Leadership Styles, Life-Cycles and Corporate Culture

In the life cycle of civilizations and companies there is a twin-fold process of integration and disintegration. Civilizations or companies, when growing, expand their borders and are integrating different people, ideas, competencies, and cultures. When they cease the process of integration and expansion, they start defending their borders and building walls to keep out the energetic barbarians, and the process of internal disintegration begins. As the focus shifts from offense to defense, the focus of energy is increasingly internal rather than external. The spirit of unity of purpose increasingly becomes the spirit of self interest and internal division. Soon the body of the culture is engaged in internal warfare and self-mutilation, and the enemy does not so much conquer as to march in to fill the void created by the impotence of the old culture. Toynbee concluded that the decline of every civilization was not at the hands of an external enemy but rather an act of suicide, the loss of will, and the disintegration of the culture. Whether or not you accept Toynbee's analysis of the rise and fall of civilizations, there are clearly lessons for leaders of companies and countries. You can see these in the emerging periods of the Prophet, Barbarian and Builder and Explorer. You can also see the decay and decline beginning the dominance of the Administrator, the Barbarian and the Aristocrat. You can only hope to see an age of the Synergist, when the best qualities are held in balance.

1. “Reasonable men adapt themselves to their environment; unreasonable men try to adapt their environment to themselves. Thus all progress is the result of the efforts of unreasonable men.” George Bernard Shaw “Lean Start-Ups: Human institutions designed to create something new under conditions of extreme uncertainty.” Entrepreneurship is a management science. Those that succeed are those who can pivot, within every bad idea is the kernel of a good idea, waiting to be recognized. Most ideas are bad ideas, but move in a direction of what works in the marketplace. “Pivots” are the key. “We achieved failure.”
   1. They reality distortion field that convinces people that they know what customers want. It is usually wrong.
   2. That we can accurately predict the future. This causes you to fail the test of flexibility or adaptation.
   3. Success is following the plan.
   In the beginning is the word, the creative act, the spirit of renewal. Creative personalities, including religious prophets, seem to follow a pattern of withdrawal-and-return. They disappear into the mountains or desert. They remove themselves from the distractions of the current order and seek some vision of a better future. Their power to inspire others is only seen on their return when they are intentionally disruptive. A revolution begins and their followers can hardly be called an organization, more a group of disciples. It is disruption, not order. It is the nature of creative personalities. The vision of these prophets is like a rocket blast, a surge of energy that disturbs the old and propels movement toward something new. Often these prophets are incapable of doing their work within the framework of the old order, but must but be exiled to a new land. As new wine must be put in new bottles, so too, may the new wine of innovation require the new bottle of new organization, (Mar 2:22 And no man putteth new wine into old bottles: else the new wine doth burst the bottles, and the wine is spilled, and the bottles will be marred: but new wine must be put into new bottles.)

• Your ideas are long range and visionary.
• You are willing to make great sacrifices in time and energy to see your ideas realized.
• You tend to withdraw for long periods to work through your ideas.
• You see challenges others don’t see.
• Others see you as a bit “different,” (You were not most popular in high school!)
• You’re probably not very well organized, and you are impatient with details and administration.

• Your leader is a visionary and creative person on whose ideas the company was founded.
• Your organization is at risk because it has not yet proved its product’s viability in the marketplace.
• There is more chaos than organization, with things changing daily, reporting relationships unclear, and processes undefined.
• There is an excitement and deep belief in what you are trying to accomplish.

“To be a successful soldier, you must know history… What you must know is how man reacts. Weapons change, but man, who uses them, changes not at all. To win battles, you do not beat weapons – you beat the soul of the enemy man.” George S. Patton IV

The prophet founders of companies are soon followed by, or become themselves, barbarians, the commanding generals whose strength of will focuses energy in crisis. The idea and inspiration is not enough. Decisive action is now required to build a company. Every new company is in a crisis, a fight for survival. When business is in a fight for survival it has more in common with war than many managers realize. The ability to move quickly, with discipline and unity of energy and effort, is the key to victory.

You may be a Barbarian if…

• Your mission is clear and urgent. Conquer or die is the priority.
• You are in charge and very comfortable making decisions.
• Others accuse you of being authoritarian and not consulting them on decisions.
• You are very action-oriented and have little patience with planning and administration.

Your organization may be in the Barbarian age if…

• It is rapidly expanding, taking in new territory and integrating the conquered.
• Decisions are made quickly and the leader may only consult a small group of associates.
• Growth in products and markets is far ahead of the growth in administration, processes and organization structure.
• The demand for performance is high and those who can’t are left behind or expelled.

The period of the Prophet may be a brief moment in the history of the corporation. The age of the Barbarian should also be short. If an organization’s leadership remains in the Barbarian Age, its growth will be arrested. It must move on and enter a period of specialization, a time when systems and structure take form, and the organization matures.

Now leadership has to take on a different character. It must be shared, delegated, and increasingly collaborative. While the leaders must continue to be creative and fast moving, they must also develop increasingly specialized competence in production, service, marketing, and sales. If they do, this third stage may last for centuries in the life of civilization and decades for a corporation.

The primary leaders in this period of specialization are the Builder and Explorer. The Builders will construct the internal capacity of efficient production, while the Explorers continue the push outward, expanding the boundaries of the developing corporation or culture. In civilization the Builders are literally building cities, roads, reservoirs, libraries and stadiums; the Explorers are conquering new territory to expand the scope and influence of the culture by integrating diverse people. In corporations the Builders are creating the means of production, they are making production efficient. The Explorers are out conquering new customers and territories, seeking to dominate their competition.

In the first two stages of development, growth is highly dependent upon the individual leader, the Prophet and the Barbarian. But in the third stage, the environment – both internal and external – is becoming too complex for such centralized decision making.

You may be a builder if…

• You enjoy the “real work” of your company, making the product or delivering the service.
• You enjoy measuring the results of your work.
• You like to make decisions quickly, take action, and see results.
• You know you are not a visionary and don’t waste a lot of time dreaming about the future.
• You don’t like committees or sitting around wasting time talking.

You may be an Explorer if…

• You are a convincing and enthusiastic communicator.
• You sometimes feel that you work for you customers and others in your own company often seem to be obstacles to your goal of serving your customers.
• You believe your company should place a high priority on expansion.
• You are curious and you naturally explore for new opportunities for your company.
• You love to keep score, and you are competitive by nature.

Your organization is in the Building and Exploring Age if…

• Your products or services have proven to have a competitive advantage and you are growing rapidly.
• You are now profitable and you can add needed staff to develop management systems and to make processes routine and stable.
• You are hiring more, and the jobs are becoming more specialized.
• There is a high confidence in the future.

“Whenever an individual or a business decides that success has been attained, progress stops.” Thomas Watson, Sr. (Founder, IBM)

“The arrested civilizations have achieved so close an adaptation to their environment that they have taken its shape and colour and rhythm instead of impressing the environment with a stamp which is their own. The equilibrium of forces in their life is so exact that all their energies are absorbed in the effort of maintaining the position which they have attained already, and there is no margin of energy left over for reconnoitering the course of the road ahead, or the face of the cliff above them, with a view to a further advance.” Arnold Toynbee

Increasingly the challenge is within, not from the external environment. Increasingly the leaders are seeking to bring order to the chaos of differentiated organization created in the previous stage. Counting and recording, systems and structure, are now important. And increasingly the processes of administration become dominant in their minds, and the leaders are drawn from the administrators. In time, with Administrators in charge, counting and recording become more important than the substance and spirit of creativity, the response to the external challenge that was the source of initial growth. Increasingly the focus is on internal, rather than external, challenges. The unchecked priorities of administration will soon lead to bureaucracy.

It is difficult to accept that chaos is good. But growth, in people or cultures, implies some degree of chaos. If you want a perfectly clean and orderly house, do not have children. Children, in their most rapid periods of growth, are a mess, and create a mess around them. Mess is good. In old age, the personality becomes obsessed with order and control. Just as the bones become brittle, so too does the mind become intolerant of innovation. But, there is a middle ground, a balance between the disorder of growth and innovation and needs of administering differentiated organization.

Initially administration serves the needs of those producing and selling, building and exploring. To manage a large manufacturing or selling organization you must know where things are, how many you have, and what they cost. Initially, to “take account” is to assist those engaged in the work that serves customers. But it shifts, and it gradually appears that those producing and selling increasingly come to serve those administering. It is the turning of this tide that signals the entry into the Administrative stage.

In this fourth stage, the corporation is holding its ground, creating and maintain order. And now the successful leaders face their single greatest test. Are they able to maintain forward motion, continue to be creative, decisive, and develop increasing competence, while at the same time administering secured territory? If they can, the organization will break through to that ideal balance that assures continued health. If they can’t and the Administrator becomes the dominant leader, imposing his cultural priorities, decline will begin.

You may be an Administrator if…

• You developed your career in the corporation’s staff functions.
• You consider yourself expert at the procedures, processes and systems of management.
• Order, consistency, and smooth operations are high priorities for you.
• You devote more time to checking on what has happened, as reflected in financial and other reports, than you spend focused on future growth in products, services, or customers.

Your organization may be in the Administrative Age if…

• Much of the energy of the managers is devoted to streamlining and improving procedures.
• You are well established in your market and feel confident that customers will continue to buy from you.
• There is little sense of urgency or crisis.
• Your organization is investing in expensive offices and staff headquarters.
• New products or services are expected to come from the staff research and development group.

“The piper who has lost his cunning can no longer conjure the feet of the multitude into a dance; and if, in a rage and panic, he now attempts to turn himself into a drill sergeant or a slave-driver, and to coerce by force a people whom he feels that he can no longer lead by his old magnetic charm, then, all the more surely and more swiftly, he defeats his own intention; for the followers who had merely flagged and fallen behind as the heavenly music died away will be stung by a touch of the whip into active rebellion.” Arnold Toynbee

The transition from the Administrative Stage to that of the Bureaucrat occurs without any plan or intention. Old age happens. It needs no encouragement. No one in the history of organization ever created a design team to design and implement bureaucracy.

As soon as the leader imposes increasing levels of control in his love for order, he becomes a bureaucrat and loses understanding of the original organizing principle that was the energy created by the “word,” the creative act that was the reason to unite and sacrifice. Now the lack of creativity leads to impotence in the marketplace, and survival is dependent on cost cutting and control and anyone with the creative spirit, potential Prophets who possess the very cure that is so needed are driven to exile or crucified for their violation of order. The decline will soon lead to death. The bureaucracy causes the exile or execution of those who are creative but unable to conform to the required order. With the departure of creativity, the fate of the company is sealed

You may be a Bureaucrat if…

• You spend most of your time in meetings reviewing what has already happened or should have happened.
• You cannot remember when you last participated in the development of a new product or service… and, you don’t think that’s your job.
• You are more concerned with how you and your company are viewed by Wall Street analysts than by your customers.
• You believe tighter control will solve many of your organization’s problems.
• You spend more time with central staff managers than with line sales and production managers and workers.

Your organization may be in the Bureaucratic Age if…

• Your company is growing more by acquisition than by internal new product creation.
• Your company has reorganized more than once in the past three years.
• You are more interested in the internal challenges of the organization than the external marketplace.
• Employees and managers alike feel that they can do little to alter the company’s fortunes.
• Managers and employees tend to talk about the “good old days” when things were exciting and fun.
• Managing or fixing the systems and structure receives more time and attention than selling and producing.

Management derives its power from its legitimacy, and in the Aristocratic Age legitimacy is lost. It is lost because the managers have stopped doing their job, that of leading, creating vision, and building unity of energy and effort across diverse people and interests. Peter Drucker said:

“Power has to be legitimate. Otherwise it has only force and no authority, is only might and never right. To be legitimate, power has to be grounded outside of itself in something transcending that is accepted as a genuine value… If power is an end in itself, it becomes despotism, both illegitimate and tyrannical.”[1]

Legitimacy is a matter of perception, and it is the perceptions of the constituent groups that matter. In every relationship there must be a balance of power, a mutual concern, and respect. When these mechanisms break down, leadership acts on its own interests, and contrary to the interests of its followers; rebellion inevitably results.

The disintegration of culture may appear as either an internal revolution or an attack by a competing Barbarian. In either case, the cause is the same: the loss of social unity brought about by alienation of the leaders and their loss of legitimacy. It is not employees who become alienated from the leaders. It is leaders who have divorced their followers. They have moved to the 48 ^th floor of the office tower and spent too much of their time surrounded by others who are striving to achieve the same level of detachment from workers and customers. The more detached are the leaders, the more incapable they are of recognizing challenges and issuing forth a creative response to challenge. Woodrow Wilson understood:

“I do not believe that any man can lead who does not act, whether it be consciously or unconsciously, under the impulse of a profound sympathy with those whom he leads – a sympathy which is insight – and insight which is of the heart rather than of the intellect.”

At this stage, the leader’s focus, his motivation, has shifted from serving others to serving self. In the later days of a society, the leaders become obsessed with material self-gratification. This obsession is largely due to the loss of gratification normally derived from productive work. There is satisfaction to be derived from sawing and sanding wood into a piece of furniture, from designing, testing, and watching a mechanical object come to life, from listening to a customer and sincerely striving to meet his or her needs. All of these pleasures are lost to the Aristocrat. Now, the rewards come from the appearance of wealth. The irony is that the Aristocrat is not achieving greater satisfaction than a productive individual of modest resources. The supervisor whose team sets a new production record is undoubtedly achieving a higher level of satisfaction than the Aristocrat purchasing the Gulfstream IV or the new limousine or conducting grand meetings at a country club. The Aristocrat has been so long removed from productive work that he or she no longer remembers their satisfactions.

You may be an Aristocrat if…

• You manage an organization that has not successfully developed and marketed a new product or service for several years, and your only expectation for growth is through acquisition.
• Most of your time is spent on financial matters, strategic planning, and restructuring the organization, not with those who have their hands on producing or selling products or services.
• Your offices are plush with expensive artwork, you have limousine service, and you spend a lot of time at expensive social gatherings, for business, of course.
• You feel that only you and a small circle of advisers are capable of understanding the strategy of the corporation.

Your organization may be in the Aristocratic Age if…

• There is a complete separation in perception, expectations, and communication between those workers and managers who produce and sell and those who claim to be the leaders of the corporation.
• The leader thinks of himself (herself) as indispensible and almost synonymous with the company.
• A great deal of the time and energy is spent in internal warfare, both between horizontal units and vertical “classes.”
• There is an almost constant process of reorganizing.
• There is a continual effort to cut costs, hold down wages, and the leaders are constantly warning of the gravity of the situation, yet their own compensation is increasing with no apparent relationship to the fate of the business.

[1] Drucker, Peter. The Frontiers of Management: (New York: Truman Talley Books, E. P. Dutton, 1986), p. 180.

Achieving Balance – The Search for the Fountain of Youth

Is it inevitable that growth and expansion are followed by bureaucracy and decline? If you study the course of civilization you might reach that conclusion as the long march of cycles appears as an inevitable pattern. But Arnold Toynbee asked himself this question some years after he wrote A Study of History. His answer was “no”. He said that he believed in free will. He believed that if we understand the causes of integration and disintegration, of emergence and decline, we can alter our behavior and achieve an ever-advancing civilization. It is the failure to recognize and respond to new challenges that leads to a condition of ease, to the loss the power of self-determination, the loss of will.

In human aging there are chemical biological processes over which we have no control. Of course, we can greatly influence human aging with diet, exercise, and our own social and mental activity. Organizations, on the other hand can be influenced even more. They are inherently capable of regeneration. Managers change, products change, the market changes, and all of these are opportunities for adaptation, and for adjusting the style, culture, and processes to prolong the life of the organization. The 3M Corporation has been through numerous periods of refocus, redefining its product portfolio, constantly innovating and maintaining its social capital within the organization and its brand equity. It is an “old” corporation that can act young. There are many other examples. And, of course there are examples of organizations that fail to adapt to new markets and technologies and become rigid and lose their ability to innovate within a very short period.

Revolution is the transformation brought about by leaders who recognize new challenges, acknowledge the failure to adapt to a changing landscape, and promote a new outlook, a new spirit, and new strategy. Corporations have proven that there is no fixed time frame of life cycles. The key to this success is always the ability to create synergy of the different styles or capabilities of leadership and to maintain a healthy balance of the five forms of wealth.

What are the lessons of this story? I think there are several. One is the diversity of leadership styles that are needed to fulfill the potential of any organization. As companies mature, the need for the creative Prophet does not disappear; nor does the need for the conquering spirit of the Barbarian. But what is needed is balance and the creation of synergy or harmony between the diversity of talents, each put to work on the challenges appropriate to the type of temperament. The most difficult of all tasks of leadership is to create unity from diversity. It is the purpose of a leadership team. On a leadership team you do not want ten Administrators who will create excellent and orderly plans but never have the energy to go anywhere. Nor do you want ten Barbarians, each with the strong will and singular focus to fight a battle. You also need the Builders, the engineers and specialists who know how to make complex things work and Explorers to expand the territory. And you need Administrators who bring order to complex organizations and tasks through counting and recording. But you do not need the excess of administration that is bureaucracy. You need leaders, or you need to become a leader, who can bring these personalities together in a harmonious orchestra.

Another lesson regards the role of personalities versus process and principles. Civilizations, when they have been at their peak, have had senates, election processes, systems of law, and separation of powers. When Rome was being born it was highly reliant on principles. This was the period, generally regarded as the peak of the civilization, when the Roman senate was supreme and the acceptance of Roman law and order prevailed. It then was overcome with cults and clashes of personality and the law became subservient to the personalities. The process of disintegration exactly paralleled the decline of the reliance on principles and process and the return of dominance of personalities.