The European Business Review Jan/Feb 2014 edition (sample) by EBR MEDIA

The European Business Review January - February 2014

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The European Business Review January - February 2014

Contents Management

5 New Business Models and the Changing Contexts of Business School Peter Lorange, Jagdish N. Sheth & Howard Thomas 10 Work Teams Have Emotions, Too (and you need to understand them) Sigal G. Barsade & Donald E. Gibson 14 How to Boost the Insight Generation Power of Your Worforce in Innovation Alessandro Di Fiore

Innovation

20 The Solution Economy: A New Way to Solve Social Problems William D. Eggers and Paul Macmillan 24 Delivering Innovation in Unified Communications 26 Stop the Nonsense! Innovation is a Discipline. Jay Rao 30 Innovation: A Critical Capability Scott J. Edgett 34 Staying Power: Managing Innovation in an Uncertain World Michael A. Cusumano 41 Achieving Demand Planning Excellence Karin Bursa 45 Want More Innovation-Driven Entrepreneurship? Go Low-Tech! Terence Tse & Mark Esposito

Leadership

50 Nelson Mandela as A Strategic Leader Paul J. H. Schoemaker 56 Who Says Yes When the Headhunter Calls? Peter Cappelli & Monika Hamori 60 Meeting Expectations John Sutherland 64 Jealous Leader´s Behaviour: the Othello Boss Syndrome José Ramón Pin & Guido Stein

Logistics

70 The Globally Intergrated Enterprise: Developing Enterprise Intergration as a Strategic Capability Maximilian Chowanetz & Sia Siew Kien

Editors Jane Liu David Lean Elenora Elroy Rebecca Lord Commissioning Editors Laura Macshane Simon Rosenthal Marcus James Garreth Edwards Business Development Editors Ian Love Diane Hamilton Krithika Natarajan Production Saul Luckman Onyinye Iwu Illustration Mark Hithersay Vaan Cao Head of Finance Lynn Moses Editor in Chief The European Business Review Publishing Oscar Daniel

READERS PLEASE NOTE The views expressed in articles are the authors’ and not necessarily those of The European Business Review. Authors may have consulting or other business relationships with the companies they discuss. The European Business Review 113 Sternhold Avenue London SW2 4PF Tel +44 (0)20 8678 8991 Fax +44 (0)20 7000 1252

75 Logistics Clusters: The Feedback Loop Leading to Economic Growth and Jobs Yossi Sheffi

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81 Attributes of Engineers and Engineering for the 21st Century World PE Seeram Ramakrishna

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Management

New Business Models and the Changing Contexts of Business School By Peter Lorange, Jagdish N. Sheth and Howard Thomas

The traditional models of many business schools are being questioned given their serious financial difficulties. Below, Peter Lorange, Jagdish N. Sheth and Howard Thomas address the importance of the examination and evaluation of new models and approaches to management education.

usiness studies remains one of the most sought after majors both at the undergraduate and graduate levels (e.g. the MBA) and a successful growth story in higher education. However, the context in which business schools operate has undergone significant change, which makes it timely to undertake a critical examination and evaluation of new models and innovative new approaches to management education. Four factors are particularly relevant: • The stable, growth-oriented business environment of the past is changing. Advanced countries have fewer undergraduate and graduate students. Even the relatively stable executive education market seems to be in a recession. Although it might be argued that market conditions are improving, an alternative viewpoint might suggest that instead the situation is one of less demand, more turbulence and more marketdriven cycles. If this is so, it is important to explore the possible consequences for academic leaders. There may need to be a greater willingness and capability to be more open-minded, flexible, and have a different approach to timing decisions, ie focus on

changes that involve so-called ‘in/out’, and/or long/short moves. This relates to the timing of when to enter the market as well as when to exit (in/out), as well as when to commit to a long-term contract (long) versus when to stay current (’spot’ contract or short). Speed and agility are increasingly essential and the old stability-based managerial approaches are less appropriate. This relates to both curriculum changes and faculty responsiveness to new topics, new research and new competencies. Business schools will need to be more proactive and even abandon some of the old approaches. • Perhaps partly as a function of more difficult times, it seems that graduate and undergraduate students and executives are demanding a greater emphasis be given to projects, thus requiring a more eclectic curriculum. For example the development of a new product involves the areas of R&D, marketing, sales, manufacturing and finance. Similarly to enter a new market involves marketing and sales as well as communications, manufacturing, logistics, legal expertise and so on. Hence, close and quick co-operation across disciplines becomes very important. Thus, the traditional functional and discipline-based curriculum design is becoming increasingly outdated. The need for disciplinary focused academic departments and disciplinefocused (so called A-Journal) research may be diminishing. There needs to be a quick response to these changing needs. However the move away from embedded academic traditions to a multidimensional, multidisciplinary teaching and research approach may be very difficult to implement under the current consensually-based academic governance mechanisms. • Students are being realistic about the need to prepare themselves as well as possible for the difficult job market. Holding a generalist MBA degree may simply no longer be enough for them. The trend towards more job-specific Master of Science degrees seems clear, as set out in the European Bologna agreement. M.Sc. specialisms could include banking, finance, highend marketing, human capital management, business analytics, shipping and sports management. The demand for more general MBAs may well continue, perhaps after having taken a specialist M.Sc., provided the academic institutions design appropriate and meaningful linkages between specialist and general management degrees and maintain strong quality, academic standards and norms in their programme offerings. • The more traditional business models of many business schools are being questioned given their serious financial difficulties as a result of high fixed costs and lower demand. Now may be an appropriate time to explore other more

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Management

cost-efficient business models, which incorporate the use of educational technology while at the same time maintaining academic quality. It may be necessary to utilise faculty more effectively, increase their classroom exposure and improve the interaction with students. Such changes may be difficult to initiate and implement in many traditional academic contexts. The majority of business schools receive public funding, and many exist within public universities. The issue of cash flow planning, particularly when it comes to the income side, may need closer attention. An active focus on how to affect the income side, perhaps by introducing new programmes as well as being more attentive to a school’s breakeven point will be increasingly important. There are ways to meet these challenges, while also maintaining a high level of quality in academic value creation.

The Lorange Network Model The Lorange Institute of Business Zurich is an innovative ‘network-based’ business model which has adopted a revised curriculum based on strong modularisation. Many modules are taught over weekends so that participants may continue to work. Executive M.Sc. specialisations including Modern Finance, Modern Marketing, Leadership, and Management in Cycles (such as in shipping), can later be expanded into deeper Executive MBA elective courses. Many modules are offered jointly for executives and masters students. The faculty comprises leading experts on specialised topics as well as leading practitioners with unique backgrounds and expertise who are recruited from around the world. The latter group of practitioners tend to teach shorter, two-day modules. An intensive marketing effort has been undertaken to introduce the school to the world. But it takes time for a school to establish a reputation based on quality. Exciting and innovative programmes alone are not enough. Perhaps the biggest challenge relates to administrative organisation. New programmes based on emerging disciplines may be put in place. Professors may be available to teach on them. Marketing plans may be formulated which make the programmes attractive, relevant and financially viable to participants. But to find effective new team members able to translate the vision of such a future-focused organisation is one of the most difficult tasks. However, it is apparent that: • A website presence and social media ‘engineering’ offer unique opportunities for marketing, and connecting with prospective and present participants • Co-ordination across modules and across offerings is absolutely essential • Different models for longer-term franchising-based networks might develop and thought has to be given to the image that will thereby be created. Figure 1 illustrates how such an ‘intelligent’ network might work centred around a ‘hub’ anchor. Each participating school

The European Business Review January - February 2014

represents a natural source of specialisation according to its location. For example, a Brazilian school might focus on the young, computer-based consumer, a Middle East school on family business, a Nordic school on entrepreneurship and a Swiss school on finance. Each would provide a programme on its particular topic of excellence, say, through a two-day module. Figure 1: A global balanced network

Middle East: Family Business

Switzerland: Finance

USA: Enterpreneurship

Nordic: Leadership

Coordination

Brazil : Youth marketing

• Nevertheless, innovation and change can certainly be expensive. This is likely to be problematic for established business schools especially when the outcomes are uncertain.

A set of guidelines for revising the modern business school’s modus operandi Drawing upon insights culled from The Lorange Institute of Business, various questions can be raised: • Does a business school really need an exclusive pool of permanent faculty and do they really need to be permanently based at just one institution? Is it necessary for faculty to give exclusive contributions in only one school? Could faculty be shared among several academic institutions? They are an expensive resource, so why not share the costs? This assumes, of course, that each faculty member must be able to and/or willing to undertake both cutting-edge teaching and research. Receiving institutions must be willing to pay for a faculty member’s research as well as teaching. Is it necessary that faculty come from a pool of academic professors? Why not make use of leading practitioners as teachers and researchers? An additional benefit would be a combined thematic cutting edge and practical focus. The concept of a stable network of part-time faculty might also enhance academic performance, both in the classroom and in research. Faculty members would need to perform well for their contracts to be continued; in this situation tenure would not exist in the same way. However, many traditional business schools are organised around a tenure-based model, with academic departments for each major field (finance, marketing and so on) and this

creates problems in implementing a new non-tenure, contract based model. Professors normally undertake research and teach within the parameters set by each field. Promotion is based largely on discipline-based research outputs within their specific field, published as single-authored articles in specialised peer-reviewed journals. It is argued here that this model is no longer good enough. The focus is more on specialised research rather than on more relevant and current business issues, such as understanding how to cope in turbulent times through creativity, innovation and attacking new markets. This focus impedes the growth of joint work between teams of professors and students engaged in crossdisciplinary and practical research. Professors must have authority, self-confidence and personal belief in their own expertise. But at the same time, there should be the willingness to collaborate and share their knowledge by working in a different and more generous way. Other dysfunctionalities are inherent in the classical academic model which may reinforce the very narrow world of the professor. For example, specific courses, on well-identified topics, are typically repeated by the same professor every year. There develops an ‘ownership’ associated with it. These courses are shaped by a professor’s expert knowledge base with contents which is less relevant in today’s setting. These materials may be used repeatedly, capitalising on a once-and-for-all ‘investment’ in course development, which allows time for more individual research. Such courses may become predictable boring, irrelevant and disconnected from current practical challenges. There have to be better options. Teamteaching might be more realistic and would broaden the focus and achieve more cross-disciplinary outcomes. Unfortunately, professors are rarely free to innovate. Curriculum changes, especially major ones, must typically be reviewed by a faculty committee which is usually a slow, bureaucratic and sometimes intimidating process. This may

For change to occur, it helps to have a receptive faculty willing to endorse a meaningful change agenda for the benefit of the whole school. partly explain why outdated teaching approaches persist. • It may be time to value a more collaborative faculty culture. Perhaps, working with a network of part-time faculty might facilitate this further. Thought may need to be given to how to credit jointly undertaken/authored research, joint teaching and so on. At annual review time, there should be an acknowledgement of individual and collaborative efforts. • Academic institutions have become increasingly bureaucratic and demand more from faculty. This includes procedural red tape, and the requirement of greater student interaction, more frequent meetings, increased paperwork, leaving less time for teaching and research. Bureaucracy needs to be reduced, perhaps by simplifying formal structures including reducing the number of departments, streamlining processes, producing more explicit agendas and stronger leadership in meetings and demanding more purposebased conclusions. Traditional academic departments might be combined, leading to fewer silos. Maybe even the hierarchy of academic titles might be reduced or even eliminated, further reducing the number of silos. • Full-time study programmes are usually seen as of higher quality than their part-time equivalents, especially at the undergraduate level, but also sometimes with MBA programmes. This perception is ripe for revision. Students can learn both on the job and in business school. Such a combined effort can enhance the experience and provide a deeper and more practical understanding. Relevant inputs can be speeded up from both sides. Academics would have access to practical ‘living case’ inputs and managers would be able to draw on academia for ongoing innovations. This could almost occur simultaneously.

A variant of this might be having senior and junior executives taking the same courses and sharing the classroom. A more youthful perspective can broaden senior executives understanding of such issues as career expectations, consumer trends, IT-based technology and so on. Junior executives can learn much from the wisdom and experience of their senior colleagues. It is the blend of these perspectives – the positive tension – that must be sought. • Currently too much teaching takes place in a lecture hall environment where a professor ‘talks’ to the students and there is limited or no exchange of ideas. Why could the classroom not be more of a debating forum, a ‘meeting place’ where there is a sense of dynamism and excitement? There has been some movement towards this kind of setting, especially in the MBA field, but more could be done. In an effective ‘meeting place’ where there is a sense of openness, new propositions could be freely launched, potentially benefiting faculty member’s research. Ideas could be ‘tested’ against existing propositions, and against practical experience and dilemmas. • Innovation is a key driver. Research that is close to business is an important element in this. Innovation is more feasible in a school with less bureaucracy, fewer silos and more managerially focused students. • Many academic institutions are conservative with faculty having a fair amount of input: there is a sense of a ‘bottom-up’ dominated culture. But there must be a ‘top-down’ counterbalance, typically in the hands of the dean. It is this ‘top-down’ / ‘bottom-up’ balance that is so critical for success. However, good leaders may stay away from contexts that seem impossible to lead. For change to occur, it helps to have a receptive faculty willing to endorse a meaningful change agenda for the benefit of the whole school.

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Management

• Good governance is critical. Seniority and tenure should not necessarily be the major determinants when it comes to inputs on governance. Instead there should be recognition of a faculty member’s demonstrated ability, willingness to contribute to teaching and research, to the establishment and to the maintenance of a community which values collaboration. Good governance today implies a lot of ‘virtuality’, taking advantage of emergent technology. Meeting face-to-face may be difficult, impractical and expensive – and it may no longer be necessary. A minimal number of faculty meetings per year would suffice, in combination with virtual ‘meetings’. Questions brought to them should be focussed: key value-creating dimensions should dominate, such as are we innovating enough and how can we do more? Do we have a productive enough learning culture, a ‘meeting place’, and how can we do better? Part-time faculty must feel included and be committed and also see themselves as part of the team. Governance is therefore central and must be effective. • Effective learning is the key driver at the business school of the future; it is its raison d’être. The ‘meeting place’ as a model for two-way dialogue between faculty and participants in the classroom has already been mentioned, and it was emphasised that the learning would flow in both directions. In a sense this means that everybody becomes a potential teacher or student. Professors learn as well as teach and students are no longer passive receivers of knowledge. Everybody is committed to learning regardless of formal status. This leads to another central question. What new capabilities will be required of the faculty? The professor’s role changes in that it becomes one of facilitating an exchange of ideas rather than delivering one-way monologues. Distance learning may be an appropriate vehicle for studying the basics at home and then classrooms become meeting places for shedding light on critical dilemmas for business. These new pedagogical processes have been introduced in some settings (the Open University in the UK being one example) but these ideas are still relatively new. It is certainly worth asking whether the classroom setting is optimal today. Two factors further underscore the benefit of more active participation in the classroom. First, the students / participants will bring with them practical experiences drawn from real life, which may be of relevance to specific dilemmas being discussed. Participants learn from sharing their experiences. In turn, this knowledge can be carried back to the business setting. There is a feedback loop to the learning in the classroom and on the job. The professor’s role involves keeping discussions focussed and relevant, while also challenging ideas. The physical layout of the classroom should also be more conducive to open debate. For example at The Lorange Institute the rooms are ‘flat’, not the classical horseshoe shaped auditorium. Students sit around tables, six to seven in each group. Professors walk around the room and give a ‘mini-lecture’ for 20 minutes. Key words are written on flip charts that are hung on the wall. Groups then

The European Business Review January - February 2014

discuss the issues at their separate tables, for 20 minutes, using flip charts if appropriate. 20 minutes of plenary discussion follows, with the professor as the integrator. It has been found that material which used to take 5 days to cover in a conventional classroom setting can be completed in 2 days using this approach. This is more time effective, more collaborative and potentially more engaging for students and faculty. To conclude, it is certainly worth considering why these changes in academic value creation are not happening faster. Why is it so difficult to introduce new pedagogy? Why is it so difficult to put the student more in the centre of the learning process? This probably has to do partly with old-fashioned governance models that still exist in much of academia with their focus on axiomatically based research, publishing single-authored articles in narrow referred journals and tenure. Partly, too, however, it may be extremely difficult to retrain our professors for the new roles or to convince them that there may be better ways of teaching. Our doctoral programmes should be refocused to cover this. And best practice, when it comes to ‘meeting-place driven classes’ should be much more widely shared.

About the Authors Peter Lorange is President of Lorange Institute of Business Zurich. He was President of IMD from July 1993 until April 2008. He is Professor of Strategy and was the Nestlé Professor and then the Kristian Gerhard Jebsen Chair of International Shipping at IMD. Professor Lorange has written or edited 20 books and some 120 articles. His area of special interest is Global Strategic Management, Strategic Planning and Entrepreneurship for Growth, and he has conducted extensive research on multinational management, strategic planning processes, shipping and internally generated growth processes. Jagdish N. Sheth is the Charles H. Kellstadt Professor of Marketing at Emory University. His areas of research include consumer behavior, multivariate analysis, competitive strategy and globalization with a special focus on emerging markets. He is a Fellow of the American Psychological Association(APA),consumer psychology and Past President of Association of Consumer Behavior(ACR). He is recipient of all the top three awards bestowed by the American Marketing Association(AMA). Professor Howard Thomas has had a global career in business and management education. He has been a business school Dean at University of Illinois, USA; Warwick Business School, UK and Singapore Management University, Asia. His teaching and research interests encompass strategic management and management education. He is a highly-cited scholar, who is a Fellow of the Academy of Management, USA, the British Academy of Management, the Strategic Management Society and the Academy of Social Sciences.

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Work Teams Have Emotions, Too (and you need to understand them) By Sigal G. Barsade and Donald E. Gibson As the use of groups and teams increases in organisations, more studies consider behaviours in a group setting. Below, Sigal G. Barsade and Donald E. Gibson argue that managers who understand and manage a team’s emotional processes may gain the insight they need to give them the edge in fostering effective work teams.

s the use of groups and teams increases in organisations, we are learning new lessons about how people in groups feel and behave differently than when acting alone. We tend to be aware of our own individual emotions: we know when we’re feeling angry and ready to strike out; we also know when we’re flooded with a good mood after a personal success. When we bring these individual emotions to work groups, the result is a complex mix. We each bring our own mood-of-the-moment or feelings based on what’s happened that day. We also bring our emotional tendencies—whether we tend to be upbeat and optimistic, or lean toward the gloomy, or anxious. What happens when individuals’ emotions come together in a group setting? How can we hope to understand group emotions and moods in the workplace? Given the complexity, it’s not surprising that there has been significantly more research focused on individual than group emotions. Yet we commonly use terms suggesting that groups do have emotions: we say that “The group feels that we ought to go forward…” “The mood in the group was a little down today.” “We’re ‘on a high’—we met our stretch goal!” As researchers, we’ve been studying the ways in which groups have emotions and how these emotions influence individual and group outcomes. We’ve come to some conclusions that can

The European Business Review January - February 2014

help managers better understand where group emotions come from, what they mean, and how they can be good—and bad— for organisational performance.1

Where Do Team Emotions Come From? Individuals Shaping Groups One way to view this question is from the “bottom-up,” that is, that employees bring their current emotional feelings and emotional tendencies to a group, and these feelings and tendencies come together to create a team emotion. In this view, a team’s mood is the average of the team’s individual moods. (Indeed, there are now several online websites that have begun to help businesses track a team’s mood: the strategy is to poll individual team members to see what they are feeling, and average these feelings into an overall team mood.) Such an approach makes sense because a range of studies have shown that emotions are contagious: an individual’s cheerful or gloomy mood is likely to be “caught” by others, and replicated in a group, particularly if it is cohesive. Contagious positive emotions can lead to increased cooperation, less conflict and better perceived performance in groups, while contagious unpleasant emotions can lead to the reverse2. A variety of studies have also shown that these average

Studies have shown that emotions are contagious: an individual’s cheerful or gloomy mood is likely to be “caught” by others, and replicated in a group, particularly if it is cohesive.

team moods have an influence on performance. For example, in retail environments, studies have shown that the more negative a group’s mood, the less they engage in positive behaviors with customers and the more they are absent from work.3 Conversely, group positive moods in nursing teams have been shown to be associated with increased effectiveness; with military teams, positive mood was a critical factor in teams creating clear deadlines and performing well.4 In short, team emotion makes a difference. Managers would be well-advised to pay attention to the mood of their teams and the sources of these moods. Another application of the bottomup approach is to ask the opposite question: that is, “How different are individuals’ emotions in a group and how does that influence performance?” Here, there is support for the notion that the more similar individuals are to each other in terms of their emotional tendencies, the more productive the group. For example, one study of top management teams found that when the CEO and his or her management team share the same affective personality they are more satisfied, have greater shared decision-making, less group conflict and are more productive as a team, based on the company’s financial performance.5

Where Do Team Emotions Come From? Groups Shaping Individuals While studies have supported the bottom-up approach, this approach doesn’t tell the whole story. Is group emotion just the sum of its individual parts divided by the number of people in the group? Additional research indicates that there is a group emotional effect above and beyond the average of individual emotions. This view is “topdown” in the sense that the group is seen as likely to dramatically shape individual emotions. Individuals feel differently when they are in groups, and these emotions may be more extreme than an individual might feel by himor herself. In this view, individuals are likely to be substantially influenced by

a group’s positive excitement about a particular project, or conversely, angered beyond their normal tendency by a group’s feeling of perceived injustice. These are powerful “crowd” emotions. One merely has to observe the enthusiasm displayed at an all-employee sales meeting, or the anger of union members on a picket line, to note the extreme emotional power of groups. This perspective is useful as a reminder to managers that individuals acting in groups rather than alone may have an enhanced sense of power and invincibility, along with a heightened sense of anonymity—individual responsibility is less clear in a group than when acting alone. This combination may cause groups in organisations to take actions that, individually, they

the only acceptable emotions for members to display. Team members at Disneyland, for example, are forbidden from expressing negative emotions in the public setting of the parks.1 These norms may reflect overall emotion cultures that indicate strong cohesiveness and a culture that encourages positive social interactions. In fact, a recent study in a health care setting found that an emotional culture of companionate love, which consisted of employees expressing emotions of caring, compassion, affection and tenderness towards each other, led not only to better outcomes for employees, but to the patients they cared for, as well as the families of those patients. The positive emotions rippled out even past the organisation itself.7

An important consideration is that the contagion of a leader’s emotions is related to his or her power: the more powerful a leader is in comparison to other group members, the more likely the group will be influenced by his or her emotional tone. might have avoided. The case of Enron is an example where the “smartest guys in the room” encouraged groups of people to have confidence and downplayed hesitation or feelings of fear or guilt in the group that could have signaled that inappropriate action was being taken.6 Recent large fines at financial institutions and hedge funds point to organisational emotional cultures that may encourage feelings of group pride that make unethical or illegal actions seem more reasonable. Examples such as these are a reminder that groups may create emotional cultures that generate strong informal rules (called “emotion norms”) and values about which emotions— and at what intensity—are “okay” for group members to express. Teams vary, for example, to the degree they allow individuals to express anger or annoyance with each other. Workgroups, especially those oriented toward customer service, may have strong norms encouraging positive emotions as

An important element in shaping group emotion is the emotion of the group leader. Leaders can set the emotional tone of a group through their own moods as well as the emotions they encourage—or discourage—in group members. Leaders may not realise the impact of their emotions on group members; they may unconsciously influence the tone of the group. They may also purposefully try to shape the emotions of the group, by, for example, using positive emotions to generate group enthusiasm and cohesiveness, or using negative emotions to spur motivation and focus. An example of the latter approach is when coaches use expressed anger and frustration to motivate sports teams to heighten their performance. An important consideration is that the contagion of a leader’s emotions is related to his or her power: the more powerful a leader is in comparison to other group members, the more likely the group will be influenced by his or

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Management

Managers should consider a team member’s emotional tendencies in addition to the technical competencies or expertise they may bring to the group. her emotional tone. This is a cautionary note for managers: group members will be especially attuned to managers’ emotions, and be more likely to share them. Given some indications that negative emotions can be more contagious than positive ones, managers may wish to more carefully regulate their expression of negative emotions.

Bottom Line: Understand Your Team’s Emotions Managers need to be aware of both bottom-up and top-down sources of group emotion. Both have been shown to significantly influence group performance. In terms of bottom-up considerations, in forming teams, managers should consider a team member’s emotional tendencies in addition to the technical competencies or expertise they may bring to the group. If cohesiveness is important to a team’s functioning, the manager should consider members sharing similar emotional tendencies. But the manager must also consider the mix of team members based on whether they tend to feel or show positive or negative affect; he or she may wish to ensure that there are sufficient employees showing the emotions of companionate love, or happiness so as to infect other group members with the same emotions. On the other hand, the manager may be cautious of populating a team with all “upbeat” people—a better strategy for some tasks may be to have a balance in group emotional tendencies. In terms of top-down considerations, managers need to manage their team’s emotional cultures as carefully as they manage their cognitive culture. Is this a team that encourages positive emotions, caring and emotional support (the culture attributed to Southwest Airlines or Zappos), or one that is filled with fear or thrives on anger? Has the manager considered his or her

own emotional tendencies in terms of setting goals for the team—is the team picking up on unspoken stresses of the manager, which may then influence team functioning? Another contextual component is for the manager to consider which type of mood or emotion is going to make his or her people most effective. Most evidence indicates that a positive mood leads to better decision-making, but there can be specific, shorter-term situations, in which negative emotions can be important as well. For example, short-term fear can help lead employees to understand the need for a necessary but painful organisational change, or brief bursts of anger may help energise a team who has lost unjustly to a competitor. The danger is that longer term experiences of these negative emotions can lead to burned out, less productive employees. These recommendations assume that managers have a sufficient level of emotional intelligence to recognise their own and others’ emotional patterns and tendencies. This managerial competence can be increased by becoming aware of the critical importance of team emotions to enhancing team satisfaction and performance.Rather than attributing team emotions to forces beyond their control, managers who understand and actually manage a team’s top-down and bottom-up emotional processes may gain the insight they need to give them the edge in fostering effective work teams.

About the Authors Sigal Barsade, PhD., is the Joseph Frank Bernstein Professor of Management at the Wharton School, University of Pennsylvania. Her research focuses on emotional intelligence, emotions at work, and

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organizational culture and she publishes in the top academic journals in her field. She speaks to managers across the world about these issues, and consults to a wide variety of organizations. Her research is often quoted in the general media. Donald E. Gibson, Ph.D. is Dean and Professor of Management, Charles F. Dolan School of Business, Fairfield University. Professor Gibson’s research examines organisational role models, anger in the workplace, and conflict management. He has articles published in Organisation Science, Journal of Management, Journal of Vocational Behavior, Academy of Management Perspectives, and Journal of Business Ethics among others, and a book for practicing managers, Managing Anger in the Workplace. He received his MBA and Ph.D. from the University of California at Los Angeles, and was a professor for six years at the Yale University School of Management.

References 1. Barsade, S. G., & D. E. Gibson (2012). Group affect: Its influence on individual and group outcomes. Current Directions in Psychological Science, 21(2): 119123; Barsade, S. G., & D. E. Gibson (1998). Group emotion: A view from top and bottom,” Research in Managing Groups and Teams, Vol. 1: 81-102. 2. Barsade, (2002) The ripple effect: Emotional contagion and its influence on group behavior. Administrative Science Quarterly, 47: 644-675. Kelly, J. R. & Barsade, S. G. (2001). Mood and emotions in small groups and work teams. Organisational Behavior and Human Decision Processes, 86(1): 99-130. 3. George, J. M. (1990). Personality, affect, and behavior in groups. Journal of Applied Psychology, 75: 105-116. 4. Gibson, C. B. (2003). The efficacy advantage: Factors related to the formation of group efficacy. Journal of Applied Social Psychology, 33: 2153-2186. Knight, A. P. (Forthcoming). Mood at the midpoint: How team positive mood shapes team development and performance. Academy of Management Journal. 5. Barsade, S. G., Ward, A. J., Turner, J. D. F., & J. A. Sonnenfeld (2000). To your heart's content: A model of affective diversity in top management teams. Administrative Science Quarterly, 45: 802-836. 6. Mclean, B., & Elkind, P. (2003). The smartest guys in the room: The amazing rise and scandalous fall of Enron. New York: Penguin. 7. Barsade, S. G., & O’Neill, O. A. (Forthcoming). What’s love got to do with it? A longitudinal study of the culture of companionate love and employee and client outcomes in the long-term care setting.

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Innovation

Stop the Nonsense! Innovation is a Discipline. By Jay Rao

For most firms, innovation is more a slogan or aspiration than a managed practice. Below, Jay Rao shows that for the best companies, innovation is a set of practices and attitudes built into daily work and long-term thinking, and argues that organisations should start treating innovation as a real discipline.

ave you noticed how the word “innovation” has crept into CEO speeches, consultant presentations, marketing material and the media? There’s no escaping the overuse and misuse of the “i-word” these days. Companies mentioned it 33,528 times in their 2012 official reports, a 64% increase from 2006. A study of 260 Global executives revealed that 40% of them had a Chief Innovation Officer; and for most, such titles were mainly “for appearances.” These same executives conceded that they didn’t have a clear innovation strategy to support the role.1 Regrettably, as it stands today, for most firms innovation is more a slogan or aspiration than a managed practice. I find myself in front of 1,000-plus executives and managers each year, and I ask them the same question: “How many of you are tired of hearing the word innovation?” Many hands go up. When asked why, the responses are predictable:

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“It’s all talk and no action.” “We’re told to be innovative, but are never given the time or resources.” “Our innovative projects get shelved even if one quarterly target is missed.” “Our leaders want us to be innovative when they aren’t.” Abuse of the i-word isn’t just annoying, it’s wasting money. Firms have invested in ideation software, new product development systems and internal venture funds. And, of course, lots of money is spent on consultants who, they hope, will magically deliver organic growth. For most, that spending hasn’t paid off. A BCG survey found that 45% of executives were dissatisfied with their financial return on innovation spending. Dissatisfaction among employees was even higher at nearly 64%.2 A McKinsey innovation report3, based on a global survey of nearly 1400 executives concluded that: • Executives cited innovation as an important driver of growth but few explicitly led and managed it. • CEOs and executives were frustrated with efforts to jumpstart innovation initiatives. • There was overall dissatisfaction with the outcomes of their initiatives. • Mimicking best practices was often ineffective. • Nearly a third of respondents managed innovation on an ad hoc basis. So, is the current talk about innovation real or nothing more than corporate blather? Certainly, with so many people thinking and talking about innovation, we must be making some progress. But imagine for a moment how much more progress we could be making if innovation was treated less as a buzzword, an aspiration, or a magic organic growth formula and more as a true discipline! It’s time to end the i-word nonsense and start moving in that direction.

A BCG survey found that 45% of executives were dissatisfied with their financial return on innovation spending. What Other Disciplines Can Teach Us The business world has many disciplines and their evolutions provide insights into the development of innovation as a body of knowledge and a field of practice. Consider marketing. Like other established disciplines, marketing has conceptual frameworks (e.g., the “4Ps”) and a unique vocabulary—the Lingua Franca. It has developed practical methods (e.g.,

Segmentation, Targeting, Positioning) and tools (e.g., conjoint analysis) that practitioners master through formal study. Over time, academic departments have formed to develop a body of marketing knowledge and to pass it on to others. Journals, professional associations, and conferences dedicated to marketing add new knowledge and evolve the discipline.

The business world has many disciplines and their evolutions provide insights into the development of innovation as a body of knowledge and a field of practice. We have witnessed a similar evolution with the quality movement which, like innovation today, was initially more aspirational than effective. The early concepts of quality were developed in the United States during the 1930s and then spread to post-war Japan. Seeing the potential of quality control tools to save scarce resources and improve the poor image of their products abroad, Japanese industrialists embraced quality and broadened its scope through concepts such as kaizen and muda. They turned quality into a teachable discipline and management philosophy with strategic implications. By the early 1980s, that new discipline was being adopted widely. In the US, the methods of quality evolved into TQM, encompassing the entire enterprise and its supply chain. Six Sigma, a later variant of the quality discipline, had a few more distinctive features than its predecessors. Irrespective of what it was called—Lean, TQM, Six Sigma—these practices tended to share the following traits: • Integration with firm strategy • Championship by top leaders • Support from a cadre of experts—master black-belts—in the concepts, methods and tools of quality • Training of black and green belts—making all employees knowledgeable of quality’s tools and their strategic implications. Corporations that took quality seriously made it part of their culture—embedding the new “discipline” into their thinking, planning, training, and behaving. FedEx was one of those companies. It trained its people in the discipline of quality and integrated that discipline into the fabric of the organisation. Today, the tools and methods of its particular approach (which it calls “Quality Driven Management”) are used across the company’s many business units. As

described by Robert Quinn, Corporate VP of Operations and Service Support: Quality Driven Management is wired into the culture of FedEx. It is in the expectations we have for our people. It is the processes that they follow for continuous improvement. . . . It is the language we use and the rewards and recognition we give to our team members.4 Not every company that bought into the discipline of quality enjoyed FedEx’s long-term success. Many, in fact, lost interest or were derailed by bumps in the road. Nevertheless, enough of them succeeded to give the movement staying power. Academic research and courses followed, as did journals, conferences, consulting practices, and professional associations. Today, quality is no longer an empty buzzword or organisational aspiration, but a solid discipline that produces measurable benefits. To become a true discipline, innovation must go through a similar evolution. We can learn several lessons from the evolutions of business disciplines: 1. Mastery is the result of choice and commitment. Not every firm wants to be great at marketing like Coca Cola. Not every firm aspires to operational excellence like Aldi. Mastery of any discipline requires a choice and commitment to the hard work of learning and practicing. Commitment comes from desire to excel in a specific discipline. 2. Mastery requires years of effort. For a discipline to be mastered, the leadership team must make it a high priority and commit resources to it over many years. Toyota has worked for decades to embed quality into its corporate culture and value system. 3. Mastery requires a cadre of experts to lead the way. Motorola and other Six Sigma companies created internal cadres of experts to assist and guide the quality initiatives of others. 4. Mastery requires a broad-based understanding of principles and methods. All employees should have some basic level of training and involvement with innovation.

Innovation’s Evolution as a Discipline As a corporate discipline, innovation is relatively new and is perhaps midway along its evolutionary path—standing roughly where the quality movement was twenty years ago. In the worst cases, it remains an empty buzzword. Disciplined corporate innovative efforts can be traced back to Thomas Edison’s first “invention factory,” Bell Laboratory and the R&D centers of Kodak, DuPont, IBM,

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Innovation

Despite the availability of principles, methods and tools, several obstacles impede progress in treating innovation as a discipline; these include widespread misconceptions, wrong or narrow definitions, unrealistic expectations, and a need for instant gratification. Principles

Disruption Dominant designs Design thinking Platform thinking

Methods

Idea funnel Prototyping Opportunity space Portfolio management Emergent techniques

Tools

Innovation lifecycle Adjacency mapping Ideation software Stage-gate systems Lead and non-user feedback TRIZ

Principles, Methods & Tools of Innovation

Siemens and other offsprings like Xerox PARC. By the 1980s several tools of the innovator’s craft were being adopted by new product developers. However, it wasn’t until the 1990s, that pioneering academics— Peter Drucker,5 James Utterback6 and Clayton Christensen7 —began publishing books that explained innovation as a structured process, and told executives how to harness it in the service of organic growth and strategy. At the same time, the emergence of Internetbased firms such as eBay, Google, and Amazon made it clear that innovation is not limited to physical products, but extends to services and business models. The resurgence of firms like Apple, IBM and P&G re-confirmed the power of innovation. So today, academics are studying and writing about it, and today’s employees have many useful principles, methods and tools to work with (see sidebar). But much remains to be done within companies before the benefits of innovation-as-discipline will be felt. Despite the availability of principles, methods and tools, several obstacles impede progress in treating innovation

as a discipline; these include widespread misconceptions, wrong or narrow definitions, unrealistic expectations, and a need for instant gratification. The biggest of these is a failure to recognise and support the “soft” side of innovation. Executives are investing substantial time, money and energy on resources and processes—all of which are necessary. Most, unfortunately, ignore the values, behaviors and workplace climate—essential aspects of culture—that make those investments pay off. Several studies support the conclusion that enterprise culture is as important as R&D investments in generating innovation.8 Successful innovation is one part principles, methods and tools, and another part human creativity and insight. Leaders must bring these two very different parts together. Consider how two firms have managed to do that through their attention to discipline and culture.

Whirlpool: Discipline For decades Whirlpool, the leading U.S. appliance maker, was fixated on quality and cost. In 1999 the company embarked on a mission to be recognised as Number 1 in innovation. It began by asking 75 employees to think creatively about new possibilities. One of the group’s ideas turned into a hit product, but most ideas fizzled.

trained a smaller group of people as “I-mentors.” These mentors were analogous to Six Sigma master black belts; all had regular jobs, but facilitated innovation projects and helped fellow employees to develop and test their ideas. Nine years on, 1,100 of Whirlpool’s 61,000 employers were I-mentors. An intranet portal offered a common forum for learning the principles of innovation, for keeping abreast of recent research, and for tracking the progress of ideas under development. Employee teams from all levels were formed to vet new ideas.9 The innovation initiative paid off. Two years on, Whirlpool had 100 credible new business ideas, 40 concepts in experimentation and 25 new products and business concepts in prototype. By year three, it had hundreds of ideas in the pipeline, 60 in prototype and 190 being scaled for the market. In year four, new products generated by the innovation program contributed nearly $2.5 billion in revenues. In year five, new products accounted for $4 billion of Whirlpool’s $19 billion revenues.10

W.L. Gore: Culture11 In 2012, W.L. Gore, a $3 billion company, was ranked for the fifteenth consecutive year among the “100 Best Companies to Work For” by Fortune magazine. Also, for several consecutive

Successful innovation is one part principles, methods and tools, and another part human creativity and insight. Leaders must bring these two very different parts together. Whirlpool re-thought its approach. It had to help people get beyond the idea stage and into the realm of practical commercial opportunity. To do that, it enrolled every salaried employee in a business innovation course; then

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years, it was named one of the best workplaces in the UK, Germany, France, Sweden, Spain and Italy. The voluntary turnover rate at Gore was around 5%—one-third the average rate in its industry and one-fifth that

for private firms of similar size. While best known for its Goretex® fabrics, Glide floss and Elixir guitar strings, Gore also gained notoriety in medical implants, cables, and filters for electronic and pharma applications. Gore enjoyed a well-deserved reputation as a company with a very innovative culture. It did not specifically train people for innovation but infected them with its obsession for creating breakthrough products based on extended-polytetrafluoroethylene (ePTFE) technology. Gore eschewed job titles, bosses and bureaucracy, and all associates could spend up to 10% of their work hours “dabbling” with their own ideas. They could also “gift” their expertise to teams that were toying with innovative projects. At any given time, Gore had hundreds of these projects underway.

“

Moving beyond buzzwords and aspirations to a disciplined approach to innovation can set any organisation apart and give it competitive advantage.” There was discipline, however, beneath this seeming chaos. First, the company aimed for ePTFE-related innovations that would give them highly differentiated market positions. Second, projects died if employees didn’t sign up for them. Third, the dabbling-to-profitability journey had to pass three reality checks: Will people buy it? Is it a money maker? Finally, will it provide a sustained advantage— perhaps through a patent? Gore was patient in getting its projects right and moving them to market. There were no cut-throat timelines or calendar marks. However, the company also knew when to pull the plug. All had skin in the game through employee share-holding.

Discipline + Innovative Culture: An Unbeatable Combination Moving beyond buzzwords and aspirations to a disciplined approach to innovation can set any organisation apart and give it competitive advantage. That advantage is multiplied when discipline is combined with an innovative culture. An innovative culture assures that promising ideas are plentiful, and that the opportunities behind the best ideas are recognised. Discipline assures that those opportunities will be addressed efficiently, effectively, and with an intelligent appreciation of risk. Discipline and an innovative culture is an unbeatable combination! Many companies are learning the discipline of

innovation12, following a path similar to that of their predecessors in the quality movement. If the history of that movement is any guide, we should see widespread mastery and adoption of innovation’s principles, methods, and tools by the end of this decade. The greater challenge will be building innovative cultures. Culture is hard to grasp and difficult to change. There is, however, cause for optimism. Toyota, FedEx and GE mastered the discipline of quality and built it into their cultures, making them formidable competitors. On the innovation side, we observe similar encouraging unions of discipline and culture at 3M, IDEO, and P&G. And though even the best of these may occasionally stumble under one or another regime of leadership, culture tends to be persistent and carry them across periods of inattention. For them, “innovation” is not an empty slogan or a term sprinkled liberally through annual reports. Rather, it is a set of practices and attitudes built into daily work and long-term thinking. Tired of the meaningless i-word? Then start treating innovation as a real discipline.

About the Author Dr. Jay Rao teaches at Babson, in its Executive Education programs, and consults widely around the world. His research has appeared in The Sloan Management Review, The European Financial Review, IESE Insight, and other publications.

References 1 Leslie Kwoh, “You Call That Innovation,” Wall Street Journal, 23 May 2012 2 Innovation 2010, Boston Consulting Group Report, April 2010 3 Leadership and Innovation, The McKinsey Quarterly, 2008, No. 1 4“Quality Belongs to Everyone,” http://www.youtube.com/ watch?v=6q6V5J1qDs8 <accessed 7 July 2012>. 5 Peter Drucker, Innovation and Entrepreneurship, HarperBusiness, 1985 6 James Utterback, Mastering the Dynamics of Innovation, Harvard Business School Press, 1996 7 Clayton Christensen et. al., Seeing What’s Next, Harvard Business School Press, 2004 8 “The Global Innovation 1000, Why Culture is Key,” Strategy + Business, Booz & Co., issue 65, winter 2011. 9 Terry, Waghorn, “Making Your Company An Innovation Machine,” Forbes.com, 8 January 2009. 10 Innovation 101: Whirlpool’s Spin on Innovation, IndustryWeek.com, 16 July 2008. 11 Jay Rao, “W.L. Gore – Culture of Innovation,” Babson Case Study BAB698, 2012. 12 True innovators already outperformed their peers by nearly 12.4% over a three year period and by a modest 2% over ten years. Source: Innovation 2010, Boston Consulting Group Report, April 2010.

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Leadership

Nelson Mandela as A Strategic Leader By Paul J. H. Schoemaker

Nelson Mandela's life story is one that transcends borders, race, language, and culture. Below, Paul J. H. Schoemaker argues that Mandela’s remarkable story holds valuable lessons for business leaders involved in managing profound change, and considers how the core of Mandela’s strategy was to encourage racial harmony, forgiveness without forgetting, power sharing, and a strong focus on the future, not the past.

elson Mandela's life story has long since become a legend, one that transcends borders, race, language, or culture. His leadership truly belongs to the world. Mandela’s courage, sacrifice, wisdom and magnanimity have elevated him to such global icons as Mahatma Gandhi and Mother Teresa. What is less well-known is how Mandela evolved into the kind of strategic leader who from prison helped to bring freedom and democracy to South Africa. Even though he was isolated from his fellow prisoners at the end of his 27 years of captivity, he managed to steer secret meetings with the government toward the abolishment of apartheid and was set free in 1990. A few years later, free elections were held and Mandela became the country’s first democratically elected President ever in 1994. Mandela’s remarkable story holds valuable lessons for business leaders involved in managing profound change. Six capabilities are especially important for visionary leaders facing deep uncertainty and

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turmoil. They are the ability to (1) anticipate, (2) challenge, (3) interpret, (4) decide, (5) align and (6) learn.1 I illustrate each below using Mandela’s own word and actions. But first some background is helpful about Mandela’s early years since these very much shaped his development, life journey and leadership approach. Mandela, born in 1918, was the son of a top adviser to a tribal royal family, the Thembu. His father had helped to elect the tribe’s new chief and when Mandela’s father died, this talented tribal chief took the young boy into his own family. So, in his early teens, Mandela left his mother and their isolated small village to witness first hand the center of tribal power. This experience awakened his interest in education, politics and leadership. After finishing law school, Mandela helped found the Youth League of the African National Congress (ANC), which was outlawed by the Government. The country’s ruling white party was the National Party (NP) which came to power in 1948 and architected a strategy of strict racial segregation.2 Mandela rose to prominence in the ANC through his liberal politics and opposition activities, especially the Defiance Campaign of 1952. Inspired by Gandhi’s successful opposition to British colonial rule in India, Mandela was at first highly committed to non-violence. But the government’s harsh measures against non-violent opposition drew him over time into various forms of targeted sabotage, resulting in numerous arrests. In 1961, Mandela co-founded a militant wing, in partnership with the South African Communist Party, and was eventually convicted of treason3. The judge spared him the death sentence but condemned him to life in prison. Other ANC leaders had fled the country and the ANC became viewed by the establishment as a communist terrorist organisation. President Ronald Reagan in America as well as Prime Minister Margaret Thatcher in England both viewed Mandela as a terrorist.

Anticipation During the midst of the Apartheid struggle, while in prison for life, South Africa’s hardline white president P.W. Botha publicly offered Mandela freedom if only he would renounce violence and other illegal activity. President Botha tried to shift the blame for imprisonment to Mandela himself: after all, he was free to go now provided he would be law abiding just like other free citizens. Mandela did not fall for this transparent ploy. Yes, he very much desired freedom after decades of hard labor and confinement in a small cell. But he also felt it would betray his followers and especially the ANC’s long struggle for freedom. Here is how Mandela replied, in part, to President

Botha’s disingenuous offer: “What freedom am I being offered while the organisation of the people remains banned?,What freedom am I being offered if I must ask permission to live in an urban area? Only free men can negotiate. Prisoners cannot enter into contracts.” Mandela turned down the President’s offer and opted to stay in his cold, dark prison cell at Robben Island, which measured about 8 by 8 feet in size. He was prepared to serve out the remainder of his life sentence in misery. His decision was both principled and

- started negotiations with Mandela in prison. Mandela anticipated correctly that the Apartheid regime would eventually fall. Even though he was quite isolated from the news media and poorly informed about political developments in the country, he was nonetheless able to see the deeper trends. Half a decade after rejecting Botha’s offer of freedom, this man of deep principle was released unconditionally. He rose to become the President of the ANC in 1990 and the President of South Africa in 1994.

Mandela turned down the President’s offer and opted to stay in his prison cell which measured 8 by 8 feet in size. His decision was both principled and strategic. He felt that political change would come eventually and was willing to bet his freedom on it. strategic. He had a deep sense that political change would come eventually and was willing to bet his freedom on it. He also realised that his public rebuke of the President would make him a powerful symbol of the ANC’s opposition, while drawing international attention to his great personal sacrifice. And indeed, the world took notice of the freedom struggle afoot in South Africa. International businesses as well as governments increasingly boycotted the country during the 1980s. The NP’s unyielding apartheid stance, especially P.W. Botha’s dogmatic hardline and police state tactics, made the NP a pariah on the global stage. Business leaders from Anglo American and other local companies increasingly challenged P.W. Botha, and later his successor F.W. de Klerk, to change course4. Young whites also voiced their opposition to apartheid and racism, in churches, schools, social clubs, at work and when home with their parents. Eventually even the Dutch Reformed church, which through its Calvinist views had given apartheid proponents dubious biblical justification for racial segregation, changed its views.5 Very slowly, the Afrikaner leadership - represented at its core by the Broeder Bond

Challenge While in prison, Mandela stood out – among fellow prisoners and guards – as a man of conviction and dignity, willing to sacrifice his life for his beliefs. Through word and deed, he challenged the oppressive system that was denying him freedom. Many of his fellow political prisoners at Robben Island were heroic as well in proudly challenging the status quo. Most were well educated and they taught each other about their respective fields of expertise while working in the lime stone quarry, with oversight by guards who did not permit speaking. Prison life was harsh, with bad food, cold sleeping conditions in the winter, and much loneliness. Mandela fell ill intermittently and contracted nasty lung infections due to his years in damp prison cells, including tuberculosis. He died in 2013 from these lung diseases, as well as due to old age. Despite these hardships, Mandela bravely challenged the unjust system he was raised in and made it clear that he was willing to sacrifice his life to help unshackle his people. He secretly wrote an influential autobiography in prison titled Long Walk to Freedom, which chronicles his own life against the backdrop of deep social injustice and harsh

state oppression.6 This clandestine book got smuggled out in pieces, was printed overseas when finished, and became a global best seller. An international freedom campaign by the ANC, led by the exiled leader Oliver Tambo, made Mandela the poster child for the evils of apartheid as well as an eloquent spokesman for the cause of a free democratic South Africa.7 Mandela’s challenge was not just a single event or one major confrontation. It was a struggle that took shape over decades driven by an unshakable will and a strong moral compass. The ANC took the challenge right to the country’s leaders, using the black population and media to speak truth to power. This sustained pressure worked. By 1990, President de Klerk’s back was very much up against the wall. The economy was suffering from the boycotts; business leaders wanted change; the containment strategy of carving out Home Lands for blacks was failing; and the country was at the brink of civil war in black townships. Something had to give. The turning point was de Klerk’s seminal opening speech to Parliament in Feb of 1990. He called for free democratic elections (one man one vote) as well as the unconditional release of all non-violent political prisoners. In addition, he lifted the ban on the ANC and many other outlawed parties. This was a watershed event since whites were a minority in the country and would surely lose most political power through these declarations. De Klerk kept his promises and released political prisoners, although not yet Mandela at first given his violent past. President de Klerk was hoping for a power sharing arrangement with the ANC, but this proved to be naïve in the end on the part of this otherwise very pragmatic NP leader. De Klerk and Mandela were jointly awarded the Nobel Prize for peace in 1993 for achieving a largely non-violent, voluntary transfer of power by a minority group to a hostile majority, a rare event in human history indeed. Mandela was always clear that the purpose of challenge is not to destroy but to create something better.

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Leadership

Interpret

Decide

After being elected President in 1994, Mandela recognised full well that South Africa could easily fall back into civil war due to the many crimes, injustices and deep wounds inflicted by apartheid. He also knew that an all-out racial war would at best yield a Pyrrhic victory. Much of the expertise needed to run the country’s business, legal, social and educational institutions resided within the white minority population. Having seen what happened in nearby Zimbabwe under Robert Mugabe’s corrupt leadership, whites feared for their future and many started to leave the country (a brain drain known as white flight). Mandela’s aim was to rise above past injustices, embrace Archbishop Tutu’s call for truth and reconciliation, and unify the country by focusing on a shared, democratic future. Mandela envisioned a future that scenario planners had promisingly titled Flight of the Flamingos.8 The core of his strategy was to encourage racial harmony, forgiveness without forgetting, power sharing, and a strong focus on the future, not the past. Being a master of symbolism, Mandela looked for opportunities to display magnanimity towards his former enemies. For example, he invited his prison guards to be present when he was sworn in as President. His key insight was to allay fears of the white minority, arguing that “we have to surprise them with restraints and generosity.” An especially symbolic act in this regard was his visit to Betsie Verwoerd, the wife of the “architect of Apartheid” who was assassinated later in life. Not only did Mandela visit his widow, but he was willing to do so at her home in Orania. This was a white Afrikaner enclave and one of the last anachronistic vestiges of racial segregation.9 Mandela’s interpretation of what the country needed to avoid civil war was spot on. South Africa could only prosper as a multi-racial society if leaders embraced mutual forgiveness. This was a brilliant insight for a man imprisoned unjustly for 27 years. His ability to set aside natural feelings of revenge, and focus his efforts on aligning his people beyond factionalism, was truly remarkable. In 1993, after his release from 27 years in prison, he said: “I am working now with the same people who threw me into jail, persecuted my wife, hounded my children from one school to the other… and I am one of those who are saying: Let us forget the past, and think of the present.” Later, in a 2000 interview with the Christian Science Monitor, Mandela reiterated the same message: “For all people who have found themselves in the position of being in jail and trying to transform society, forgiveness is natural because you have no time to be retaliative.”

An important strategic decision arose shortly after Mandela became a free man, but before being elected President in 1994. The trigger was the 1993 assassination of Chris Hani, a wellknown, popular black leader fighting for equal rights. Hani was shot in cold blood by a far right, white immigrant when stepping out of his car in the street. The killer was identified by a white woman who duly turned him in. This targeted killing was the flame that ignited a tinder box, resulting in wide spread demonstration against the white, racist government. Many blacks wanted revenge, and the atmosphere was ripe for looting, violence and mayhem. Just of out of prison, Mandela rose to the occasion and appealed for calm. Here is part of what he said. "Tonight I am reaching out to every single South African, black and white, from the very depths of my being. A white man, full of prejudice and hate, came to our country and committed a deed so foul that our whole nation now teeters on the brink of disaster. A white woman, of Afrikaner origin, risked her life so that we may know, and bring to justice, this assassin. The cold-blooded murder of Chris Hani has sent shock waves throughout the country and the world. ... Now is the time for all South Africans to stand together against those who, from any quarter, wish to destroy what Chris Hani gave his life for – the freedom of all of us." Another brave decision occurred in the sport arena. South Africa is sport crazy and during Apartheid the Springboks were a world class rugby team, at par with Australia, England and New Zealand.. The boycott had meant that the Springboks could no longer compete internationally, which proved a deep blow to the ruling white class. In the black community, the Springboks were a symbol of racial discrimination – all players were white. So, what to do after Apartheid was abolished? As depicted in the movie Invictus, black sports officials very much wanted to change the team’s logo and jerseys to root out any association with apartheid. But not Mandela - he felt that uprooting such cherished symbols was not the way to make whites feel at home in black-led South Africa. He told his comrades: “that is selfish thinking. It does not serve the national interest.”10 As a further gesture of reconciliation, Mandela genuinely rejoiced when the national rugby team Springboks won the world championship even though the team had been a symbol of racism and Afrikaner domination. Mandela proudly wore the team’s shirt during the championship match himself. He waved his hands in enthusiastic support of the Springboks and thereby clearly signaled to the world at large that he truly desired a rainbow nation.

Mandela’s aim was to rise above past injustices, embrace Tutu’s call for truth and reconciliation, and unify the country by focusing on a shared, democratic future.

After having been elected President of South Africa in 1994, Mandela announced that he would serve for only one term whereas two were permissible under the constitution. This early decision not to stand for a second term was a remarkable gesture in a country and continent where leaders seek maximum power (such as Mugabe in Zimbabwe). Mandela

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Align

Mandela was both stubborn as well as a fast learner. He had no choice in prison and quickly figured out how to use the system to his advantage. Toward the end of his imprisonment, he became a central player in brokering a truce with the government. knew that alignment of diverse interests in this complex country meant that he needed to make room for others. Also, his age was an issue. Mandela used his Inauguration speech to align a deeply divided nation around a common vision. He knew that his speech would be watched by more than a billion people on television around the world and wanted to signal clearly that he represented the hopes of all the people of his country, regardless of color. Some of his lines became famous and are inscribed in stone at Robben Island, such as: “We have, at last, achieved our political emancipation. We pledge ourselves to liberate all our people from the continuing bondage of poverty, deprivation, suffering, gender and other discriminations. Never, never, and never again shall this beautiful land experience the oppression of one by another ….. The sun shall never set on so glorious a human achievement. Let freedom reign. God bless Africa.” By the time Mandela became President in 1994, he already knew many high profile business leaders and companies personally. To help align white leaders, he would summon them to support a project such as a health clinic for a rural area. One such leader received a call from Mandela’s office requesting that he accompany the President to the Eastern Cape. This leader was less than enthusiastic and pleaded that he had an appointment around mid-day clashing with Mandela’s request. The President’s Office assured him that he would not be late for his prior appointment; he would be picked up at 0700 from his house the following morning. When duty calls like this, one has to oblige and get ready to make a sizable donation. Knowing the irresistible charms of Mandela, this business leader quickly consulted with his financial director to set a reasonable limit on the size of the anticipated donation request. When the Air force plane landed, the President and he were whisked off in a military helicopter. The final destination was a large football stadium. There had been extensive flooding in the area, with much devastation. Mandela was visiting there to support, bolster, and review the re-construction efforts. Upon landing, about 80,000 black school children – all adorned in crisp white shirts - simultaneously bowed to acknowledge the great man’s arrival. As they were climbing down from the helicopter, Mandela planted his hand firmly in his guest’s back and said rhetorically, “Now, I hope you are not going to disappoint me?” The business leader decided in that instance to double the donation from 500,000 Rand to one million Rand (about $100,000 dollars in those days).11 Mandela was an astute politician as well as a visionary leader who created opportunities for other leaders to grow and change their own values and beliefs. Slowly but surely, he aligned them around a new vision for South Africa.

Learn Mandela was both stubborn as well as a fast learner. He had no choice in prison and quickly figured out how to use the system to his advantage. Toward the end of his imprisonment, he became a central player in brokering a truce with the government. He did much of this alone, realising that his fellow freedom fighters were concerned that they were not involved. But only he could step up to the plate and make things happen on behalf of the ANC. Using shuttle diplomacy, several government leaders visited him in prison and Mandela would be flown at time from his new prison house near Cape Town to meet in secret with President Botha in the capital of Pretoria, and later with FW de Klerk. In parallel, sympathetic white guards would pass secret messages between the ANC and Mandela. As explained in his book, Mandela was very deliberate in learning what was going on politically. Each meeting was a new piece of the puzzle to see how far he could push, what the real agendas were, who truly had the power, etc. But an even larger learning challenge presented itself after release. This one had to do with a fundamental shift in Mandela’s political views, to the surprise of many – including Mandela. For most of his life, Mandela was a freedom fighter operating at socialist and even communist end of the political spectrum. The white business community in S Africa after all had been deeply implicated in Apartheid and was far more part of the problem than the solution in the early days. Only when the international boycotts started to really hurt the bottom line did leading companies, such as Anglo American or Sanlam, start to push for the abolishment of apartheid. So, it is quite understandable that Mandela – after fighting the white establishment for decades from prison – was not very positive toward free markets and private ownership. Indeed, after his released from prison in 1990, Mandela made it clear that “The nationalisation of the mines, banks and monopoly industries is the policy of the A.N.C., and a change or modification of our views in this regard is inconceivable.” But when Mandela was invited to speak at the World Economic Forum in January of 1992 in Davos, Switzerland, he started to change his thinking. Mandela met there with the leaders of the Communist Parties of China and Vietnam, among others. These leaders told him ‘We are currently striving to privatise state enterprises and invite private enterprise into our economies. We are Communist Party governments, and you are a leader of a national liberation movement. Why are you talking about nationalisation? ” In a short period of time Mandela learned that socialism was viewed as passé and communism a discredited ideology. They key to growth he learned was to unleash people’s natural desire to better themselves and the best way to

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Leadership

do this is in a free market context, using the private sector, with limited government oversight. Personal freedom was a life- long goal of Mandela and so democracy, open markets and private property held much appeal. “They changed my views altogether,” Mandela remarked to Anthony Sampson, who was his friend and the author of Mandela’s biography. “We either keep nationalisation and get no investment, or we modify our own attitude and get investment.”12 Mandela’s change of mind was viewed with skepticism since it seemed to be aimed at attracting foreign investment. But according to Tito Mboweni, a former governor of the South African Reserve Bank who had accompanied Mandela to Davos, his change of heart was genuine. Mandela was able to reinvent himself later in life by listening and learning about how much the world had changed. He entered prison a communist but became a champion of free markets. Profile of Mandela as a Transformational Leader • Unwavering commitment to a long term vision of justice, freedom and hope. • Willingness to endure great personal sacrifice for his vision and beliefs. • Not escalating violence but answering in kind when no other options remain. • Acting with dignity toward those who wronged him, including his jailors. • Taking the long view on urgent decisions while remaining firm to principle. • Moving alone when necessary, but without betraying his friends and party. • Articulating compelling arguments that eventually persuaded his opponents. • Showing sensitivity to the dilemmas of adversaries, with some yielding as needed. • Appreciating the power of symbols and public gestures of genuine magnanimity. • Ability to forgive in order to be free from feelings of revenge and victimhood. • Weaving key decisions over time into an evolving tapestry of equality and freedom. • Placing reconciliation with those who opposed his struggle on top of his agenda.

What Mandela offers aspiring strategic leaders is an example of how complex societal forces, uncompromising values and key moments of decision can be woven over time, and across political, legal and economic landscapes.

Key Lessons What Mandela offers aspiring strategic leaders is a powerful example of how complex societal forces, uncompromising values and key moments of decision can be woven over time, and across political, legal and economic landscapes, into a compelling vision that can transform a political party, a nation and even the world. Strategic leadership is not just about executing an initial strategy by engendering followership, but above all about adjusting that strategy when necessary to maintain broad support.13 Few political leaders today master this as well as Nelson Mandela did, who is also affectionately known by his tribal name as Madiba. It seems fitting that a black teenage boy who was enthralled with the machinations around the throne of his tribe’s chief eventually occupied an even larger throne, one visible to the entire world. Mandela is a man who spanned many decades, cultures and realities in his search for freedom and justice. He sacrificed deeply and nobly, and in the process became a world icon for human rights. In political terms he was truly a transformational leader. In the end, even his foes admire and respect him – and justly so. His life is one the most remarkable in the past 100 years on earth.

About the Author Paul J.H. Schoemaker is an internationally renowned thought leader in the fields of decision making and strategy. He speaks frequently at conferences and offers seminars around the world. He is the author of Decision Traps (Doubleday 1989) and its sequel Winning Decisions (Doubleday 2001) which together have sold well over 100,000 copies. He is presently completing a new book on strategic leadership. Dr Schoemaker has written over 100 academic and applied papers, which have appeared in such

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diverse journals as the Harvard Business Review, the Journal of Mathematical Psychology, Management Science, Brain and Behavioral Sciences, and The Journal of Economic Literature. He also serves as Research Director of the Mack Institute for Innovation Management at the Wharton School and is the founder and executive chairman of Decision Strategies International, Inc, a consulting and training firm specializing in strategic management, leadership development and organisational alignment (see www.decisionstrat.com.)

References

1. Schoemaker, P.J.H., Steve Krupp and Samantha Howland, “Strategic Leadership: The Essential Skills,” Harvard Business Review, Jan/Feb 2013, 131-134. 2.http://en.wikipedia.org/wiki/Apartheid_ in_South_Africa 3. For further detail, see http://knowledge. wharton.upenn.edu/article/lasting-legacy-nelson-mandelas-evolution-as-a-strategic-leader/ 4. Clem Sunter, The world and South Africa in the 1990s, Tafelberg, 1987 5. Susan Rennie Ritner, “The Dutch Reformed Church and Apartheid”, Journal of Contemporary History, Vol. 2, No. 4, Church and Politics (Oct., 1967), pp. 17-37 6. Nelson Mandela, Long Walk to Freedom, Back Bay Books; 1st Paperback Ed edition (October 1, 1995) 7. Stephen Ellis, External Mission: The ANC in exile, 1960-1990, Oxford University Press, 2013. 8. Adam Kahane, “Transformative scenario planning: changing the future by exploring alternatives,” Strategy & Leadership, Vol.40, N5, 2012. 9.http://en.wikipedia.org/wiki/Orania,_ Northern_Cape 10. Thomas L. Friedman “Why Mandela Was Unique,” New York Times, Op-ed A29, Dec 11, 2013. 11. Based on personal communications with Brian Isaacson, based in Johannesburg, South Africa. Thanks as well to Prof Nick Binedell, Dean of GIBS, for sharing his insights. 12. http://dealbook.nytimes.com/2013/12/ 09/how-mandela-shifted-views-on-freedomof-markets/?_r=0&pagewanted=print 13. The role of historical context is examined critically by Hermann Giliomee, The Last Afrikaner Leaders: A Supreme Test of Power, University of Virginia Press, 2013

Safeguarding Your Company’s Reputation and Your Bottom Line

ngered by Shell’s arctic drilling plans, Greenpeace started a multi-stage online hoax in 2012 to raise public awareness. A YouTube video, website with an interactive ad generator, and Twitter feed went viral as millions around the world—and dozens of media outlets—spread the word. Forbes called it a “social media nightmare.” Instead of invading oil rigs with boats filled with protesters, Greenpeace was able to send reputation-damaging blows without leaving dry land. Most crises don’t attract this much attention, and most aren’t started by global NGOs with decades of experience and big budgets. But, according to Wharton Management Professor Witold Henisz, activists are increasingly able to access virtually everything companies or their suppliers do anywhere in the world. “The financial and reputational damage a single individual or small group is capable of causing can be catastrophic,” he says. Henisz, an expert on corporate reputation management and author of a forthcoming book (April 2014) on the topic continues: “Companies expanding into unfamiliar foreign markets to source

natural resources or access growing middle classes can be particularly vulnerable, as these same countries also tend to have gaps in or weak enforcement of regulations governing human rights, environmental discharge and safety and health; local populations skeptical of foreign investors; and grassroots activists who are increasingly watching over the operations of multinational corporations.” Henisz has been teaching executives from around the globe how to improve diplomatic skills as a consultant and in Wharton Executive Education programs. He recently became faculty director of the new four-day Corporate Diplomacy: Building Reputations and Relationships with External Stakeholders designed to help senior leaders develop a broad set of tools to manage these risks, before a crisis hits. “Diplomacy must be an organizationwide concern,” he says. “You need to build a culture that involves everyone in the effort to assess stakeholder opinion and integrate that knowledge into financial and business planning as well as into every interaction between employees and external stakeholders.”

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Five Ways to Improve Corporate Diplomacy Here are five ways to improve corporate diplomacy based on Henisz’s research and work with executives. 1. Don’t focus solely on finance (defining investments and determining the risk-adjusted rate of return). This narrow view misses the strategic element of interacting with stakeholders. 2. Question conventional wisdom about which countries to avoid— some of your best opportunities may be in locations where others haven’t succeeded. 3. Gain a deep understanding of your stakeholders to determine what is important to them, who is most important, who to reach out to, and what to say. Conduct interviews, check the local media, and read blogs to create a 360 degree view. 4. Develop a company-wide strategy for reaching out to external stakeholders that takes a more integrative perspective towards risk, and that recognizes that better management of stakeholder opinion is critical to its longterm success. The entire C-suite must be committed to it. 5. Recognize that stakeholder engagement is more than just a promise to do good. It’s a commitment to do better. If people perceive you as being driven solely by financial returns and not genuine interest in how you can achieve mutually beneficial wins, they’ll never accept you.

Who Says Yes When the Headhunter Calls? By Peter Cappelli and Monika Hamori Professionals increasingly choose to hop across employers, often moving between similar types of positions. Below, Peter Cappelli and Monika Hamori use a large executive search firm’s dataset to examine whether executives are likely to pursue offers from the executive search firm to be considered for positions at other organisations.

discretely, guided by search consultants. Surveys show that the majority of vice president-level and above openings in the United States had retained search firms engaged in filling them.4 Responses from close to 2,500 executives indicate that the number one trigger for their job search is receiving a call from an executive recruiter.5

The new career realities

Our study

The past three decades have seen major changes in the employment relationship: Unconditional loyalty to employers and spending one’s entire career with the same corporation are things of the past.1 The reality is, an increasing number of professionals choose to hop across employers, often moving between similar types of positions. How about loyalty in the executive ranks? Is job hopping less frequent there than among lower-ranking employees? Top executives and CEOs especially have been long considered the “inner core” of a corporation.2 For that reason, they have supposedly longer tenures at employers than their lower-ranking counterparts.3 Other sources, however, reveal that employer hopping may go on there as well, but more

To resolve the contradicting findings above, our study set out to explore loyalty in the executive ranks. First, we were interested to see the extent to which executives might show a willingness to move across employers. Second, we wanted to identify the factors that are the most likely to trigger their moves. To address these issues, we analysed the candidate database of one of the largest “retained” executive search firms - firms that are paid by clients to help them identify and attract candidates to fill executive vacancies. Retained search firms only contact potential job candidates when they have a specific vacancy to fill. A search consultant approaches individuals whom the consultant believes could be a good match for the vacancy and asks whether they are willing to be considered for the position. The consultant essentially offers executives the opportunity to begin a search process which, if successful, will lead to a negotiated package that is attractive enough to cause them to leave their current job. The database that we use helps the search firm identify

Responses from 2,500 executives indicate that the number one trigger for their job search is receiving a call from an executive recruiter.

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Shocks that affected the prospects for executives’ careers increased the likelihood of job searching. Examples included completion of a merger or acquisition, which is a signal of jobs being lost and positions changing and of uncertainty of what the future is going to look like. an initial pool of candidates for a search assignment and contains information on the most prominent executives in the search firm’s target markets. This dataset is limited to financial services firms: asset management companies, banks, consumer finance companies and investment banks. In addition to executives who hold jobs in prominent companies listed in industry-specific rankings such as those by the American Banker Magazine or Institutional Investor, potential candidates may also find their way into the database through references from industry experts. As a result, reputable employers are overrepresented in the dataset: 36 percent of the executives in the database are employed by a Fortune 500 employer and 34 percent of the executives have an employer who was in Fortune’s most admired companies in the US and globally. The database contains information on 14,000 executives. This pool corresponds to roughly two percent of the population of executives in the financial services industry in the New York area where most of the dataset executives work. We limited the logistical challenges of coding the data and adding information to it by drawing a random sample of 2,000 executives from the original 14,000. Executives in the top echelon (CEOs and Chairpersons) represent 13 percent of our dataset, Chief Financial Officers 5 percent, Executive and Senior Vice Presidents 18 percent, Senior Managers including directors, vice presidents and managing directors, as well as partners and principals 48 percent. Managers and professionals account for the remainder of the entries. Forty-two percent of the database executives had an MBA degree, 6 percent were Ph.D.s and only 0.1% had only a high school diploma. 68 percent of them changed employers to get into their current job, while only 32 percent of them were promoted from the inside. The average executive has spent about 5 years with their current organisation.

The job search behavior of executives For each executive, the dataset provided the following unique information: Has the search firm ever contacted them about a position elsewhere, and if so, did the individual agree to be a candidate for the job opening? This information allowed us to measure the extent to which executives were ready to jump to new opportunities. We found that more than half of the dataset executives agreed to be considered for an open position when approached by the search firm. Rather than showing more willingness to stay with their current employer, executives higher up in the organisational hierarchy were less likely to

decline the search firm’s invitation than their lower-ranking counterparts: 55 percent of chief executives and 65 percent of executive vice presidents said "yes" upon being contacted by the search firm, compared to 47 percent of vice presidents and 50 percent of managers and non-managerial professionals, for example. The results above reveal that those who have risen to the top of their organisations are opportunistic about the possibility of further advancement. They appear to believe that in today’s fast-changing global economy, their future at their employer is permanently uncertain. Most companies routinely lay off people and go outside to look for new ones, considering their managerial and executive ranks to be disposable. Executives’ lack of allegiance to their company appears to be a reaction to how their employers treat them. The findings above could be valuable to talent professionals: For corporate human resources staffs, they are a signal that a retention strategy is critical for the upper echelon of leaders, not just for rank-and-file employees. And for recruiters, the research indicates that with the right touch, they have decent odds of poaching an executive to fill another opening.

Executives higher up in the organisational hierarchy were less likely to decline the search firm’s invitation than their lowerranking counterparts.

The drivers of executive job search The likelihood of the dataset executives keeping track of outside opportunities differed by their work context and previous career moves. In companies with good industry reputations and with good reputations as places to work, executives were less likely to say "yes" when the search consultants called. Executives who worked for firms that showed above-par financial performance and offered higher levels of compensation relative to peers were also less likely to search for a new position elsewhere. Alternatively, shocks that affected the prospects for executives’ future careers increased the likelihood of job searching. Examples included completion of a merger or acquisition, which is a signal of jobs being lost and positions changing and of uncertainty of what the future is going to look like. The longer executives had spent with their current employer, the less likely they were to engage in job search. This may be because tenure with their current employer

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Leadership

The more moves executives made in their career -- not just across companies, but across functions or industry segments -- the more likely they were to say "yes" to the invitation to search for another job. These moves had that effect even when they took place inside the same company. helped them learn about prospects in that organisation. Interestingly, the more moves they made in their career -not just across companies, but across functions or industry segments -- the more likely they were to say "yes" to the invitation to search for another job. These moves had that effect even when they took place inside the same company. International assignments were especially strongly associated with the willingness to search, perhaps reflecting the old wisdom that individuals in such roles feel cut off from the rest of the organisation. Exactly why more movement should lead to a decline in loyalty isn't completely clear. Maybe more moves create more options, i.e. more jobs where executives might fit. They may also create more interest in exploring them. The more focused one’s career has been, the more focused are the set of likely opportunities elsewhere and it is easier to have good information about those prospects because one already knows that field well from prior experience. As a result, the opportunity for learning is lower. For executives with broader backgrounds, finding information on all opportunities may be more difficult and search therefore will have more value. Finally executives who spend ample time in a position start developing social ties that hold them to that place. More frequent moves may hinder the formation of social networks simply because executives have not stayed in one role very long. This finding comes as many companies have been encouraging employees to move laterally around the organisation to broaden their skills. Although moving executive talent around through rotational assignments has been seen as one of the most effective and common ways to develop them for advancement, it may also make executives more likely to leave.

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The Implications for Europe We think that our findings are applicable to industries and regions beyond the financial services sector in the New York area, and are especially applicable to European executives. While executives in Europe may often be portrayed as less ready to move to new positions, a comparative analysis of CEO career histories in Europe, in the Financial Times Europe 500 companies and the United States (S&P 500) indicates that European CEOs may be even more footloose than their US counterparts, spending a lower fraction of their career at the same organisation.6 Therefore we expect them to be no less likely to say “yes” than their US counterparts when the headhunter calls.

About the Authors Peter Cappelli is the George W. Taylor Professor of Management and Director of the Center for Human Resources at the Wharton School. He is also a Research Associate at the NBER in Cambridge, MA. Monika Hamori is a professor of Human Resource Management at IE Business School in Madrid, Spain. She received her Ph.D. from the Wharton School.

References

1 For a detailed description of the changes in the employment relationship, see Hamori, M., Bonet, R., & Cappelli, P. 2011. Chapter 12: How organisations obtain human capital. Burton-Jones, A., & Spender, J. C. (eds.) Oxford Handbook of Human Capital. Oxford University Press 2 See, for example, Boxall, P. (1998). Achieving competitive advantage through human resource strategy: Towards a theory of industry dynamics. Human Resource Management Review, 8(3), 265–288. 3 Norburn (1987), for example, showed that CEOs have longer tenure at their current corporation than lower-ranking executives. Norburn, D. (1987). Corporate leaders in Britain and America: A cross-national analysis. Journal of International Business Studies, 18(3), 15–32. 4 International Association of Corporate and Professional Recruiters survey (2003): Best-performing search firms of 2003. Report, IACPR, Beverly Hills, CA. http://www.bbgsearch.com/files/03Survey2.pdf 5 Association of Executive Search Consultants. 2011. Executive search: An industry transformed. http://www.stjobs.sg/career-resources/ job-seeking-guide/executive-search-an-industry-transformed/a/72103 6 See Hamori, M., & Kakarika, M. 2009. External labor market strategy and career success: CEO careers in Europe and the United States. Human Resource Management, 48(3): 353-376. This study shows that CEOs in Europe and the United States both worked for close to three different employers. 26 percent of US CEOs and 19 percent of European CEOs started their career at the company where they were promoted to their current position. US CEOs spent 46 percent, European CEOs 38 percent of their career with their current employer.

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Leadership

Jealous Leader´s Behaviour: the Othello Boss Syndrome By José Ramón Pin and Guido Stein Figures from classical literature are used in psychology to name behaviours, and it is also helpful to use this technique to describe the world of human behaviour in business. Below, José Ramón Pin and Guido Stein use Shakespeare’s Othello to address jealousy resulting from the success of others, such as bosses and peers, customers, suppliers and shareholders. “Jealousy contains more of self-love than of love.” François de La Rouchefoucauld The Jealousy of the Othello Boss Our teaching and consulting experience has often put us in the position of dealing with a manager's career problems that can only be fully understood under the hypothesis of a jealous boss. In a manner similar to that of Othello, whose love for Desdemona leads him to suffer the passion of jealousy that motivates all of his actions, in corporate life you sometimes come across managers and businesspeople whose quest for publicly recognised power, brilliance or professional success generates a jealousy that consciously or unconsciously affects their decisions. According to the dictionary, jealousy is the ‘suspicion that an affection or item of personal value that one has or aims to possess may be achieved by somebody else’. The phenomenon occurs in certain circumstances: one case is that of managers with an immature or somewhat unbalanced personality who are lacking in self-esteem and confidence. This situation may be temporary – for instance, a newly hired boss may not yet master a job that has taken a great deal of effort to achieve, or the previous boss may have moved on, which makes the new boss feel the need to prove his or her skills. It may also be recurrent, due to a sense of insecurity or lack of confidence that is rooted in the character traits of the jealous boss. This insecurity translates into a fear of being replaced by someone brighter. Visible behaviours include: 1. Heavily criticising the performance of subordinates with a view to belittling their work. It sometimes means engaging in arguments and unkind gestures that are incomprehensible to others. 2. Eliminating the presence of subordinates, who are viewed as internal competitors, at meetings with the company’s senior management. 3. Commissioning difficult – or almost impossible – projects and providing insufficient resources with which to complete them. This leads to errors and failures of

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subordinates, which can undermine their competitive skills. 4. Dismissing the subordinate from a project for no apparent reason or with a banal excuse. This abusive supervision by bosses has been widely studied in the literature. For instance, Liu, Liao and Loi (2012)1 describe actions that hinder the creativity of employees in up to two hierarchy levels below the jealous manager. Othello managers generate other Othello managers and eventually imbue the culture of a company with a climate of mutual distrust, in such a way that it becomes progressively more evident as you advance in levels of responsibility. In this respect, the ’Iagos’ play a critical role. Lago is Othello's ensign; he knows his boss well and is familiar with his weaker character traits, so he can effectively exert an influence on him. His role is that of an instigator: he makes Othello jealous by insinuating his wife is having an affair with his lieutenant Cassio, who is eventually dismissed. Insidious people who thrive on causing distrust among others may be intrinsically weak, but they are always dangerous, since they foster a sense of confrontation where none existed and often cause such confrontations to materialise. Some senior executives and businesspeople allow and even encourage the figure of Iago as walls with which to defend their positions, in the style of the Praetorian Guard, which in turn leads to a greater climate of distrust.

You cannot go against a person's nature, so discovering the existence of the Othello syndrome early on prevents a great deal of unpleasant environments in businesses. Otherwise, the dynamics of jealousy will continue to expand and lead to permanently broken interpersonal relationships. The Othello syndrome spreads in companies in a similar way: a boss names a subordinate for a job and when that person triumphs, the boss fears for his or her own success and prestige. Another employee then goes on to ‘open the boss's eyes’ regarding the apparently valuable subordinate. If the boss fails to exercise caution, he or she can be swayed by the insinuations. Once the jealousy process begins, it takes a great deal of strength to retract. From a practical standpoint, there are three challenges: a) discovering this symptom in the manager; b) doing something to neutralise or correct it; and c) preventing the emergence of this syndrome in oneself.

Keys to Reacting to an Othello Boss Having an Othello boss is a source of dissatisfaction and concern, especially if the boss already has an intrinsically jealous nature. According to Maslow (1990): ‘It is generally acknowledged that it is more enjoyable to love than it is to hate. However, pleasure in hating is real and cannot be neglected. There are certain types of neurotic people who take greater pleasure in destruction and hatred than in friendship and love’. And on another occasion (1960), he writes: ‘The person who seeks power is precisely the one who should not be given it, because it is a neurotic and compulsive need. These people make a very harmful use of their power: they walk over people and manipulate or hurt them to satisfy their selfish, conscious or unconscious, neurotic or healthy inclinations. When they are leaders, they are not concerned with what is most important in every given situation; their priority is themselves their own complacency’.2 Because you cannot go against a person's nature, discovering the existence of the Othello syndrome early on prevents a great deal of pain and unpleasant environments in businesses. Otherwise, the dynamics of jealousy will continue to expand and lead to permanently broken interpersonal relationships. At the first signs of behaviours related to this syndrome, one must react with care – it is always advisable for the subordinate to simultaneously acknowledge the manager's skills, successes and support. This approach lowers the precautions of the Othello boss and partially renders the actions of any ‘Iagos’ useless. Like anything that has to do with psychology and human behaviour, such actions are difficult not only to recognise, but also to apply, as they can make the jealous person even more aggressive. A reaction that may cause such an escalation would be to inform the Othello boss's superiors of the jealous behaviour. Sometimes, a realistic option is to

distance oneself from the boss by seeking a transfer within the company or resigning. Guillermo S. Edelberg gives specific advice for avoiding envy or jealousy from one's boss, colleagues or subordinates:3 • Strive to prevent situations that can be interpreted as unfair, arbitrary or showing favoritism. • Be alert to signs that indicate its appearance. • Talk to the person who is showing these signs as soon as possible. If the person is your boss, this must be done very tactfully to avoid enhancing their jealous feelings. • Deal with these behaviours as a human emotion rather than as a ‘base passion’; i.e., professionally, setting aside the mixed feelings they trigger. Understanding jealous people well is the first step towards dealing with them. It should not be ruled out that Othello bosses, after seeing the negative and even devastating effect of their jealous behaviour, may repent, just as the Shakespearean character does. And although the harm has already been done and is often irreversible due to a breach of trust, it is the best way to start over. The learning pattern for overcoming the syndrome involves seeing the consequences, being aware of who was responsible and changing whatever caused the reprehensible vengeful behaviour.

It should not be ruled out that Othello bosses, after seeing the negative effect of their jealous behaviour, may repent, just as the Shakespearean character does. This pattern also applies to subordinates who are the object of the Othello boss's jealousy: they should conduct a self-analysis of their behaviour and ask others to give their opinion, as they may discover they were consciously or unconsciously the cause of the jealousy and can therefore take the appropriate steps to prevent it in the future. This requires taking a step back and looking at the problem from the outside. This may not always be possible, but without a change in perspective it will rarely be addressed correctly. The opinion of a third party with life experience and affection for the person who is suffering the situation is often very helpful. This task can be performed by a good mentor or coach.

Humility and Generosity: Antidotes for Jealousy Humility is increasingly important for leadership in the global world of complex organisations (Owens and

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Leadership

Hekman).4 To be humble, it is necessary to get to know oneself, i.e., to be aware of one's limitations: accepting what one knows and is capable of and, above all, acknowledging what ones does not know and is not capable of. Humble managers are not only immune to jealousy, but are actually proud of the success of their employees. They do not think they have reached the summit of anything nor are they blinded by how much they still need to accomplish to become a better manager and, ultimately, a better individual; nor are they saddened if others have progressed further than them. Having a competent and humble leader, which is very different from having a pusillanimous and weak one, is one of the best tools for promoting people's talent. Humility is necessary not only in the leader, but in all members of a company. It endows realism, which is precisely the key feature needed to analyse the situation and understand the position of a manager who has a jealous boss.

Generosity, which leads us to prioritise the wellbeing of others, lays the moral foundation that, along with humility, allows for the professional development of employees. The responsibility of senior management is twofold: they need to be humble themselves and to develop leaders who are also humble. There may not be a better antidote against such a human and understandable passion as jealousy. On the other hand, the virtue of generosity, which leads us to prioritise the wellbeing of others ahead of our own, lays the moral foundation that, along with humility, allows for the professional development of employees. To promote growth among the people we manage, they must become the priority of our action. Generosity enables managers to go beyond the formal exercise of their power, the efficiency of the required business results and the superficial chemistry that results from satisfying the desires of others, and leads to the sacrificed delivery of setting a good example. The response is the respect and trust of employees: respect for what managers do for their companies and trust in what managers do for them. There is no longer a place for jealousy to thrive. People are managed, influenced or supported the way they are, not the way they should be. Here are some thoughts that may give a clue as to how to deal with one's own jealousy and that of others: • Jealous people may cause problems for others, but they torment themselves. • Great people make listening a priority; petty people tend to monopolise the conversation. • The most important thing in communication is hearing what has not been said.

The European Business Review January - February 2014

• Remember that it is not what you say, but what the other person hears. • Leadership has less to do with position and more to do with disposition. • People are more likely to change as a result of observation than of argumentation. • When we really understand the point of view of others and what they are trying to do, we see that nine out of ten times they are right. • The secret to getting something we want is to disregard it. Quite often, we cannot find something when we look for it and then unexpectedly come across it later on. • To become an exceptional person, you must begin by considering yourself unexceptional.

About the Authors José Ramón Pin is professor at IESE Business School in the Department of Managing People in Organizations, director of IRCO (The International Research Center on Organizations) and holds the José Felipe Bertrán Chair of Governance and Leadership in Public Administration. His book Consistency: The Key to Managing People in Organizations is published by Pearson Educación S.A. His areas of interest include the development of management skills, capacity and careers and the relationship between ethics and management processes. Guido Stein is associate professor at IESE Business School in the Department of Managing People in Organizations. He is partner of Inicia Corporate (M&A and Corporate Finance) and a consultant with firms in diverse sectors such as finance, industry, energy and professional services. His recent book is Managing People and Organizations: Peter Drucker's Legacy. His current research focuses on undesirable turnover in top management, power and taking- charge processes.

References

1 Liu, D., Liao, H. and Loi, R. (2012). “The dark side of leadership: A threelevel investigation of the cascading effect of abusive supervision on employee creativity,” Academy of Management Journal, 55, 5, pp. 1187-1212. 2 Maslow, H. A. (1991). Motivation and Personality, Díaz de Santos, Madrid. (1998) Maslow on management, Wiley, New York. 3 Eldelberg, S. G. “Envidia y celos en el trabajo,” a note by INCAE Business School. 4 Owens, P. B., and Hekman, R. D. (2012). “Modeling how to grow: An inductive examination of humble leader behaviours, contingencies, and outcomes,” Academy of Management Journal, 55, 4, pp. 787-818.

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