Both/And Leadership PDF

Both/And Leadership – Smith, Lewis, Tushman 1. INTRODUCTION Leaders face contradictory challenges → some CEOs respond by prioritizing one challenge over the other, some seek a middle ground negotiating trade-offs that all stakeholders accept Both approaches have in common that they seek...

Both/And Leadership – Smith, Lewis, Tushman 1. INTRODUCTION Leaders face contradictory challenges → some CEOs respond by prioritizing one challenge over the other, some seek a middle ground negotiating trade-offs that all stakeholders accept Both approaches have in common that they seek to find a stable solution → assumption that stability is what an organization needs in order to be successful (mischaracterization of the business environment) Too much focus on one goal triggers a demand for the other and as the business environment and its actors changes, stability breaks down often destroying value The goal of leadership is to maintain a dynamic equilibrium in the organization → executives with this goal do not focus on being consistent but purposely and confidently embrace paradoxes → senior teams build a dynamic equilibrium by separating the imperatives that are in conflict with one another (in order to recognize and respect each one) while at the same time actively managing connections between them in order to leverage interdependencies and benefit from synergies 2. THE PARADOXES OF LEADERSHIP Paradoxes: imperatives that are in conflict with each other, tensions paradoxes fall into three categories related to three questions that many leaders perceive as “either/or” choices ARE WE MANAGING FOR TODAY OR FOR TOMORROW Innovation paradoxes: tensions between today and tomorrow, existing offerings and new ones, stability and change firm’s long-term survival depends on experimenting, taking risks and learning from failure in the pursuit of new products, services and processes firms also need consistency, discipline and steady attention to make most of their current products DO WE ADHERE TO BOUNDARIES OR CROSS THEM? Decisions about geographic, cultural and functional boundaries Globalisation paradoxes: tensions between global interconnection and local needs, breadth and depth, collaboration and competition DO WE FOCUS ON CREATING VALUE FOR OUR SHAREHOLDERS & INVESTORS OR FOR A BROADER SET OF STAKEHOLDERS? Leaders may be torn between maximizing profits for the firm and trying to generate wider benefits – for investors, employees, customers and society but being socially responsible can bring down share price and prioritizing employees can conflict with short-term shareholders’ or customers’ needs Obligation paradoxes: tensions between maximising profits for the firm & trying to generate wider benefits – for investors, employees, customers and society → the either/or questions can never be definitely answered, they need consideration of alternative demands that are interdependent & contradictory → require leaders to reframe and consider as both/and questions instead of either/or It is challenging to a manage both/and approach as relationships between the sources of a paradox will change over time and in response to external and competitors’ events actions taken to manage strategic paradox may trigger others sources of paradoxical tensions are often found in different parts/levels of a firm (business units) which makes paradoxes a major driver of internal conflict because people in each business unit tend to associate with one side or another of a paradox, real conflict can arise & a large organization hosts different cultures leaders’ challenge is not to choose between alternatives but to recognize that both must be addressed 3. THE PARADOXICAL MINDSET paradoxical leadership begins with a re-examination of some assumptions about leadership FROM CONSISTENCY TO CONSISTENT INCONSISTENCY Cognitive dissonance: discomfort triggered when making decisions and taking actions that we see as inconsistent with an accepted truth, or when values conflict usually when two ideas seem contradictory, choosing and championing one can minimise cognitive dissonance → this needs to be changed to be able to benefit from the synergy of the ideas at the top of an organization consistency is far from a necessity, it is a vice keeping leaders with successfully dealing with strategic paradoxes FROM SCARCE RESOURCES TO ABUNDANT RESOURCES traditional leadership approaches assume that resources – time, money, people etc – are scarce and it becomes natural for leaders to look for constraints → ends up in zero-sum thinking: allocating resources to one goal means they are no longer available for the others which fuels conflict between managers with different agendas  leaders embracing paradox realise that resources can be abundant and generative at same time they pursue strategies to grow the pie with these resources → exploring collaborations with new partners, using alternative technologies, adopting more-flexible time frames for shifting resources for better use FROM STABILITY AND CERTAINTY TO DYNAMISM AND CHANGE leaders seek to reduce their followers’ discomfort with certainty by making decisions that minimize complexity and emphasize stability → when the strategic environment changes this often ends in defensive and detrimental actions paradoxical leadership depends on embracing dynamism and change → leaders must be open to the new, developing a management strategy of coping with rather than controlling & minimising ambiguity managers must be humble admitting they might not know what the future holds approach emphasizes the value of experimentation & failure, spurring critical feedback to enable learning & ongoing adjustments 4. MANAGING DYNAMIC EQUILIBRIUM when leaders assume there are multiple truths, that resources are abundant and that the role of management is to cope with change → can reach a state of dynamic equilibrium which is at the centre of paradoxical leadership to benefit from paradox, managers must build organisational competencies by both separating & connecting opposing forces SEPARATING begins with respecting the needs of groups with different agendas → requires pulling apart the organization’s goals and valuing each of them individually Separating: different organisational goals need to be pulled apart and valued individually → one way: create business units (and even subgroups) based on functions, geographies, products each with its own leader, mission, metrics and culture → other way: if separation is not possible – carving out dedicated times and spaces for exploring each goal using different decision-making processes CONNECTING Connecting: finding linkages and synergies across goals → one way: build overarching organisational identity and unite people in a higher purpose → other way: design roles and processes intended to integrate separate strategic goals (Example: leader might designate a manager to act as a business integrator with responsibility for linking innovation with existing products → leaders might use integrated metrics and reward systems to foster connections TOWARD A DYNAMIC EQUILIBRIUM  Organizational success depends on both separating and connecting In the interest of fostering synergies, leaders might promote an overarching identity, stress a collective mission statement, develop unified measurement systems Smart leaders design metrics and rewards -even build out different financial statements – for each strategy and complement those with additional metrics and rewards that depend on the success of the entire organization Niels Bohr (nobel prize-winning physicist): “how wonderful that we have met with a paradox. Now we have some hope of making progress.” -> paradox reveals truth and spurs creativity