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198 The Conductive Organization well-described set of core values, with supporting leadership behaviors is a key requirement for building values-based conductive organizations. In recent years we’ve seen how the behavior of leaders can fatally damage an organization, even one that has historically been seen as a great organization. It’s not just a matter of managing the risk of strategic failure. Fundamentally, an organization does all that it can to ensure that it’s not vulnerable to destruction by unethical leaders. A set of leadership values that are non-negotiable is key for mitigating this risk. The organization must make it clear that, if leaders do not live by these values, they cannot and will not be allowed to hold leadership positions at any level. The power of leadership values is that they instill a well-defined and understood set of leadership accountabilities. Without this level of accountability, organizations are prone to corruption. When leadership values and behaviors are culturally protected, contradictory behavior is quickly identified because the leadership principles have been collectively adopted, agreed upon, and institutionalized. Clarica’s three core values (partnership, stewardship, and innovation) were translated into 18 leadership behaviors. Although these behaviors were embraced and lived by the executive team, they were also expected from all employees across the organization. The leadership behaviors were described in action-oriented terms to stress that employees should be proactive in bringing these values to life: Partnership in action:  Seek and build partnerships  Listen and understand  Communicate clearly and honestly  Foster collaboration  Encourage the heart  Appreciate diversity Stewardship in action:  Act with integrity  Look outward A New Leadership Agenda     199 Optimize customer success Act with energy to get results Be a leader Take ownership Innovation in action:  Be entrepreneurial  Be solutions-oriented  Commit to learning  Actively request and offer feedback  Take risks to meet the vision  Create and share knowledge. Monitoring leadership values and behaviors is an ongoing process where assessment is used as the basis for interventions focused on evolving behaviors towards an ideal state. This monitoring and assessment can be achieved through a values system. Clarica’s quarterly Values of Your Voice survey completed by employees monitored how leadership values and behaviors were being lived. Employees were asked whether they agreed, somewhat agreed, somewhat disagreed, or disagreed with 100 statements designed to discover how the employee experienced the culture of the organization. Leadership-oriented statements included:     Strategic direction is clear, vision is meaningful. I know how I contribute. My manager expects collaboration. People are empowered, trust one another, and take risks. Poor performance is managed effectively. From the survey findings, Clarica’s executive team had one view of how individuals were developing requisite leadership values and behaviors and another of how this development was experienced by the employee-base. 200 The Conductive Organization The Dangers of Managing through the Spreadsheet Without anchoring leadership capabilities and expected behavior in values, an organization can fall into a number of habits that are detrimental to conductivity. A key danger is a view of the organization only through the eye of the spreadsheet. We aren’t in any way questioning the need for strong financial discipline or prudence, but rather highlighting the inherent risk of such an approach. Senior leaders who make decisions based only on what spreadsheet cells tell them may behave contrary to the organization’s best interest. For instance, to get the right numbers, funding may have to be pulled from initiatives (e.g., lay-off people, discontinue learning resources, reduce travel) that build capabilities or deepen relationships. Such a move may provide short-term financial success and may even be applauded by the markets, but it carries a long-term cost as capabilities and relationships disintegrate. Leaders with a spreadsheet mindset run the risk of sending mixed messages through the organization that can wreak cultural havoc and lead to employee disengagement. For example, a CEO may say “our people are our most valuable asset” and then say “80 per cent of expense is people and so to achieve an ROE (return on equity) of X percent we have to cut Y number of people.” What this leader is doing is saying in one breath that people are indispensable to the value proposition of the business and in the next that they are totally dispensable. We aren’t saying that downsizing must be avoided at all costs. Of course, there are times when it’s a required organizational response to changing market demands or a result of technological enhancement or a merger. What we’re saying is that it should be deployed judiciously and appropriately. Removing Fear The constant threat of downsizing will naturally engender fear in individuals. Where fear predominates, people will hide mistakes, not A New Leadership Agenda 201 take risks, and become competitive with their colleagues. Considered from a values perspective, they’ll more likely operate through the basic and narrower values related to survival rather than values that promote greater interdependence and partnership. In a climate of fear, employees are incapable of entering into a high-trust relationship with customers. We cannot expect employees to own their relationship with the customer and open up to customers’ concerns with care and attention when the organization doesn’t enter into high-trust relationships with employees—where care and attention are equally evident. The Importance of Integrity One of the most important mandates of knowledge-era leaders is to ensure that a very high level of trust is maintained within all the organization’s relationships. At the same time an environment where people are willing to change rapidly on a regular basis must be created. If the level of trust is eroded by the way leadership functions, there will be a build-up of resistance to change as employees stop believing in the organization’s goals and adjust their commitment accordingly. Basically, leading with integrity (2) means that we stand for what we believe. Consequently, it’s incumbent on leaders to have the courage to act with integrity even when tough and unpopular decisions must be made. When Clarica purchased the Canadian operations of MetLife, a significant number of staff lost their jobs. Clarica endeavored to work through the layoffs with a high degree of integrity. Difficult communications about job status were delivered in an honest, straightforward manner. Clarica made the commitment that all former MetLife staff would know within six weeks of the merger whether or not there would be a role for them going forward. Acting with integrity creates a platform for delegating responsibility, encouraging self-initiation, and increasing trust. It’s the way to encourage people to exercise a higher degree of leadership in a conductive organization. 202 The Conductive Organization vision targets systemic view selfinterest “silo” view service safety courage Figure 10.5 Acting with Integrity Leadership integrity has been illustrated by Koestenbaum as a diamond linking four key elements: vision, service, courage, and systemic view (see Figure 10.5). (3) When leadership integrity becomes eroded in an organization, behaviors revert to the inner diamond (self-interest, safety, silo view, and targets). Instead of striving to realize a worthwhile vision, leaders place single-minded importance on targets that become devoid of meaning. A healthy organization and its leaders are at the service of a worthwhile cause. This is lost when leaders become self-serving. This behavior has a disproportionate impact on depleting the trust reservoir of the organization. When everyone starts looking out for themselves as individuals, the organization loses its coherence and the outside-in perspective becomes clouded. Self-serving behaviors also lead directly to an erosion of courage to safety. When leaders no longer stand for what they believe, they take refuge in safe behaviors. At this point, they generally have quit and stayed—they’re there in body, but little else. From this perspective, it’s not possible to care for the collective success of the organization. It’s a contagious condition. Everyone starts marking time and optimizing their own narrow, individual interests. Leaders lose their systemic, holistic view and no longer act in the organization’s col- A New Leadership Agenda 203 lective interest. The inner diamond takes on a centrifugal dynamic of its own where the erosion of one dimension leads to the erosion of the next. This illustration can provide identification of symptoms that point to the start of erosion. At any point, an organization’s climate can be mapped onto the arrows that link the outer diamond to the inner diamond. With the tension between these two diamonds in mind, leaders can easily monitor the overall climate of leadership integrity that characterizes their organization. Conclusion A new leadership agenda, based on core values, is needed in a highly conductive organization. Recognition that all employees have a mandate to exercise their leadership capabilities moves the organization to a self-initiated culture that has the capabilities to create and maintain high-trust relationships both internally and externally. As an organizational capability, leadership is the dynamic that provides the tension to constantly calibrate the four core capabilities—to keep the organization focused on an outside-in perspective. Traditional leadership styles and attitudes toward leadership development are rapidly changing in the knowledge era. Organizations that recognize the need to move to a new leadership agenda are creating environments in which leadership capabilities can be exercised by all employees—no matter where they sit in the organizational structure. Emerging Principles  Leadership is a capability that must be encouraged and nurtured within all employees, not just the few who sit at the top of the organization chart.  The ability to configure and reconfigure business processes and capabilities, to continually calibrate to the customer, is central to the leadership agenda today. 204 The Conductive Organization  Leadership’s responsibility is to ensure that systems and structures are in place to enable members of a value-creation network to collaborate, learn, share knowledge, and execute their responsibilities.  Recognition that all employees have a mandate to exercise their leadership capabilities moves the organization to a self-initiated culture that has the capabilities to create and maintain high-trust relationships both internally and externally.  A set of leadership values that are non-negotiable is key for mitigating governance risk.  Where fear predominates, people will hide mistakes, not take risks, and become competitive with their colleagues.  It’s becoming a critical organizational and leadership capability to be able to create and leverage participation in network-designed and -delivered solutions.  Leadership operates through the assembly, disassembly, and reassembly of cross-disciplinary teams, which may also include customers and/or partners.  Understanding customer aspirations and creating the capabilities to service customers’ articulated and unarticulated needs requires a special set of generative capabilities—learning, collaborating, and strategy making.  Great organizations learn how to articulate the purpose, or meaning, of their corporations in ways that transcend everyday business constructs and inspire all who come into contact with the corporation.  All employees should be encouraged and enabled to develop their leadership skills for their own benefit and in congruence with the requisite leadership behaviors of the organization.  When leadership values and behaviors are culturally protected, contradictory behavior is quickly identified because the leadership principles have been collected, adopted, agreed upon, and institutionalized. A New Leadership Agenda 205  Senior leaders who make decisions based only on what spreadsheet cells tell them may behave contrary to the organization’s best interest.  In a climate of fear employees will be incapable of entering into a high-trust relationship with customers.  If the level of trust is eroded by the way leadership functions, there will be a build-up of resistance to change as employees stop believing in the organization’s goals and adjust their commitment accordingly. References 1. For more information on Russell Ackoff ’s work see: Ackoff, R.L. (1994). The Democratic Corporation: A Radical Prescription for Recreating Corporate America and Rediscovering Success. New York: Oxford University Press. Ackoff, R.L. (1999). Re-Creating the Corporation: A Design of Organization for the 21st Century. New York: Oxford University Press. 2. For more information on leadership integrity, see Barbara Annis’s work at http://www.baainc.com 3. Koestenbaum, P. (1991). Leadership: The Inner Side of Greatness. San Francisco: Jossey-Bass. This page intentionally left blank 11 From Conductive to Highly Conductive—The Evolving Organization Introduction An alternate title for this concluding chapter might have been “A Work in Progress—The Never-Ending Journey to a Highly Conductive State.” As we outlined in the first chapter, we’ve by no stretch of the imagination come to a definitive answer about how a conductive organization should be structured—what’s going to be the answer for the ever-emerging challenges of the knowledge era. Instead, we’ve offered our opinion as to where we should be headed, based on reflection on our own experiences in practice, as well as our conversations with colleagues and peers. In a keynote address to delegates at the May 2003 Knowledge Nets Conference in New York City, knowledge visionary Larry Prusak talked about ideas and the endless trail of supposed leading-edge approaches that organizations worldwide keep experimenting with in hopes of finding a winning combination. He suggested that the reason so many ideas come and go is that business management is an art, not a science—there are no proven principles, theorems, and laws to guide decisions. As a result, we continue to work with the raw materials that we have, trying new approaches and combinations to create an ever-hopeful masterpiece. 207