Elephant in the Room E-Book

Diana McLain Smith

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: The Jossey-Bass Business and Management Series (US)
• Sprache: Englisch

Seitenzahl: 397

Veröffentlichungsjahr: 2011

Beschreibung

A systematic look at how relationships determine the success of leaders and their enterprises, along with tools to help strengthen and change them Since time immemorial, relationships have determined the fate of leaders. But today they are more critical to success than ever. No longer can leaders count on long time horizons or sloppy competition to make up for the inefficiencies that poor relationships create. Leaders must make decisions and take actions quickly and well with others, even those with whom they share very little?perhaps not even a time zone. This new world puts relationships at the center of what leaders must understand and master to succeed. * Uses in-depth observational studies and clinical research to explore how relationships at the top of organizations work, develop, and change * Shows how to understand, strengthen, and transform these relationships, so they can withstand the most intense pressures and conflicts This important book features a Foreword by Peter Senge, author of The Fifth Discipline.

Leseprobe

Table of Contents

Endorsements

Title Page

Copyright

Dedication

Foreword

Epigraph

Part 1: Understanding Relationships

Chapter One: Present and Unaccounted For

Relationships: Strategic Asset or Liability?

Relationships: Seemingly Familiar, Strangely Unexplored

About This Book

What This Book Is Not About

The Heart of the Matter

Chapter Two: The Life and Death of a Relationship

Stage 1: How a Relationship Forms

Stage 2: How a Relationship Develops

Stage 3: How a Relationship Dies

Key Points

Chapter Three: It's a Matter of Perspective

The Individual Perspective

The Relational Perspective

Reality Check: The Power of Relationships

Key Points

Part 2: Strengthening Relationships

Chapter Four: Using the Heat of the Moment

Founding Friends

When Things Get Hot

Reflecting and Reframing—First Alone, Then Together

Reflecting and Reframing as Core Relational Capabilities

Key Points

Chapter Five: Mapping Relationships

The Story: Dangerous Times at SafetyNet

The Anatomy of a Relationship

A New Story to Tell

Key Points

Chapter Six: Focusing Investments, Managing Costs

The Investment Matrix

The Sequencing Matrix

Key Points

Part 3: Transforming Relationships

Chapter Seven: Navigating Change Over Time

Principle 1: Use Dual Vision to Set Your Sights

Principle 2: Build Resilience While Taking Stock

Principle 3: Put the Fun Back in the Dysfunctional

Key Points

Chapter Eight: Disrupting Patterns

Step 1: Assess the Relationship

Step 2: Map Patterns of Interaction

Step 3: Design Action Experiments

Stage 1 Results

Chapter Nine: Reframing Each Other

Step 1: Freeze Frame

Step 2: Invent New Frames

Step 3: Design Frame Experiments

Stage 2 Results

Chapter Ten: Revising What You Know

Step 1: Revisit Past Events

Step 2: Restructure Outdated Knowledge

Step 3: Return to the Future

Stage 3 Results

Appendix A: A Guide to Behavioral Repertoires

Experiential Knowledge

Interpretive Strategies

The Three R's

Appendix B: The Ladder of Reflection

Using the Ladder of Reflection to Observe and Map Interactions

On Ladders, Labels, and Frameworks

Notes

Part 1

Chapter One

Chapter Two

Chapter Three

Part 2

Chapter Four

Chapter Five

Chapter Six

Part 3

Chapter Seven

Chapter Eight

Chapter Nine

Chapter Ten

Appendix A

Appendix B

Bibliography

Additional Reading

Acknowledgments

The Author

Index

“The Elephant in the Room is as wise as it is practical. The ‘relational perspective’ will change how you think about leadership effectiveness. You'll soon see that the way executives interact with each other is more important to the success of an organization than their qualities as individuals. Drawing from her own consulting practice and accounts of famous work partnerships, Smith provides compelling stories of relationships between leaders—famous and not so famous—that influenced business and government outcomes in profound ways. The inescapable conclusion is that a relationship-based concept of leadership is long overdue.”

—Amy Edmondson, Novartis Professor of Leadership and Management, Harvard Business School

“It is very rare for someone to write a book of this kind based on real life experience that is both sensitive in human terms but also practical and hard edged.”

—Lord Dennis Stevenson, banker, former chairman, HBOS plc

“No matter where you are along your professional journey, you'll wish you had read The Elephant in the Room earlier. Diana Smith's insights into what made some contemporary and historical business and political relationships succeed and others fail will make you pause and reflect. Most important, her frameworks and insights on what you can do to make your relationships successful will become part of your professional toolkit.”

—Paula A. Sneed, chairman and CEO, Phelps Prescott Group; retired executive vice president, Kraft Foods Inc.

“This book offers vivid and practical insight into the relationship dynamics central to effective leadership and sustained organizational success.”

—Ashley Unwin, UK consulting leader, PwC Consulting

“The Elephant in the Room shows you how to navigate even the trickiest business relationships. Drawing on stories from decades of research, Smith lays out the skills we all need to develop to succeed as leaders today. An invaluable handbook for anyone seeking to get results through others.”

—Marilyn Paul, author, It's Hard to Make a Difference When You Can't Find Your Keys

“The Elephant in the Room reveals priceless insights into what it takes to develop and sustain healthy, productive relationships. A must-read for anyone who wants to be a successful leader.”

—Gerald Chertavian, founder and CEO, Year Up

“Smith outlines practical strategies for building constructive relationships in a fast-moving business context. A must for leaders as well as HR professionals.”

—Jens R. Jenssen, senior vice president of people and organization, Statoil

“Leadership is a relationship. And it's the quality of your relationships that will ultimately determine your level of success. No one understands this better than Diana McLain Smith. Her new book, The Elephant in the Room, is extraordinary. It's one of the most insightful and discerning examinations of interpersonal relationships at work I've ever read. Diana begins with a revealing and intimate portrait of two corporate executives whose relationship starts as a ‘bromance’ but eventually sours, and then she moves us to carefully examine our own relationship challenges. The Elephant in the Room is not another one of those quick fix, flavor-of-the-month, faddish books that offers pabulum solutions to very challenging problems. It is just the opposite. The Elephant in the Room is a very serious book about a very serious issue, and the most significant factor in your success as a leader. Diana blends clinical analysis, compassionate coaching, and practical business advice that lead to those stunning insights, aha moments, and useful information that we always seek but don't find in most books. You'll definitely find them in The Elephant in the Room. Buy it, read it, use it.”

—Jim Kouzes, coauthor, The Leadership Challenge, and The Dean's Executive Fellow of Leadership, Leavey School of Business, Santa Clara University

Copyright 2011 by Diana McLain Smith. All rights reserved.

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Library of Congress Cataloging-in-Publication Data

Smith, Diana McLain.

The elephant in the room: how relationships make or break the success of leaders and organizations / Diana McLain Smith; foreword by Peter Senge.

p. cm

Includes bibliographical references and index.

ISBN 978-1-118-01542-1 (cloth); ISBN: 978-1-118-08673-5 (ebk); ISBN: 978-1-118-08674-2 (ebk); ISBN: 978-1-118-08676-6 (ebk)

1. Leadership. 2. Interpersonal relations. 3. Organizational behavior. I. Title.

HD57.7.S6473 2011

658.4′092–dc23

2011017896

The cartoons in chapters 1, 2, and 8. Copyright © Leo Cullum/The New Yorker Collection/www.cartoon.bank.com

The cartoon in chapter 5. www.cartoonstock.com

The cartoon in chapter 4. Copyright © Henry Martin/The New Yorker Collection/www.cartoon.bank.com

The cartoon in chapter 6. Copyright © Barbara Smaller/The New Yorker Collection/www.cartoon.bank.com

The cartoon in chapter 7. Copyright © Frank Cotham/The New Yorker Collection/www.cartoon.bank.com

The cartoon in chapter 9. Copyright © William Hamilton/The New Yorker Collection/www.cartoon.bank.com

The cartoon in chapter 10. Copyright © Robert Mankoff/The New Yorker Collection/www.cartoon.bank.com

To my brother, Rob, and my husband, Bruce

For being there

Foreword

Human beings are social animals. We are not especially big or especially strong. Our ability to survive and evolve has always hinged on our ability to learn collectively, to adapt our ways of living to new circumstances, to innovate. We have deep instincts for kindness and concern for the other. We care about one another, not because we need to but because we want to. As the pioneering biologist Humberto Maturana says, “We are loving animals.”

But instincts need to be cultivated. Although relationships have always been the context in which innovation and learning either flourish or founder, challenging work settings demand more than instincts. This becomes evident as soon as conflicts arise. What happens when we face others with “crazy ideas,” ideas with which we strongly disagree, even ideas we consider dangerous for the team or organization we are part of? Quickly, good feelings give way to fear, anger, and distrust. In a flicker of an eye, the predisposition toward concern and mutuality becomes competition for whose idea will win out.

Cultivating practical capacity regarding relationships—how they work, develop, and change—requires a consensual body of knowledge. We need practical tools and shared understanding for building relationships that enable innovation and continual learning. We need practices to cultivate our awareness and fluidity in action. We need shared commitment to mutual learning, based on the understanding that this matters, personally and organizationally.

Without common tools and shared language, the nurturing of relationships fades into the background, an organizational bass clef of disregard and disquiet drowned out by the more immediate demands of tasks and results. When this happens, relationships become “the soft stuff,” ignored as a domain of strategic significance and conscious capacity-building. Habitual mental and behavioral habits govern. Simple behavioral rules such as “be nice” and “listen politely” substitute for building skills and behavioral repertoires that can prepare us for the difficulties that inevitably come. The results are failed relationships and, often, failed institutions. Diagnoses of what went wrong inevitably focus on strategic errors and operational breakdowns but rarely trace the sources upstream to relationships that failed to generate the deep trust and capacity for mutual inquiry and collective creativity that demanding circumstances required.

For decades Diana Smith has been a leader helping people develop relational intelligence in challenging management contexts. Her insights start with a simple shift in the lens by which we frame difficulties when they arise: it's not about her or him; it's about us. Relationships are embedded in webs of interactions. It's a system. But we usually start with the lens of individuals. Starting off on the wrong foot heads us down a path with little leverage for real change.

That said, there is a good reason we impose an individualistic lens on a systemic phenomenon. Most of us simply do not know how to do otherwise.

This leads to the second part of Smith's insight: there are predictable patterns of growth and change in work relationships, and they can be understood and influenced.

Smith lays out a conceptual framework that can be used to understand the forces that drive relationships north or south. She also provides a general way for gauging the capacities of key work relationships, along with tried and tested tools for strengthening them. Grounded in years of research and consulting with management and other working teams, Smith's frameworks are complex yet intuitive. Once you understand the basics of her lens and tools and work with them, they will grow into a fundamental element of your leadership practice. This is a big claim. But read on, and see for yourself.

While the issues and lessons here are timeless, never have they been more timely. In a world that is increasingly distributed, interdependent, and multicultural, mastery in the domain of productive work relationships will often be the distinguishing feature of organizations that succeed or fail. A CEO mentor of mine pointed out many years ago that he saw this as the fundamental shift unfolding in leadership and management: “Whereas marketing, manufacturing, technology, and financial sophistication used to distinguish firms, today they are the ticket for admission in global industries. Increasingly, what will set companies apart will be their sophistication in the human domain. What was folklore and untested aphorisms will need to become more systematized, just as has happened in these other fields.”

Herein lies a defining challenge of our time. In a world increasingly interconnected by technology, our abilities to understand one another and cultivate the capacity for truly thinking together become ever more critical. To the extent we fail to do so, we will become victims of a great irony, expressed succinctly by a young student recently: “We are more and more connected, and yet we are more and more separate.”

Peter Senge

Cambridge, Massachusetts

February 2011

The elephant in the room

A major problem or controversial issue that is obviously present but avoided as a subject for discussion because it is more comfortable to do so.

—Oxford English Dictionary

Part 1

Understanding Relationships

The relationship—the pivotal point on which all else turns—is built (or undermined) in every interaction.

—Suzanne Clothier1

Chapter One

Present and Unaccounted For

If civilization is to survive, we must cultivate the science of human relationships.

—FRANKLIN ROOSEVELT, THE DAY BEFORE HE DIED

“Relationships? Get over it!” a leader once told me, looking askance. “We're not married. We just have to work together.” Yes, and that's exactly the point, I replied. You do have to work together, and if you don't get your relationships right, a lot can go wrong—both for you and your organization.

Countless examples in the historical record and in my own research suggest that if you don't treat relationships as a strategic asset—and invest accordingly—they can easily become a serious, even fatal liability. Think of Apple in the 1980s. Two years after Steve Jobs hired John Sculley as Apple's CEO, the two had a falling out, the board sided with Sculley, Jobs left, and the company nearly faded into oblivion. “I'm actually convinced that if Steve hadn't come back when he did,” John Sculley himself said in a 2010 interview, “Apple would have been history. It would have been gone, absolutely gone.”1

The personal aftermath is harder to discern, since it is less public. But in Jobs and Sculley's occasional post-facto accounts of their breakup, you can see the toll it took on their lives. You can also see, if you look closely, that neither man seems to grasp the role he played in creating a relationship that almost brought down a great company.

In 1995, with Jobs still in exile and Apple struggling to survive, Jobs had this to say about why Apple was doing so poorly: “John Sculley ruined Apple, and he ruined it by bringing a set of values to the top of Apple which were corrupt and corrupted some of the top people who were there, drove out some of the ones who were not corruptible, and brought in more corrupt ones and paid themselves collectively tens of millions of dollars and cared more about their own glory and wealth than they did about what built Apple in the first place—which was making great computers for people to use.”2

Ten years later, after his triumphant return to Apple, a more sanguine Jobs tells what he calls “a story of love and loss” in a 2005 commencement speech delivered at Stanford University: “I was lucky. I found what I loved to do early in life. Woz and I started Apple in my parents' garage when I was twenty. We worked hard and in ten years, Apple had grown from just the two of us in a garage into a $2 billion company with over 4,000 employees. We'd just released our finest creation, the Macintosh, a year earlier, and I'd just turned thirty, and then I got fired. How can you get fired from a company you started?”

His answer, though brief, says a lot: “Well, as Apple grew, we hired someone who I thought was very talented to run the company with me, and for the first year or so, things went well. But then our visions of the future began to diverge, and eventually we had a falling out. When we did, our board of directors sided with him, and so at thirty, I was out, and very publicly out.”

Of what happened next, he says, “What had been the focus of my entire adult life was gone, and it was devastating. I really didn't know what to do for a few months. I felt that I had let the previous generation of entrepreneurs down, that I had dropped the baton as it was being passed to me.… I was a very public failure and I even thought about running away from the Valley. But something slowly began to dawn on me. I still loved what I did. The turn of events at Apple had not changed that one bit. I'd been rejected but I was still in love. And so I decided to start over.”3

The breakup with Sculley cost Jobs dearly. It was, as he put it, a devastating public failure, from which a lesser man might not have recovered. Still, his answer to the question of how he got fired—their visions diverged; they had a falling out; the board sided with Sculley—displays little insight into how their relationship fell apart or why the board felt the need to side with either one of them, but most important: Why Sculley?

The point is, there's little here Jobs could use to ensure it wouldn't happen again—if not to him, then to the next generation of entrepreneurs to whom he is passing the baton. While no speech could ever detail the rise and fall of a complicated relationship, this account makes no mention of what we'll see in Chapter Two; namely, that Jobs and Sculley interacted in ways that made it impossible for them to reconcile their differences, brought out the worst in both of them, and led to the choice faced by the board: one or the other had to go, and go quickly, if the company was to survive. What's more, it's not enough simply to say that the board sided with Sculley. The board felt it had no choice. Jobs's out-of-control behavior in response to Sculley's increasingly controlling behavior had painted a rather large target on Jobs's chest. By the time the board was forced to choose, they had lost whatever confidence they had in him as a leader.

Chapter Two

The Life and Death of a Relationship

I now had what the self-help books called baggage, which I would carry around for the rest of my life. The trick was to meet someone with similar baggage, and form a matching set, but how would one go about finding such a person?

—DAVID SEDARIS1

More than twenty-five years have passed since Steve Jobs and John Sculley's much-publicized breakup at Apple. Yet it still serves as a cautionary tale. In two short years, their celebrated camaraderie turned into an antagonism so great it escalated hostilities between divisions, put Apple at risk of a takeover, sent Steve Jobs into a twelve-year exile, and destroyed millions in potential revenue. How these leaders went from soul mates to mortal enemies in such a short time shows how relationships, even those touted as a perfect match, can self-destruct under pressure.

When Jobs and Sculley's relationship first fell apart, most people chalked it up to personalities: Jobs was too volatile, Sculley too cautious and controlled. Others pointed to adverse circumstances: the relationship simply wasn't strong enough to survive a precipitous drop in sales.2 Still others said their chemistry was off: Sculley was too corporate, Jobs too iconoclastic. While each explanation holds merit, they all overlook the most intriguing and instructive aspect of what happened: the way their relationship developed over time.

Only by understanding how relationships form, develop, and die can you see why people form ill-fated matches, why certain personalities clash, and why some relationships break down so quickly and completely under pressure. And only by understanding how relationships form, develop, and die do you stand a chance of altering the course a relationship takes. By looking closely at how the Jobs and Sculley relationship developed over the course of three stages, we can extract timeless lessons about the life and death of a relationship and its impact on the firm.

Stage 1: How a Relationship Forms

When joining an organization, most people spend weeks or even months negotiating everything from job responsibilities to financial rewards to decision rights. Yet if you look closely at these negotiations, you can see another deal also take shape, as people—through their interactions—define the informal terms of their relationship: the emotional responsibilities each person will seek and shirk, the psychological rewards they'll each want to give and get, and the interpersonal rights they'll each claim and relinquish.

It is the interplay between these two deals that sets the foundation of a relationship. By paying attention to both, you're much more likely to get a relationship off to a good start. Conversely, as this chapter shows, when you ignore the informal side of a relationship, you're much more likely to get into trouble and to be stunned and amazed when you do.

The Story: The Perfect Match

When Steve Jobs and John Sculley first met at a January 1983 dinner following a private preview of Apple's new Lisa computer, their mutual attraction was obvious to everyone.3 One Apple chronicler, Frank Rose, tells the story of that midwinter evening in New York:4

After an hour or so they went downstairs, where Sculley's limousine was waiting to take them to the Four Seasons for dinner. It was a car that seemed as big as an airplane, with a bar and a TV and a driver named Fred, all on call twenty-four hours a day.… They swept down Park to Fifty-Second … and pulled up at the discretely canopied entrance to the Four Seasons. Sculley led them into the travertine anteroom, up the stairway to the reservations desk, past the enormous Picasso stage curtain, and into the stark opulence of the Pool Room.

Over dinner the unlikely chemistry between Jobs and Sculley became readily apparent. Despite their obvious differences in age and background—Sculley was strictly Ivy League and corporate, having graduated from Brown University and the Wharton School and having spent most of his professional life at Pepsi; Jobs, seventeen years his junior, had dropped out of Oregon's funky little Reed College during his freshman year—they somehow clicked. It was almost as if each tapped something unrealized in the other. There was a cool, crisp professionalism to Sculley that Jobs respected, a utopian fervor to Jobs that Sculley found intriguing. Sculley was a man who knew how to run a multimillion-dollar enterprise. Jobs was a kid who proved he could change the world. Put them together.… 5

Earlier that same day, the differences between Sculley and Jobs were as apparent as their affection was at dinner. While Jobs was jumping up and down with enthusiasm for his spanking-new product, Sculley held back. He was looking at the product through the eyes of a corporate executive at the helm of a traditional company in an industry in which winning depended more on cost efficiencies and marketing than on product innovation. “[Sculley] didn't take to it wholeheartedly,” says Rose. “He was cautious. He had reservations. He wasn't sure that this new technology, dazzling as it was, would have much impact at a big corporation like Pepsi, because it didn't have the IBM logo. No one ever got fired, the saying went, for buying an IBM.”6

To this side of Sculley, Steve Jobs gave little notice. What he saw was a savvy, ingenious marketer, whom he alone described as “very charismatic.”7 After all, Sculley was the one who had revived the Pepsi Generation campaign in the late 1960s, spurring unprecedented growth for the next six years. By 1978, Pepsi Cola was surpassing Coke in sales for the first time in the firm's eighty-year history.8 Perhaps at Apple, Sculley could do the same thing—invent the Apple generation. That would certainly advance Jobs's vision of changing the world by resetting the balance of power between the individual and the institution. One person, one computer: that was his motto. Since Apple's inception, he'd dreamed of bringing power to the people, as the saying from the 1960s went. Only, he was going to do it by putting an Apple computer in the hands of every person. With Apple cofounder Steve Wozniak gone and CEO Mike Markkula anxious to move on, the decision whether to hire Sculley was largely up to Jobs. And it looked to him as if Sculley had all the right stuff.

Two months later, the deal was done. In April 1983, Sculley accepted the offer to join Apple as its new president9 and passed up the once-in-a-lifetime opportunity to succeed his mentor, Donald Kendall, as chairman of PepsiCo. To make the jump more palatable, Apple agreed to give the forty-four-year-old Sculley a $1 million salary along with a promised $1 million bonus, a $1 million severance package (in case things didn't work out),10 an option to buy 350,000 shares of stock, a $2 million loan to buy a Tudor-style house in the California hills,11 and $1.3 million for Sculley's Greenwich (Connecticut) home to save him the trouble of selling it.12

Although no small amount in 1983, the money isn't what sealed the deal. Nor was it the opportunity to lead a company growing at a breakneck pace. No, what sealed the deal was the bond Sculley and Jobs forged out of their mutual attraction to power. For Sculley, Jobs held the power to change the world; for Jobs, Sculley held the key to corporate power. It was a heady match, says Frank Rose, seducing them and preoccupying everyone else:

For weeks they had been gazing worshipfully at each other, finishing each other's sentences, parroting each other's thoughts. It was as if they were on a perpetual honeymoon which they had to share with a great many unruly children.… The summer honeymoon between Steve and John was the talk of the company. The two were inseparable. John was listening and learning, and the person he was learning from was Steve.… He seemed so in awe of Steve—his brashness, his charm, his charisma—that he saw everything through Steve's eyes.… But the infatuation wasn't one-sided. It was almost like a father-son relationship in which the two adopted each other.13

Theirs wasn't any father-son relationship, however. As Sculley later wrote, “I felt that part of my role was to nurture Steve from a prince to a king, so he would someday be able to run the company he cofounded.”14 That first summer, they were so absorbed with one another that they failed to see what others feared most—that their father-son indulgences might demolish a useful, if delicate, balance of power within the firm. “In the original triumvirate,” says Rose of Mike Scott as president, Mike Markkula as chairman, and Jobs as visionary, “Jobs's brash enthusiasms had been leavened by Scotty's stern hand and Markkula's persuasive manner.… Sculley's arrival changed all that. John made Steve his partner, not realizing that Steve had never been a partner in running Apple before. Suddenly there were no restraints. Sculley unleashed him, and Steve unleashed was an astonishing spectacle. People began to liken it to Godzilla being let out of his cage.”15

But Sculley saw no trace of a monster in the hyperkinetic Jobs. He didn't understand there was a reason no one had ever granted Jobs unchecked access to power. Nor did he see what he later came to believe: that Jobs was often “stubborn, uncompromising and downright impossible.”16 What he saw was a prince entitled to inherit a throne. Similarly, Jobs didn't see in Sculley what others saw: a cautious leader unlikely to make the bold moves that came second nature to Jobs. Nor did he see what he later came to believe: that Sculley was preoccupied with control and would never give Jobs the power or support he wanted. All he saw was a powerful, supportive benefactor who would help him realize his dreams.

What the Story Teaches Us

The one characteristic that marks the beginning of all relationships headed for trouble is obliviousness to the informal side of a relationship. Like most executives, those negotiating Sculley's entry into the firm focused on business matters. They discussed ideas for growing the business; they debated how Apple's technology might change the world; they talked roles and responsibilities; they negotiated compensation. In the end, they came up with a deal so full of potential upside and so buffered against downside risk that Sculley couldn't refuse.17

What they didn't do was take a look at the nature of the relationship Sculley and Jobs were forming. Sure, everyone could see the two were enamored of each other. But no one questioned why they'd clicked so quickly and so completely. While some found their instant intimacy unsettling and others worried each didn't see the other for the person he really was, no one could say why or do much about it. All they could do was chalk it up to chemistry and leave it at that.

Most of us do the same thing. When people click or clash, we chalk it up to chemistry and leave it at that. But it is possible to identify and analyze the seemingly mysterious ingredients that go into the makings of a relationship. As this book shows throughout, given the right tools, it's possible to understand what happens when a relationship forms, and then to anticipate what might happen next. For now, let's look more closely at what happened with Jobs and Sculley.

Understanding What Happens When a Relationship Forms

We all bring to relationships our own characteristic ways of interacting with others given our behavioral repertoires.18 Built out of experience, these repertoires are organized around key themes such as power, conflict, control, and success. Over time, as we interact with each other, patterns emerge around these themes, and in these patterns you can discern the informal terms of a relationship, including

The emotional responsibilities we'll seek (“I've gotta help this guy!”) and those we'll shirk (“No way I'm doing that!”)—regardless of formal roles.The interpersonal rights we'll claim (“You can't treat me that way!”) and those we'll relinquish (“Don't worry about it”)—regardless of any formal deal.The psychological rewards we'll want to get (“Just once I wish she'd give me a pat on the back!”) and those we'll be willing to give (“You did a great job”)—regardless of financial rewards.

When people first meet, their themes act like DNA, intersecting to give rise to distinctive patterns of interaction. These theme-bound patterns interact with circumstances to shape the way a relationship evolves over time.19 In the case of Jobs and Sculley, it was their shared preoccupation with power that gave rise to their mutual attraction. Each saw in the other a form of power he coveted.20 The effusive Jobs saw in the more cerebral Sculley the corporate power he needed to change the world. Dazzled by the limousine, the chauffeur, and the opulence of the Pool Room, Jobs paid little attention to Sculley's more reserved, controlled side. To Jobs, the “charismatic” Scully may have seemed more thoughtful than controlled, more sophisticated than reserved. And given Sculley's low-key demeanor, it must have been hard to imagine how he'd ever pose much of a threat.21 As to how Sculley made it to the top of a competitive—some say cutthroat—firm such as Pepsi, Jobs apparently gave little thought.

Similarly, Sculley saw in Jobs a brilliant visionary with the power to change the world. Like Jobs, Sculley paid little attention to the behaviors he later found so unacceptable, even though they were in full evidence right from the start. Jobs's jumping up and down at the unveiling of Lisa, his unpredictable emotional outbursts, his caustic ridicule of Apple's competitors all must have seemed part of an otherwise attractive package—rough edges that could be smoothed out over time. Just how that smoothing out would occur, well, that too was assumed rather than anticipated. All Sculley saw was an opportunity to do more than sell sugared water for the rest of his life.22 With Jobs at his side, he too was going to change the world.

Anticipating What Might Happen Next

Though less noticeable at the outset, two other themes clashed rather than clicked: Jobs's well-known disdain for institutional authority (you could say he built Apple and its products upon this disdain)23 and Sculley's corporately honed preference for institutional structure and control (to which his tenure at Pepsi was a tribute).24 According to Rose, Sculley “liked to tinker with structure. Maybe it was his architectural training, maybe just his natural cast of mind, but he was always thinking about how things fit together. Jobs's thinking tended to be more intuitive, emotional, and visionary; Sculley was more a systems man, rational and analytical. Form and process were what interested him.”25

Had anyone paid attention to these rather fundamental differences, they might have given thought to how they might play out over time. As it was, no one asked what might happen should Sculley impose the kind of corporate controls at Apple he'd imposed at Pepsi. Nor did they ask what might happen should Jobs bristle under that control. Intent on finding a seasoned executive to counterbalance and contain Jobs's more intuitive, even impulsive leadership style, Apple's board didn't think through how all this counterbalancing and containing would occur.

Nor did they anticipate the events their relationship might set in motion or the effect those events would have on the firm's delicate balance of power.

Stage 2: How a Relationship Develops

In the second stage of a relationship's development, people renegotiate their formal and informal roles. As they do, initial impressions give way to more stable interpretations, and people come to know each other for “who they really are.” These more stable interpretations—what I call frames—inform people's negotiations about who should do what and turn early patterns of interaction into more informal structures. Though hard to discern without the proper tools, these informal structures give relationships their distinctive character.

Those who pay attention to the informal side of a relationship during this stage understand that what they see is what they'll get, so if they don't like what they get, they can always reconsider the way they see and treat each other. Those who ignore the informal side, as Sculley and Jobs did, believe that what they see is the way it is, leading them to feel trapped in a relationship no longer of their choosing.

The Story: The Road to Disillusionment

Six months before Sculley joined Apple, Jobs had gotten approval from Apple's board to build his own factory for the Macintosh and to get it up and running before turning it over to Del Yocam, Apple's VP of manufacturing. Several months after Sculley's arrival, sometime in the fall of 1983, Sculley knew he had a problem: Jobs didn't want to turn manufacturing over to Yocam. Instead Jobs pitched another idea: let Yocam keep the Apple II division and the Dallas factory, and let Jobs keep the Macintosh division and its new Fremont plant.26

After some initial concern, Sculley took to the idea. It would allow him to solve two problems at once: Jobs's desire to take operational control of Macintosh, and his own desire to gain greater control of Apple.27 Jobs would get his chance to run something, and Sculley would have two profit-and-loss centers to manage, the same way Pepsi, Taco Bell, and Pizza Hut were managed at PepsiCo. But Apple wasn't Pepsi, Sculley wasn't Kendall, and Jobs wasn't Sculley.

“It was a mistake,” Sculley later wrote. “I became more remote from the business.… He really had more knowledge about what was going on in the business than I did because all the information was coming up through the product divisions. They had all the power. The corporate staff basically became an impotent group.”28

Though later regretted, Sculley's decision made good sense at the time given his relationship with Jobs. It was autumn 1983. Their summer honeymoon was just ending, and they were turning their attention to building “insanely great products” and growing a “phenomenal firm.” During that time, Sculley took on the informal task of turning a prince into a king, and now, in an effort to fulfill that role, he was continually coaching, cajoling, and chastising Jobs into behaving properly. All Jobs needed, Scully thought, was the kind of experience a prince can get by running his own province.29 Besides, for his part, Jobs was acting like an adoring kid, relenting when cajoled, expressing regret when chastised, and repenting each time Sculley asked him to rein in his sometimes rude, occasionally cruel, and always emotional outbursts.

Six months later, Sculley realized his mistake. In his memoir he cites the precise moment when things took a turn for the worse. It was May 1984, only a year into his tenure at Apple. At a celebratory dinner arranged by Jobs as a tribute to his friend and mentor, Sculley stood up to thank the group and to praise Jobs. He began by speaking glowingly of their relationship, saying they'd developed not just a partnership, but a friendship. Then, pausing for effect, he looked across the room at Jobs and declared: “Apple has one leader, Steve and me.”

Later on, Sculley would say of these words: “I didn't yet know it, but my statement proved to be a turning point.”30 Within weeks of that dinner, Sculley began to worry that he was losing his grip on the management of the company. He watched with concern as Jobs's power increased after he decided to fold the Lisa product line into the Macintosh group to create two distinct lines of business.31 He noticed how Jobs was trying to influence all matters of business, not just those related to product development. Even more ominous, Sculley could tell that he was losing purchase on his relationship with Jobs. His coaching, cajoling, and chastising no longer had much effect, if it ever did. While Jobs kept promising to behave, he never seemed to make good on those promises. “For the first time,” Sculley wrote, “I felt as if I was losing control.”32

That feeling only intensified a few months later after a meeting with a group of Xerox executives. When Sculley first arranged the meeting, he knew Jobs had little respect for the company,33 but he persuaded Jobs that acquiring a firm like Xerox would accelerate Apple's growth and put it within shooting distance of IBM. With images of a defeated IBM dancing in his head, Jobs agreed to the meeting and promised Sculley that he would behave.

It ended up being a promise Jobs couldn't or wouldn't keep. Within minutes, he was telling the Xerox executives, “You're doing it wrong; you're just doing it completely wrong!” Sculley recounts what happened next:

Adams [head of Xerox's computer systems group] bristled, and things went downhill from there. Glavin [vice chairman of Xerox] glanced across the table at me and rolled his eyes.

“Now let's step back and talk about this,” I hopelessly interjected.

But Steve couldn't hold back. A pained look appeared on his face as the words came tumbling out of his mouth.

“I really shouldn't say this,” he said. “But I'm going to say it. You guys don't have any idea what you're doing.”

Within fifteen minutes or so, it was clear we were going to accomplish nothing. So I pulled Bill Glavin aside and suggested that we call off the session and perhaps regroup at a later date. The meeting quickly ended and Steve and I left the room. I was incredulous.

“Steve,” I asked. “Why did you do that? I thought we had an agreement that you were going to control yourself.”

“I'm sorry, but I couldn't help myself,” he said contritely in a little boy's voice. “I went to Xerox PARC and saw that they had all the great people and they were doing all the great things and they just didn't see it.… I just couldn't control myself. I'm sorry.”

Steve and I never rescheduled the meeting with Xerox.34

Sculley was shaken. For the first time it occurred to him that his efforts might fail, that no matter how much he cajoled or coached, Jobs might not be able to control himself—ever.

During this same time, Jobs's doubts about Sculley were also taking shape. Things weren't going so well for Macintosh. While Apple's profitability was soaring, Mac sales for September were less than two-thirds of what they'd projected. At first, Jobs felt like a failure. Stunned and upset, he walked around, head down, asking those around him what price he'd have to pay for having failed them.35 It didn't last long. Within days his self-flagellation gave way to blame, most of it aimed at Sculley. Says Rose:

The reason Macintosh wasn't more profitable, Jobs was convinced, was that the company … wasn't supporting it. Take distribution. He had gone to Sculley with his vision of 747s loading up computers at the factory gates, but other people were trying to block him on it.… He wanted to fire all those people and close down their warehouses and go with Federal Express right away.… Sculley was hedging. He wanted to appoint somebody to study it. Jobs saw no need for study.… And so he was beginning to question Sculley's performance. He was beginning to wonder why the CEO he'd picked wasn't providing the leadership he needed.36

Jobs must have been mystified. Sculley had been his most avid ally, opening doors to corporate power everyone else had kept shut. Now, Sculley was cautioning him to slow down, to study the problem. He couldn't believe it. Instead of helping him stave off failure, Sculley was blocking his success! For the first time, he questioned Sculley's more measured, studious approach to leadership. Perhaps Sculley wasn't the key to power after all. Perhaps he was just another ineffectual authority who didn't get it and had no right to tell him what to do.

What the Story Teaches Us

Sculley made three fateful decisions during this stage; later on, he regretted all three. First, after creating two separate divisions—one for the Mac, the other for Apple II—he decided to give Jobs operational control of Mac. Next, much to the chagrin of those working on Lisa (Jobs called them “bozos”), he agreed to fold the Lisa line into the Mac division, expanding the division's scope and Jobs's power. Finally, to signal that Jobs did in fact have operational control of the Macintosh division, he changed Jobs's title from vice president to executive vice president. Together, these choices moved Jobs closer to the operations of the company, gave Jobs more formal power, and wedged Sculley between Jobs-as-boss and Jobs-as-subordinate.

When leaders make bad design choices like these, it's often a sign that they're caught in informal structures that make bad choices look smart. Sculley's choices, as bad as they were, flowed logically from the pattern of interaction established during the first stage of their relationship. In this initial pattern, Sculley indulged Jobs without holding him accountable, while Jobs admired Sculley without giving him the power Kendall had given him at Pepsi. Within this relational context, it made sense for Jobs to ask for a division of his own and for Sculley to give it to him.37 Their informal dealings had led them to see each other in a particular light and to expect certain things from each other, turning their early pattern of interaction into a more enduring structure. Let's take a look at how an informal structure forms and evolves, then consider its effects.

How an Informal Structure Takes Shape

After Sculley put Jobs in charge of Macintosh, he started paying closer attention to the impact Jobs had on him and others. He noticed that “[Jobs] could inspire people, and he could make them sweat.… At one moment, he could drain all your self-esteem. At the very next, he could praise you, offering just a few complimentary crumbs that somehow made all the angst worthwhile.”38

While Sculley understood that this kind of behavior would never be tolerated at Pepsi, he accepted it in Jobs. “Steve was unique,” he explained. “People made exceptions for him. They held him to the standard of a young, smart kid; they didn't really view him as an adult.39

Besides, Sculley added, “When he looked at me, it was a look of admiration, a what-can-I-learn look that was terribly gripping. In Steve's eyes I couldn't do anything wrong.”40

Perhaps even more gripping, Sculley saw himself in Jobs: “None of Steve's behavior alarmed me, maybe because I so clearly saw my younger self in him. People had often found me difficult to deal with during my early days at Pepsi, too. I never verbally attacked anyone, but I insisted on only the best from them, as Steve did. So I tried to coach Steve the way Chuck Mangold coached me at Pepsi.”

This way of seeing Jobs led Sculley to stop short of holding him accountable for his impact. He figured he could coach and cajole Steve into behaving more constructively.

“You've got to learn to hold back some things,” I told him. “All you're going to do is cause a lot of unnecessary frustration, which isn't constructive.”

Treating his mentor as an indulgent father figure who could do nothing wrong, Jobs responded by relenting, regretting, and repenting.

“You're right,” he said. “I know it. Keep talking to me, you're absolutely right. I know I shouldn't do that.”41

If you look at what's happened so far, you can see the outlines of a structure emerge. If you were to map or draw a diagram of that structure, it would look something like Figure 2.1.

Figure 2.1 An Informal Structure Takes Shape.

As the figure shows, Sculley invites and reinforces the very behavior in Jobs that he later finds so unacceptable. By repeatedly making exceptions for Jobs and never holding him accountable, Sculley makes it less likely that Jobs will ever feel the need to control himself. Jobs, in turn, invites and reinforces the very behavior in Sculley he later finds so unacceptable. By refusing to control himself, he makes it more likely that Sculley will feel the need to control him. It doesn't occur to either one of them that Sculley might come to feel so threatened that he will feel the need to reassert his power—at Jobs's and Apple's expense.

These interlocking actions—Sculley making exceptions for Jobs, Jobs refusing to control himself—flow from the way each man frames his role in relation to the other. In seeing their roles one way and not another, some actions seem obvious, others irrelevant. It's these less-conscious informal roles that lock patterns into place, turning them into more stable structures.