoever did so would not only have a successful company but would also change the whole industry." Such inspiration, however, may not be enough to change established organizations. Currently Branson is struggling to transform two railroad networks in what was formerly British Rail, a business whose erratic service has long outraged its customers.

None of Mr. Handy's subjects work for a large corporation, and he suggests few would survive if they did. As a result, he doesn't consider experience in a corporate context necessary for them to succeed as alchemists. Rather, he emphasizes the zeitgeist of city communities, where alchemists seem to thrive, and their professional development, for which he uses the French word formation. All 29 of Mr. Handy's subjects live in London (although he thinks Berlin may be the next hot place). They are attracted to it, he writes, because "Creative people flock where creative things are happening; where mavericks congregate, irreverence thrives and disrespect for convention and authority is accepted."

Looking again at the problems mature companies have in renewing themselves, the current travails of the AT&T Corporation and the Xerox Corporation are only the latest reminder of how easy it is, over time, to slide down the slippery slope from corporate icon to corporate idiot. But it's not a question of the IQ of the executives — these companies have been managed by some extremely bright people with stellar track records in competent companies. Consultants educated at the best business schools have counseled them. There must be some other systemic factors at work.

The extraordinarily subtle nature of some of these factors is highlighted by Clayton Christensen in his elegant book The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail. He tracks the evolution of the disk drive industry to understand the trajectories of what he calls disruptive technologies. These are technologies that undermine the viability of existing firms from below by starting as small-scale innovations in nonexistent markets and then growing up into major competitors. He documents this phenomenon in disk drives but also gives other examples, such as the emergence of the steel mini-mill threatening the large, integrated steel mills. Initially the major mills were happy to cede the markets for low-grade steel such as rebar to the minis, with their scrap-fed electric furnaces. But improvement in the minis and the quality of their product has far outstripped that of the majors. With their thin-slab casters, the minis are now threatening the integrated mills' core markets.

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  1. Works mentioned in this review.Clayton M. Christensen, The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (Harvard Business School Press, 1997), 225 pages, $27.50.
  2. Peter F. Drucker, Adventures of a Bystander (John Wiley & Sons, 1998), 352 pages, $27.95.
  3. Howard E. Gardner, Frames of Mind: The Theory of Multiple Intelligences (Basic Books Inc., 1993), 440 pages, $18.
  4. Gary Hamel, Leading the Revolution (Harvard Business School Press, 2000), 336 pages, $29.95.
  5. Charles Handy, The New Alchemists: How Visionary People Make Something out of Nothing (Random House, London, 1999), 258 pages, £18.99.
  6. David K. Hurst, Crisis & Renewal: Meeting the Challenge of Organizational Change (Harvard Business School Press, 1995), 229 pages, $24.95.
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