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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
Maximize your leadership impact with the latest insights and research from the field of adaptive leadership In The End of Leadership as We Know It, a team of veteran executive and leadership strategists delivers an expert analysis of the ten most common errors leaders make when attempting to address disruption and concrete strategies for avoiding them. In the book, you'll find ways to apply the latest research in adaptive leadership and complexity to your own leadership style and achieve the impact you seek to have on your business, your followers, and yourself. The authors explain how to rethink the essence of leadership during times of flux and show you how to deal with unpredictable situations. You'll also find: * Ways to identify the devastating blind spots caused by current approaches to leadership * Strategies for unleashing the creativity and potential of employees, rather than controlling them * Tough-love feedback for contemporary leaders doing their best to deliver results in an increasingly uncertain and volatile business environment Full of creativity and inspirational energy, The End of Leadership as We Know It will benefit managers, executives, board members, business students and other current and aspiring business leaders.
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Seitenzahl: 348
Veröffentlichungsjahr: 2023
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Table of Contents
Cover
Praise for
The End of Leadership As We Know It
Title Page
Copyright
Dedication
Foreword
Preface
1 Introduction: Making a Difference in Our Complex Times
The End of Leadership as We Know It
Our Baffling Business Landscape
Embracing the Complexity Advantage
Complex Adaptive Systems in Wartime
Navigating This Book
Notes
2 It's Not About You
Networks Not Hierarchy
The Invisible Advantage: Informal Relationships
Fluid Networks: A Key to Dynamic Leadership
A Path to Strong Networks
Escaping the Trap
Notes
3 The Vulnerability Paradox
The Confidence Trap
Vulnerability Is a Catalyst for Adaptation
Vulnerability Breaks Down Barriers
Why Leaders See Vulnerability as a Showstopper
Cultivating Vulnerability
Escaping the Trap
Notes
4 Stop Strategizing and Start Doing
The Lure of Strategy
Your Strategic Plan Is Already Obsolete
Strategic Doing
Getting Comfortable with Discomfort
Two‐Way Transparency
Test, Learn, Strategize
Applying Feedback to Compound Learning
Escaping the Trap
Notes
5 Freeing Your People with Purpose‐Driven Simple Rules
The Trap of Shareholder Value
Purpose as a Compass in Complex Environments
Why Leaders Fall Short
Uncovering Your Compelling Purpose
Making Purpose Real
Escaping the Trap
Notes
6 Why Community Organizers Consistently Beat Superheroes
Temptations of Heroism
Overcoming Egos
Strength in Numbers
Sharing the Spotlight
From Crisis to Cause
Decentralization: The Power of We
Overcoming Cultural Baggage
Escaping the Trap
Notes
7 Vive la Résistance!
The Trap of Moving the Aircraft Carrier
The Roots of Resistance
Resistance Isn't Futile; It's Necessary
Employees Own What They Cocreate
Escaping the Trap
Notes
8 Resilience Beats Efficiency
The Trap of Efficiency
How Resilience Creates Competitive Advantage
Pinpointing Weak Signals
The Firebreak Approach
Cushioning the Inevitable Blows
Building Resilience Through Variety
Collaboration as Readiness
Tap External Networks for Hidden Reserves
Escaping the Trap
Notes
9 The Siren Song of Certainty
The Certainty Trap
The Antidote to Certainty: Curiosity
Cultivate a Curious Mindset
The Importance of Understanding
Communicating Curiosity
Keep Reassessing
Escaping the Trap
Notes
10 Data‐Driven Decisions Still Need a Driver
When Data Deceives
Seeing Beyond the Numbers
The Hidden Strength of Intuitive Leaders
Combining Hard Data and Gut Feeling
Let Context Be Your Guide
A Shortcut with Heuristics
Influencing Others
Escaping the Trap
Notes
11 When Best Isn't Best
The Hidden Cost of “Best” Practices
Complexity Confounds the Problem
Simplifying Complexity with Sensemaking
Building Your Mental Map
Escaping the Trap
Notes
12 Conclusion: The End of Leadership in a Quantum Age
An End of Leadership … and a Beginning
Why We Feel Fine
Notes
Acknowledgments
About the Authors
Index
End User License Agreement
List of Illustrations
Chapter 1
FIGURE 1.1 Adaptive operating design versus traditional organization design...
FIGURE 1.2 Holistic approach
Chapter 2
FIGURE 2.1 Formal structure versus informal network
Chapter 4
FIGURE 4.1 A sample uncertainty matrix
Chapter 5
FIGURE 5.1 Ikigai for organizations
Guide
Cover Page
Praise for The End of Leadership As We Know It
Title Page
Copyright
Dedication
Foreword
Preface
Table of Contents
Begin Reading
Acknowledgments
About the Authors
Index
Wiley End User License Agreement
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Praise for The End of Leadership As We Know It
“Leaders are smart people, so if they're still falling short, we need to ask why. Garcia and Fisher usefully lay out the main traps that well‐intentioned executives fall into. Only by realizing the traps—by recognizing just how appealing they are—can leaders avoid them.”
—Erica Dhawan, author of Digital Body Language
“The rules for leaders have changed! In this gem of a book, Garcia and Fisher give you the keys to those new rules for greater collaboration and performance. They will teach you the importance of recognizing your people in meaningful ways, expressing gratitude, and to think about them more than yourself. Follow their advice and enjoy the journey!”
—Chester Elton, New York Times best‐selling author of The Carrot Principle and Leading with Gratitude
“Don't let the book's title put you off. We need leadership as much as ever—it just needs to be more facilitative and supportive, less directive and centralizing.”
—Garry Ridge, chairman emeritus WD‐40 Company; the Culture Coach
“There is no one single leadership style that works in all situations—sudden, disruptive change requires versatility, the ability to change approaches to meet the moment. In this marvelous book, Garcia and Fisher identify the traps that limit a leader's versatility by over‐relying on what worked in the past but can actually get in the way moving forward.”
—Rob Kaiser, author of The Versatile Leader; president, Kaiser Leadership Solutions
“After 83 CEO engagements, I can say without hesitation that every board and chief executive I know is redefining what it means to lead in today's volatile and complex world. The End of Leadership As We Know It is a must‐read—an enlightened reality check on the path forward for leaders all over the world!”
—Mark Thompson, New York Times best‐selling author and world's #1 CEO coach
“Contemporary leadership is fraught with landmines and traps given the intensity and frequency of change leaders are faced with today. Garcia and Fisher provide a practical guide to help both seasoned and new leaders to sidestep these traps and thrive in complexity and uncertainty.”
—Dr. Robin Cohen, head of talent management, pharmaceuticals, and enterprise R&D at Johnson & Johnson
THE END OF LEADERSHIP AS WE KNOW IT
What It Takes to Lead in Today's Volatile and Complex World
STEVE GARCIA AND DAN FISHER
Copyright © 2023 by Steve Garcia and Dan Fisher. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.Published simultaneously in Canada.
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To all the leaders who make their organizations and the world beyond a better place.
Foreword
Dr. Marshall Goldsmith
As an executive coach over the past 40 years, my mission has been to help great leaders get even better. As I've consistently found, what got you here as a leader won't get you where you need to go. That's especially true today, given how much faster and more complex the business environment has become. Today's companies face unprecedented challenges including geopolitical instability, pandemics, climate change, social media and disinformation, artificial intelligence, and the expected fruition of quantum computing. In response, successful companies are adopting new, more agile operating models, which in turn require leaders to change how they lead.
As any coach knows, relationships are the foundation for great leadership. That's how you build trust and collaboration both inside and outside your team, which are the keys to lasting success. Relationships are even more salient today, as companies seek to change how they work through a greater sense of purpose, the empowerment of employees at all levels, increased collaboration, and a culture of continual experimentation and feedback. Many of my clients immediately agree that relationships are the foundation for great leadership but are at a loss to understand how they can change these relationship dynamics in a practical way.
To address this dilemma, one of the principles I share with my clients early in our coaching process is to stop adding too much value. This bad habit can be defined as the overwhelming desire to add our two cents to every discussion. It's extremely difficult for successful people to listen to other people tell them something that they already know without communicating somehow that (1) they already knew it and (2) they know a better way.
Leaders often think they make things better by always trying to improve on ideas. They don't. Imagine that an energetic, enthusiastic employee comes into your office with an idea, which she excitedly shares with you. You think it's great, but instead of saying that, you say, “That's a nice idea. Why don't you add this to it?” What does this do? It deflates her enthusiasm; it dampers her commitment. The quality of the idea may go up 5%, but her commitment to execute it may go down 50%. That's because it's no longer her idea—it's now yours.
As a leader, it's important to recognize that the higher you go in the organization, the more you need to make other people winners and not make it about winning yourself. I asked one of my coaching clients, a former CEO of a large pharmaceutical company, “What did you learn from me when I was your executive coach that helped you the most as a leader?” He said, “You taught me one lesson that helped me to become a better leader and live a happier life. You taught me that before I speak, I should stop, breathe, and ask myself, ‘Is it worth it?’” He said that when he got into the habit of taking a breath before he talked, he realized that at least half of what he was going to say wasn't worth communicating. Even though he believed he could add value, he realized he had more to gain by not saying anything.
Learning to become a trusted leader starts with the willingness to embrace uncertainty, the humility to change how you approach your team members, and the discipline to lead with listening first. The End of Leadership as We Know It perfectly captures how leaders start their journey into this new age of management that seeks to foster collaboration and creativity.
Steve and Dan have created a guide that goes beyond the surface‐level principles and strikes at the heart of great leadership. Filled with stories and experiences—from the COVID‐19 pandemic, to the war in Ukraine, to quantum computing—that will inspire you, their approach is practical and rooted in years of learned wisdom. Furthermore, unlike many others, they don't just recommend what to do. They advise you on what to stop doing, too. Often, letting go of old habits is the hardest part. You will learn to lead with heart, vulnerability, and empathy, to lean into curiosity, to focus on resilience as well as efficiency—and you'll transform the course of your career and business.
Become the leader of the future and watch your team, company, and relationships adapt and thrive like never before!
Dr. Marshall Goldsmith is the
Thinkers50
#1 Executive Coach and
New York Times
bestselling author of
The Earned Life
,
Triggers
, and
What Got You Here Won't Get You There
.
Preface
In 1987, we sat in our respective college dorms listening to R.E.M.'s new album, Document. Lead singer Michael Stripe sang, “It's the end of the world as we know it.” We could not imagine that 36 years later we'd find ourselves applying it to the radically different ways leaders today must navigate. Back then, we suspected that the advent of email and this thing called the internet was going to have an impact on the world, but we were too busy feeling fine to anticipate the destabilization and hyper‐connectedness that was to come.
Early on in our professional paths, Steve in marketing and Dan in clinical psychology, both of us experienced personal earthquakes that changed the course of our careers. Steve was a young employee in the late 1990s as tech innovator Nortel Networks rose to prominence building the internet's infrastructure. A few years later the company, disrupted by nimble competitors, failed acquisitions, and corporate arrogance, melted down. His stock options evaporated, and he had a firsthand view as the once great company laid off close to 75,000 employees. The experience sparked his curiosity into what role systems and their leaders play in the success or failure of organizations.
Dan in the 1990s was a faculty member at Cornell Medical College, specializing in the treatment of trauma. In 1998, a team of executives asked him for a psychological consult. Their financial services company had just lost its leaders in the SwissAir crash over Nova Scotia. This encounter sparked his curiosity about how senior leaders and their teams can cope with loss, emerge from disruption, and optimize their performance as leaders, colleagues, and people. He began a new career in a field he hadn't even known was a viable career path for a psychologist.
Both of our careers grew out of disruption and destabilization. We emerged into the professional world after the Berlin Wall fell and as the digital revolution came into full effect. Like R.E.M.'s classic song, our world is frenetic, nonlinear, and, if we're being honest, at times incomprehensible. Current market conditions, popularly known as VUCA (volatility, uncertainty, complexity, ambiguity), mean that leadership as we once knew it increasingly leads to failure. In our work together, we have run toward the eye of the hurricane because we believe you often need to work through the turmoil to get to a place of clarity.
We share in this book what we've found: the principles and practices for a new kind of leadership that continually adapts to disruptive change. We also share plenty of stories, some with people identified only by their first name. In these instances, we've anonymized the example by changing some nonrelevant details, such as the person's personal information.
The two of us started working together helping clients in 2003. Eventually we helped build the first leadership and organizational effectiveness practice at AlixPartners, a global consulting firm known for helping companies navigate complexity and disruption. Being immersed with leaders and their teams at some of the world's most respected companies, such as Google, Boeing, Johnson & Johnson, Bank of America, Merck, Verizon, and Regeneron, we've had front row seats to the volatility and complexity that our clients increasingly wrestled with. The increased levels of ambiguity and uncertainty created by current market conditions challenge the traditional leadership practices that worked so well for many of our clients in the past.
Our curiosity into what leaders needed to do differently led us to cofound the Institute for Contemporary Leadership, along with our AlixPartners colleague Dr. Beth Gullette. Joining us was Dr. David Peterson, then head of leadership and coaching at Google and a leading thinker on how to handle rapid change and complexity. Since 2016 we have been working with a team of immensely talented consultants and thought leaders to study leaders, teams, and organizations as they wrestle with these contemporary challenges.
The stories and insights we share in this book come from both our experiences working with leaders and companies, and the many talented researchers whom we regularly interact with and learn from. Our hope is that at a minimum you will pick up hacks that better equip you to handle the increasingly difficult challenges inherent in contemporary leadership. If you're like some leaders whom we've partnered with, the behavioral shifts we advocate will be transformative for your work. You'll make a marked difference in the lives of your colleagues, employees, and customers.
In the spirit of R.E.M.'s Michael Stipe, we feel fine about the end of leadership as we know it. The world has indeed changed and companies and other types of organizations require new operating models, which in turn require new ways of leading. These include giving up the psychological needs to be the hero, to maintain tight control, and to be invincible. Instead, it's critical to let go of the pipe dream of certainty, to lean into curiosity, and to build lasting influence by forging authentic relationships. Inspired by the leaders you'll meet in this book, and the many wise people focused on refining operating models and leadership practices, we are optimistic and excited about the future of leadership.
—Steve Garcia and Dan Fisher
1Introduction: Making a Difference in Our Complex Times
Jack stopped staring at the latest launch date estimate and put his head in his hands. For the first time he could recall, he felt like a failure. Worse, he couldn't figure out why. He'd been so confident when promoted to general manager of a division at the global medical device company where he'd worked for the past six years. But the playbook he'd used in his previous positions wasn't working.
Charged with integrating artificial intelligence into the division's products, he'd assembled a small team of trusted lieutenants to formulate a strategy. He then went to each group in the division to explain the strategy and make sure they understood their role in delivering it. Sure, there were some naysayers, but he'd expected that. It was a bold move. He had plenty of data to back up his plan, so he'd pushed ahead. After all, when the division hit its revenue numbers, everyone would benefit.
Eighteen months in, he was exhausted. He felt like he was doing all the work, making all the decisions, and getting involved in addressing every little issue. Even so, he was missing delivery dates due to data quality, and he'd recently lost some key employees, including the person responsible for the machine learning model. The CEO was impatient and frustrated. Jack had never been in this situation before. He didn't know what to do.
The End of Leadership as We Know It
In coaching and consulting with hundreds of leaders, we keep hearing versions of the same story: the practices and frameworks they learned in business school or from mentors no longer work. Many leaders are frustrated and anxious, wondering why they can't get their organizations to respond and execute as they once did. Their strategic plans keep getting upended by unforeseen circumstances. They conduct detailed analyses, build consensus, and execute accordingly, only to be disappointed by the results. In surveys, a third of these executives say they're extremely burnt out.1
This train wreck has been coming for a while. During the second half of the 20th century, big companies developed impressive structures and policies to meet a fundamental challenge: scaling up operations while controlling costs and developing marketable products. Technology was improving, but slowly and incrementally enough that most companies could take for granted the stability of their environment.
Since then, the ground has shifted. Digital technologies now enable almost instantaneous exchange of information, capital, goods, and even talent, creating a business landscape dramatically more connected than even a decade ago. Companies have used this connectivity to create new business models, from peer‐to‐peer (Airbnb) and streaming (Netflix) to cloud computing (Amazon Web Services) and cryptocurrency (Bitcoin). Yet such tight interconnectedness also leads to feedback loops and ripple effects that challenge traditional management.
No longer can leaders confidently determine cause and effect or predict the impact of any single change. Threats and opportunities emerge suddenly from anywhere and everywhere. Executives keep applying their tried‐and‐true models developed for stable environments and wonder why their efforts now fall short.
These trends have intensified in recent years, especially with the COVID‐19 pandemic, pushing many leaders to a breaking point. Business thinkers have offered remedies, urging techniques such as acting more coach‐like, establishing objectives and key results (OKRs), applying Agile methodologies, and adopting open‐source principles. These are all good ideas, but they haven't enabled most leaders to lead effectively. Their organizations remain slow to react to outside changes, leaving them vulnerable to disruption or worse.
A big part of the problem is that leaders often don't know which of the proposed techniques to use, how to combine them, or the best way to adapt them to their own unique circumstances. It's been fashionable, for instance, to adopt OKRs to align team members on objectives, measure progress, and promote dialogue around what's working and what it isn't. We've seen OKRs work well in many organizations, but only if leaders fully integrate them into organizational life and couple them with other practices. Otherwise, the technique becomes one more quick fix that falls short. Peter Jacob, chief information officer at ING Bank, said it well: “What you can't do—and that is what I see many people do in other companies—is start to cherry pick from the different building blocks. For example, some people formally embrace the agile way of working but do not let go of their existing organizational structure and governance. That defeats the whole purpose and only creates more frustration.”2
Leaders need assistance at a foundational level. To succeed in volatile times, they must first understand why their traditional approach—with its top‐down hierarchy, annual planning cycle, and cascading execution—no longer works. With an understanding of what's broken, leaders are better equipped to address root causes. They can select the appropriate adaptive leadership practices, combine them to create positive feedback loops, and apply them in the real‐world context of their own organization.
Leaders who take this comprehensive approach have indeed moved their organizations forward and increased resilience against unanticipated market shifts. They've responded quickly to threats and opportunities, retained talent, and positioned their organizations for future success—not by telling colleagues what to do, as Jack tried, but by equipping and orchestrating them in making things happen. Instead of doing the work themselves or trying to compel their workforce to change, effective leaders act as a catalyst and connector, getting people to initiate change themselves at the ground level in response to emerging developments. Everyone finally feels effective and part of a winning team.
Our Baffling Business Landscape
We can forgive leaders who grew up in the 20th century for wondering what has hit them. A simple example conveys the seeming randomness of today's business environment.
In 2020, the cereal giant Kellogg's hit an impasse with workers at its Battle Creek, Michigan, factory. Fourteen hundred workers went on strike, and the conflict dragged on for months. Then in November 2021, over 500 miles away, Sean Wiggs got involved.
Wiggs was just a student, a junior at North Carolina A&T State University. But he learned from Reddit's popular r/Antiwork board that the company had hired replacement workers. Furious, he fought back by writing a software program that inundated Kellogg's recruiting site with fake job applications. The program, dubbed KellogBot, turbocharged Antiwork's spam campaign. A video of Wiggs went viral. His and others' social media efforts appear to have helped encourage the company to offer concessions to workers and end the strike.3
Whether you are inspired or outraged by Wiggs's actions, the story points to the interconnectedness of today's economy and society. Companies face cascade effects and unintended consequences that prevent reliable forecasting because the system's parts interact in unanticipated ways. It's much harder to chart cause and effect, because the complexity goes beyond our analytical abilities. It's also harder to place bets, because what worked in the past may not work in the future. As a result, new opportunities and threats seemingly appear out of nowhere.
That's why executives who try to lead in ways designed for more stable environments find their traditional approach ineffective. Markets shift before their initial response fully plays out, leaving leaders struggling to formulate a new response. In the words of our friend and business agility expert Andy Czuchry, “Change becomes churn.” Businesses are disrupted by the next wave of change, and exhausted by the prospect of having to react yet again. Many do not survive this cycle. Long‐established operating margins have become volatile. Employees are burned out, due to unmanageable workloads and unreasonable time pressure. Even many of the largest, most established companies expect to be replaced.
At its core, executives' struggles result from a mismatch between traditional leadership practices designed for a command‐and‐control operating model, and our new fast‐paced, interconnected reality. When the environment moves slowly or at a stable rate of change, a few people at the top of the hierarchy can decide on strategy up front, translate it into a set of objectives or priorities, cascade these down organizational silos for employees to execute, and then measure results and reward performance at year's end. They can discern cause and effect, and confidently plan for the future.
But today's environment is much faster paced and more interconnected. In 1930, for example, the half‐life of an engineering degree was 35 years (i.e., the amount of time that elapsed before half of the knowledge a student learned over the course of their studies was superseded). Modern estimates suggest the half‐life is now as low as two‐and‐a‐half years: less time than it takes to earn the degree.4 At the same time, international trade, travel, and telecommunications have all skyrocketed, increasing our connection to and interdependence on one another. As a result, small, seemingly insignificant events can have large and unpredictable consequences.
In this complex environment the traditional approach to leading organizations breaks down, for five reasons. First, up‐front planning loses effectiveness as circumstances rapidly change. Second, cascading strategy not only increases delay but also limits the understanding of strategy by those expected to implement it. Third, organizational silos undermine the cross‐functional collaboration now needed to address complex challenges. Fourth, a reliance on top‐down communication inhibits the feedback needed to understand what's working and what is not. And fifth, the command‐and‐control approach reduces employee autonomy when it's needed most—to respond quickly to opportunities and threats on the front lines. The net result is a situation where a far‐away programmer can disrupt management's carefully laid plans.
Embracing the Complexity Advantage
How can leaders manage this complexity? If traditional approaches are no longer viable, what's next? The study of complex adaptive systems offers some powerful suggestions. Found in the natural world, human societies, and increasingly in technology, these systems are dynamic collectives with multiple, autonomous parts that self‐organize to address new conditions. They can sense and respond to those conditions, enabling them to adapt effectively to rapidly changing environments. Although not as efficient as hierarchical systems, complex adaptive systems are far more resilient amid volatility and uncertainty. Leaders who move their rigidly efficient organizations in the direction of complex adaptive systems will prosper in the future.
The study of complex adaptive systems offers four operating principles for thriving in unpredictability. Figure 1.1 identifies these adaptive principles as well as their traditional, command‐and‐control counterpart.
The first principle is rapid test‐and‐learn cycles versus up‐front planning. Command‐and‐control leadership views strategy and execution as separate activities. This plan‐and‐do approach assumes that we understand cause and effect and can predict outcomes. We can therefore determine which activities will create value in advance and then task our employees with executing.
In fast‐paced, complex environments like the Kellogg's strike, it's much harder to understand causality or to forecast. Advance planning becomes difficult, if not impossible, because circumstances are apt to change. Even the best strategic plans can become obsolete before they're executed. Hence the finding, already back in 2015, that two‐thirds of surveyed large‐company CEOs said their organizations struggled to execute strategy.5
FIGURE 1.1 Adaptive operating design versus traditional organization design
Instead of planning and then doing, complex adaptive systems conduct rapid test‐and‐learn cycles through continual interaction with their external environment. They essentially treat strategy as a hypothesis, or set of assumptions, that is continually tested and refined through action. In practice, this moves an organization from annual strategic planning cycles to much more frequent (quarterly or monthly) test‐and‐learn cycles. Agile sprints represent one way to put this into practice. By integrating strategy and execution, organizations move from plan‐and‐do to sense‐and‐respond. We like to call this strategic doing.
A second operating principle is to align on simple rules versus defined tasks. Stable environments not only allow leaders to plan in advance but also to translate their plans into tasks, and communicate those tasks down the hierarchy for the appropriate function to execute. These instructions tell employees what's important and how to interact with other groups. However, in complex environments, in which circumstances continually shift, relying on predefined tasks risks directing employees to pursue outdated goals.
Instead, complex adaptive systems use simple rules to govern behavior and interactions among the system's parts. When followed by the system's individual parts, simple rules, can result in surprisingly sophisticated outcomes without central coordination. In Atlanta, for instance, 370,000 drivers navigate road hazards, traffic conditions, and weather to get to and from work every day. They do this by following simple rules, such as driving at a certain speed and maintaining a safe distance from other vehicles.
Companies often communicate simple rules through organizational purpose statements, cultural norms, or heuristics such as Google's 10× thinking (employees should look for solutions 10 times better than anything out there). Organizational members use simple rules as guardrails to inform their decisions, guide their actions, and coordinate interactions with others. In essence, simple rules act as standards that govern everyone's behavior and promote collaboration by establishing norms and setting expectations.
As we describe in Chapter 5, the leaders of IAG, Australia's largest general insurance company, responded to devastating wildfires by changing the company's purpose from managing risk to making the world a safer place. The simple rules that resulted had a dramatic impact on how employees worked and equipped them to make decisions independently on behalf of customers. As a result, the company thrived.
The third operating principle is to decentralize decision‐making. Simple rules by themselves don't help unless employees are empowered to apply them. Command‐and‐control approaches concentrate decisions at the top of the pyramid. That works in stable environments with plenty of time to make decisions; employees lower down in the hierarchy can escalate whenever they are unsure of what to do.
In complex environments, however, change is constant. As a result, small delays get compounded, which can ultimately spell disaster. Complex adaptive systems mitigate this challenge by distributing control. Like a flock of sparrows, Wikipedia community, or living organisms in a forest, any part of the system can influence the rest. This decentralized approach speeds action by enabling individual members to make decisions on their own, boosting flexibility and resilience by eliminating choke points.
Leaders in organizations can foster decentralized decision‐making in different ways. One is through delegation. Another is by actively seeking employee involvement in decision‐making. A great example of this is IBM's Red Hat division. Founded as an independent company with the belief that open collaboration was the best way to create better software faster, Red Hat naturally sees employees as an important source of insight and feedback. According to DeLisa Alexander, Red Hat's former chief people officer, “We don't legislate, we discover.”6
One way Red Hat tapped into employees' ideas is Memo‐List, an internal email list to which all employees subscribe. Former CEO Jim Whitehurst said he reviewed employees' posts to Memo‐List daily and estimated that three‐quarters of employees used the platform regularly. Memo‐List gave employees a chance to express thoughts, ideas, and opinions. True to the values of open source, the best ideas rose to the top. As time passed, Memo‐List became a vital platform for strategic conversations and a crucial element in the culture of meritocracy, which observers credit with contributing to Red Hat's repeated position on Forbes's list of “The World's Most Innovative Companies” and Glassdoor's list of “Best Places to Work” as well as the company's acquisition by IBM for $34 billion.
The fourth and final principle is to organize around networks versus top‐down hierarchy. Traditionally, organizations managed performance vertically, in silos. Leaders at the top of the pyramid told each division or function what to do, and managers in each area then directed employees' efforts accordingly and rewarded them based on their performance. Not surprisingly, employees ended up identifying with and aligning themselves around the priorities assigned to their unit rather than those of the broader enterprise.
Today, most work happens not in silos but horizontally, requiring collaboration from teams across the enterprise. Indeed, in today's business environment, it would be hard to find a value stream map that doesn't cross multiple functions. Solving complex business problems invariably requires that companies integrate diverse sets of experience and expertise.
Complex adaptive systems address this need by using networks to communicate and coordinate behavior. Networks are, in fact, the sole method of organizing in the natural world. Moreover, the configuration or pattern of the relationships within a complex adaptive system is dynamic—the system can rewire itself in real time in response to external stimuli. This is a huge advantage as the structure of the relationships between the system's parts, at least as much as the characteristics of the parts themselves, determines the system's performance. This is one reason many experts now define leadership not by a set of capabilities, but as a relationship.
In the past, most organizations didn't see or appreciate their networks of internal relationships. Additionally, if they wanted to change these networks, they had to restructure reporting lines, reengineer business processes, or redesign office space, all of which were both costly and slow. Fortunately, in recent years, organizational network analysis has emerged as a tool to uncover and analyze these connections. Applying this approach, leaders can modify how people interact and collaborate, creating faster, higher‐impact, and more adaptive organizations.
One consumer health care company provides a compelling example of the power of cross‐enterprise networks. By some estimates, a third of a consumer's purchase decision is based on a product's packaging. Accordingly, the company sought to develop innovative packaging to stimulate demand. Yet initial attempts proved disastrous. In one instance, the plastic required to create a uniquely shaped bottle interacted with the formulation, causing the bottle to shatter when dropped. The result was millions in wasted inventory, product launch delays, frustrated retail customers, and internal finger‐pointing.
Dennis, a senior R&D director, was tasked with “fixing the problem.” He soon realized that every department had a different point of view on what made for good product packaging. Marketing wanted the package to be attractive to customers, manufacturing wanted to make it reliably at low cost, and R&D wanted it to protect the product it contained. It wasn't that any function lacked expertise. It was that the functions didn’t understand each other’s perspective and weren’t interacting. Siloed thinking was causing the problem.
To overcome the siloes, Dennis brought everyone together, having each function share their perspectives and suggest improvements to the larger team. As participants started to understand each other's point of view, they forged new relationships. After a series of meetings, a consensus emerged, and the group agreed on a new approach to design. Having gotten to know each other, they stopped the finger‐pointing. When people had a concern, they picked up the phone and called each other directly. Collaboration soared, and suddenly problems were getting solved. The time to develop new packaging was reduced by 25%, and the team calculated that the approach would generate $70 million in incremental revenue.
Complex Adaptive Systems in Wartime
The advantages of these operating principles over traditional command‐and‐control approaches were apparent during the first year of Russia's invasion of Ukraine. As we write this in early 2023, the war is far from over, but many observers judge the invasion to have failed on multiple levels. When Russian President Vladimir Putin launched the full‐scale attack on the much smaller Ukraine in February 2022, he anticipated a rapid and decisive victory, one that would secure his place in national history. Instead, Russia has suffered tremendous losses, its economy is in decline, and the Western democracies he sought to divide have united against him.
Many experts attribute Ukraine's success to differences between Ukrainian and Russian command structures. Ukrainian forces regularly test and learn (principle 1). They rapidly change tactics and create “MacGyver” solutions as problems arise.7 They've modified Western missiles for MiG‐29 fighter aircraft, adapted off‐the‐shelf drones to carry hand grenades, and repurposed Russia's abandoned and damaged armored vehicles.
By contrast, the Russians continued to execute the same, unsuccessful plan over time. In the words of one former US Marine fighting in Ukraine, “The Russians have no imagination. They would shell our positions, attack in large formations, and when their assaults failed, do it all over again.”8 Similarly, US Army Lt. Gen. Ben Hodges wrote, “Aside from moving ammunition back, I'm not seeing them being an adaptive force able to learn and adjust. I don't see any evidence that they have learned and fixed the things that were broken.”9
Part of Ukraine's success stems from a shared purpose—expel the invaders—that energizes Ukrainian forces. While many Ukrainians volunteer to fight, more Russians have fled the country than reported to duty during Russia's late 2022 mobilization. Ukraine's common purpose acts as a simple rule (principle 2). It clarifies the priority (resist and degrade the invasion), fosters coordination across military units, and enables lower‐level officers to act autonomously. Meanwhile, in the absence of a clear mission, Russian forces are left to blindly follow orders.
