How to save a company from demise
Question: After a well-chronicled, 30-year decline into bankruptcy, General Motors is now profitable again and going public. What does it say about its former executives, directors and union leaders that such a large, complex organization could be revived in less than two years? What factor best explains why leaders don't take the hard but obvious decisions necessary to prevent an impending disaster?
Large, behemoth institutions generally have great difficulty changing course, particularly if they have had a lengthy history of success, strong positive brand identity and a legacy of public trust. External catastrophic events affecting profit, rather than internal reflection and risk-taking, are common precipitants for corporate self-examination--and motivation to move out of the business-as-usual mode of operation. Those of us in the field of leadership know that every organization, no matter how great it is, will experience inevitable cycles of growth and decline. When a company operates as if it will be the exception to this law of organizational development, it can create a culture that is insular and arrogant and impervious to new ways of thinking and behaving. Two forces that can counter these consequences and create a climate of organizational revitalization are an integrated approach to leadership and the management of change. Whether decline becomes death is dependent on both.
If culture is, as Terry Deal states, "the way we do things around here;" then corporate leadership must question the underlying assumptions that drive the behaviors of those within the company. Many assumptions are unconscious and have a dramatic effect on operations; surfacing them is critical to a company's ability to change. An integrated approach to leadership means that the leader is able to "read reality truthfully." This reading occurs at many levels and must be communicated in ways that capture the attention of those who are instrumental in achieving the change. Tempering a sense of urgency with a sense of hope (without pushing the companies into chronic crisis or creating a state of superficial security) are marks of integrated leadership. Inner emotional balance and maturity, clarity about core values and beliefs, an ethical sensibility, genuine respect for others and the capacity to make prudent decisions with integrity are also qualities of such leaders.
These integrated qualities of leadership matter a great deal because the leader has to enlist those who are the most resistive to accepting the change in its implementation. The integrated leader must deal with considerable denial and resistance in the early stages of change and cannot succumb to the usual strategies of cheerleading, coercion and information overload, none of which work long term. These strategies emanate from anxiety and fear, avoidance of unpleasant emotions in others, and a lack of skill and confidence in conflict resolution.
When leaders craft a solution that plays to their limitations rather than to what the company and its employees need, it is a recipe for future problems. In such company cultures, there are few who have the courage to tell the leader the truth. The integrated leader is able to listen and accept feedback in order to self-correct when appropriate. This leader knows that helping those most affected take responsibility for the company's future begins with their own work on such issues. If they can look at themselves honestly, accept their strengths and weaknesses, and use this truthful analysis to create a team and a culture that possesses what they lack, then they will be able to help others in the company do the same. The integrated leader helps the stakeholders see their common interests, and equips them with the skills of negotiation. Companies launching major change initiatives make a mistake in thinking their employees will do this naturally and well. It is the critical skill in managing change; and when things get bogged down, this is usually the missing piece that is causing the lack of progress.
Change requires a change in the culture, its underlying assumptions, behaviors, and values and beliefs. Once integrated leaders get followers past denial, there is still the hard work of convincing people to grieve their loss and to let go of what have been the obstacles to progress. Cosmetic change and quick fixes seem easier, but they are just placeholders for the status quo. The integrated leaders understand this and can help others get through the processes of change to a stage of true commitment.
Integrated leaders understand that they must be able to simultaneously see the past, the present and the future when confronted with change. They know their company's history as well as their own, comprehend what is sacred and what is expendable, and appreciate the intersection of personal and institutional inner work. This helps them to explain the reality a company faces and the reasons for a change in authentic and compelling ways. It also enables them to demonstrate empathy--that quality so necessary to getting other to let go of those things that keep a company mired in the status quo. If company cultures truly valued and practiced integrated leadership and had the skill of managing change, we would have fewer situations in which catastrophic events or government intervention would be needed to save a company from demise.
Katherine Tyler Scott
November 17, 2010; 10:55 AM ET
Category: A leader's team , Accomplishing Goals , CEOs , Corporate leadership , Failures , Leadership development , Leadership weaknesses , Organizational Culture Save & Share:
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Posted by: jralger | November 18, 2010 5:44 AM
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