Leaders In London

Allan Leighton on Theory E and Theory O

Some sectors of the economy have been hit harder by the downturn than others. This is always the way. Leaders in those sectors are possibly, for the first time in their career, looking at how to avoid failure big time. It’s easy to ride the wave of a buoyant economy and look successful. It’s only when the tide goes out, as Warren Buffett likes to say, that you find out who’s swimming naked.Also, to be fair, you can be a very good leader and also fail. Failure isn’t a sign of bad leadership. A long, glittering, successful career, likewise, can just be a sign of adeptness at avoiding trouble rather than brilliance as a leader. But, that’s for another post.

So, if you are looking to make big change in response to changed economic conditions, what framework of change to choose? Past Leaders in London speaker Allan Leighton tells us you have two paths to choose:

Failure, he says, comes to CEOs who rely almost exclusively on Theory E. Here’s how it works:

“CEOs who believe in Theory E (the Economic theory of firms) focus their energies on achieving economic value through restructuring. They believe that change should be driven from the top and that people, culture and organizational arrangements are not a priority.

“CEOs who employ Theory O (Organizational) strategies for change, on the other hand, believe in the development of the organization’s human potential. Rather than change driven from the top, Theory O strategies for change involve employees in identifying barriers and creating better ways to run the business.”

Source: Allan Leighton, explaining Harvard Professor Michael Beer’s theory of the need for balance between the two theories, and how Leighton uses this approach in his companies, from his book Allan Leighton on Leadership. You can watch clips of Allan Leighton and other 2007 speakers, to give you a taste of what to expect from Jack Welch, Carly Fiorina, Daniel Goleman and our other 2008 speakers, on Leaders in London TV.

Leadership is a hard-nosed thing, right? Especially in a downturn. If you’re too soft, people will take advantage, won’t strive to hit their targets (aka to please you, in these days of evaporating bonuses) and you won’t be a strong leader, right? Well, it’s not really as simple as that, is it.

Being a ‘hard but fair’ leader, a disciplinarian who keeps on top of people to ensure they do what they are supposed to do, and that they constantly report back to you for a pat on the head and try hard to avoid your temper if they did wrong…It’s all a bit old-fashioned and uninspiring, isn’t it; both for you and the people you lead. Yes, you need some of the elements of a ‘hard but fair leader’ - setting expectations for yourselves and others and ensuring you and others strive for high performance - but all the baggage that goes with it is increasingly outmoded.

If you’re anything like me, you want people to perform to a high level and do the right thing regardless of whether you are there or not, whether you will know about it or not, whether you will shout about it or not. You want them to do it because they are inspired to do it, not because they are afraid of the boss if they don’t do it.

Over on his Leadership Now blog, Michael McKinney re-visits this whole ‘tough leader or kind leader’ thing and says it’s not a case of opposites, not a case of hard or soft leadership. Michael looks at the book LEading With Kindness, to ask if it’s possible and to break the idea that tough/hard/demanding leadership is the opposite of kind/soft/undemanding leadership. Michael says:

Bill Baker and Michael O’Malley have done a service with their book, Leading With Kindness. As awkward as that title might seem at first blush, the authors aren’t suggesting that kind leaders have a soft personality, or are sissies, or are well liked at all times. (“You can be hard-nosed and kind.”) Leading with kindness is not a hot-tub leadership where the participants pass the torch singing Kumbaya. In fact they write, “They muddle through life much like the rest of us, mostly unnoticed except by those around them who are keenly aware that they are in the presence of someone special.”

(That last sentence reminds me that great leaders are not great because they are super-human. Instead, they are ordinary but growth-oriented people with character that have chosen to make a commitment to a bold course of action that is in the best interest of those they serve despite the odds.)

Gets my vote. Click on the blog link, above, to read more. Just because trading conditions get hard, doesn’t mean your leadership style has to.

Paris Hilton for President

I’ve wondered about the connection between celebrity and leadership for some time. People increasingly ‘follow’ the lives of celebrities - ‘follow’ as in read about them, watch news items about them, live their own life vicariously through the life of the celebrity. There is something of the ‘uber-you’ about celebrity culture (projecting your own life onto the more glamorous life of someone else) which mirrors some less desirable elements of ‘followership’ in leadership theory - the tendency to give up on ’self’ and instead follow the will of the leader.

So, when John McCain’s people created an attack ad last week claiming Barrack Obama’s whole persona was more celebrity than leader - likening him to Paris Hilton and Britney Spears - they opened a whole can of worms. Here’s Paris Hilton taking up the challenge by saying to “that white haired dude” that she is, like, totally ready to lead, and that she is busy looking for a vice-presidential running mate. Worryingly, her energy policy (towards the end of the clip) sounds like it’s worth a second listen.