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When the Beat Changes…Change How You Lead

by Christopher Meyer on 02/16/2010

The default context for business leadership is the firm.  This was appropriate when stand-alone manufacturing companies in mature economies dominated business.  Today’s economy creates a radically different context for leaders and thus requires a new model.  Credible competition now comes from every continent, particularly developing countries, as innovation and technology fuel service as well as manufacturing growth. From CEO to first line supervisor, everyone is reaching wider to get the job done.

Leaders who work across boundaries regularly learn that internal power structures such as goals, formal roles, work practices, and authorities provide minimal traction outside their business unit or firm. Those who excel learn how to diagnose competing forces, embrace alternative viewpoints and frame a path to the future that is attractive and actionable for multiple stakeholders.  They are masterful at quickly structuring and executing work across distance.  Cross cultural skills begin with understanding differences between nationalities but also extend to alternative technical perspectives, public-private partnerships and new practice communities such as Open Source.

Still, most leadership books continue to use the stand alone firm as the context for defining leadership.  The most applicable book I’ve found for leading in the wider world is Joseph Nye’s The Power to Lead. Not surprisingly, Nye isn’t a business school professor.  He teaches international relations at Harvard and is most famous for introducing the concept of “soft power” which Obama and Clinton cited frequently during their presidential campaigns.  Nye’s background in diplomacy helps him understand an environment where progress depends more on negotiation than force.

Nye describes soft power as getting people to follow you through attraction. Hard power refers to coercive force such as military strength.  Inside a firm, one’s authority level reflects hard power.   Nye describes the effective mix of hard and soft power as “smart power” which depends on what he calls “contextual intelligen

Here’s a quick example of how hard and soft power operate in business.  Apple uses hard power when it requires iPhone applications to be approved before developers can sell them in the Apple App store.  The terms Apple dictates (30-70% Apple/developer revenue sharing) reflect hard power though it’s positioned to the developer as an incentive.  On the other hand, Apple exerts soft power in the millions of dollars they invest in iPhone ads that create pull for developers’ applications.

Inside firms, superior leaders rely on soft more than hard power but in wider collaborations, hard power isn’t a significant option once one leaves the negotiating table.  According to Richard Marshak, Abbott’s alliance management leader for the Abbott-Genentech oncology partnership, the negotiated agreement says little about governance.  “Fast and furious communications,” is the critical soft power tool that makes it work.

Nye defines contextual intelligence as an intuitive skill but I would argue that it is also analytic and trainable.  Blending Nye’s thinking with my experience, here are four skills that are essential for exercising contextual i

The first is awareness; starting with self.  Nye states that self-aware leaders have superior emotional intelligence.  Emotional intelligence is the ability to identify, assess, and manage the emotions of one’s self, of others, and of groups.  An important distinction that I observe is that superior leaders are able to remain in contact with their emotions while simultaneously processing analytical insights.  Blending the two generates more power and provides more options should the first approach meet resistance.

Like a spinning radar antenna, skilled leaders modulate their awareness across the spectrum from individual to total ecosystem issues quite readily.  Most resistance is rational at one level but when viewed from another, may not make sense.  For example, in the early days of Linux, individual power was so extreme that it was easy for anyone to make code changes.  Since anyone could change anything, it was very tough to make code changes stick.  Redefining the issue from individual code writer freedom to the overall Linux community effectiveness solved this proble

While organization experts focus on the behavioral dynamics between self, groups and large systems, business leaders also need to be aware of changing competitive dynamics, financial and structural forces. By allowing book publishers to set their own ebook pricing rather than sticking with Amazon’s $9.99, Apple enlisted them in establishing the iPad as a serious alternative to Amazon’s Kindle.  It was a brilliant move that culminated when Macmillan forced Amazon to accept Apple’s pricing model.

The second skill requires molding one’s awareness into a compelling vision that accomplishes three purposes.  First, the vision must be attractive enough to draw and hold multiple stakeholders’ commitment across distance, language and other distractions.  Second, it has to show why and how the differentiated stakeholders will unify into a cohesive force and win.  Third, it has to frame the critical choices that impact the total endeavor because most stakeholders view issues through local lenses.  This helps everyone avoid getting stuck in endless emotional discussions that fail to reach actionable conclusions.

A third skill for contextually intelligent leaders is presence.  Presence starts with communication skills, verbal and non-verbal.  Today’s broader work context also requires leaders to project themselves across distance.  This is a huge change in that today’s leaders are rarely physically present with all their cohorts.  Those who are particularly good at this establish a persistent albeit virtual presence using new communication tools from video to social networking.  Beyond that, they keep priorities clear and build collaborative citizenship norms that embed local and system-wide accountability in local operations.

The last skill for leaders reaching wider is to provide and link “minimum viable” work systems across the effort.  The familiar distinction between leadership and management from the old economy would suggest that this is a managerial rather than a leadership role.  Here’s why working wider changes this.  Every company or contributor has their own work processes.  The most challenging problems often occur at the interfaces between groups or modules.  Internal work systems don’t integrate across the entire effort.  Integration requires a common toolset.  Good leaders keep this unifying backbone as lean as possible to avoid smothering the distinctive contribution from each party.

In the Abbott-Genentech partnership, familiarity with FDA drug approval requirements provided a common language but each firm had their own tools and practices for conducting tasks such as clinical trials.  Since making collective progress is absolutely essential to build momentum, early on Abbott-Genentech leaders negotiated which company’s tools and processes would become the standard tasks within the collaboration.

The beat of business is rapidly changing.  Nye’s contextual intelligence and smart power framework is a good start for adjusting your leadership to the new and wider world of work.

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