Progressive Leadership

Challenging the theory of the firm in the 21st century

Greg Park

• Publisher: Emerald Publishing Limited
• Year: 2022
• Print ISBN: 9781838675684
• eBook ISBN: 9781838675691
• Topic: Business
• Subtopic: Management
• Index: Business

Progressive Leadership addresses the diminishing and increasingly dysfunctional contribution of firm leadership in the operational effectiveness, performance, and survival of the firm in the business context of the twenty-first century.

Leadership has effectively lost its licence to lead. Progressive Leadership investigates the purpose, principles, perspectives, and priorities of the prevailing theory of the firm which directs and colours the process of leadership in terms of operational decision making and interaction with other enfranchised investors. For leadership to optimally fulfil its role and responsibilities a new theory of the firm is required, one which considers and rewards a wider group of enfranchised 'investors' to optimally leverage their assets for the benefit of the firm. This will only successfully be achieved by leaders taking a more front of mind psychological approach, better anticipating the reactions and responses of the key asset of the firm, the knowledge and innovation laden 'investors'.

The book profiles a number of substantial firms which have successfully recognised the benefits of prioritising the principles of enfranchised investors and a psychological approach to leadership and concludes with an action plan as a template for existing and aspiring leaders to apply the purpose, principles, and priorities of the progressive leadership logic within their own firm.

Part I

Hard Truths and Tough Solutions to Make Firm Leadership Relevant in the Twenty-first Century Business Context

Chapter 1

Resist Malignant Normality

The Ides of March are Upon Us

The malign norms, priorities and perspectives which have prevailed within a substantial number of firms over recent decades have increasingly undermined the ability of leadership to tangibly contribute to optimal firm effectiveness and performance.

Firm leadership is presently in crisis, resulting in a threat to its very relevance within the twenty-first century business firm. The nature and extent of the problem has, in practice, for too long, been largely side-stepped, at best, under-estimated. In the absence of a recognition, acknowledgement and resolution of what are in fact malignant tumours there is every likelihood that leadership will continue to make a negative contribution to firm performance and survival over the long term. In this chapter, I provide a ‘feel’ for and overview of the nature of the crisis in leadership, before proceeding to expose the details of the underlying problems and operational solutions in subsequent chapters.

The Irrelevance of Leadership

It is unclear whether leaders matter very much. (Newark, 2018, p. 198)

Contrary to the mythology built around it, research indicates that leadership makes a marginal impact on firm performance, operational effectiveness or common purpose and meaning within the firm. In order to once more achieve relevance leaders must take a more behavioural and psychological approach to the decision-making process towards creating a culture of sustained common purpose and cohesion.

Research over recent decades indicates that there is an ingrained, yet flawed, indeed mythological, belief that leadership makes a significant impact on performance and the provision of meaning and purpose within the firm. On the contrary, the research indicates not only no correlation between the existence of a leadership cadre and firm performance (Lieberson & O’Connor, 1972), but, in addition, leadership no longer sees it as part of its role and responsibility to provide meaning and purpose, or ‘leadership’. Disappointingly, in practice, leadership has also been found to exert very little, if any, influence on operational firm effectiveness.

During the last half century, the focus on the purpose and relevance of leadership has shifted from its significance for meaning making to its significance on economic performance. In this respect, Lieberson and O’Connor (1972), in the abovementioned influential study, concluded that little difference in firm performance could be systematically attributed to differences in who leads. They decomposed the over-time performance of 167 companies into the variance explained by macro-economic conditions, industry, company and finally the company’s chief executive. Whilst the impact of the chief executive varied by industry (from little to zero) external factors accounted for far more variance than any leadership effects. They therefore concluded that in all relevant respects the influence and impact of leadership is largely mythological, like the Minotaur or Hydra.

A number of subsequent empirical studies support the conclusion that circumstances and factors outside the control of individuals define firm performance at any one time. Leadership has, therefore, at most, a tenuous impact on firm success or failure. Attributions of leadership ability largely depend upon situational factors that are under-appreciated by those undertaking assessments. As stated by Weber, Camerer, Rottenstreich, and Knez (2001), we have for long been wrong footed by the implications of

• an ‘attribution error’ and
• an ‘illusion of leadership’.

Hard to stomach if you and/or others thought that you had been an effective ‘leader’ for some decades, thereby psychologically justifying your not inconsiderable reward package. We will discuss the roles and indeed relevance of leadership versus management, past, present and future in subsequent parts of this book but there is increasing evidence that the primary role of leadership cannot be as a major contributor to performance because patently from the research it does not deliver. Rather, as Meindl, Erlich, and Dukerlich (1985) conclude,

• Firm performance determines the perception of leadership

rather than,

• Leadership being a determinant of firm performance.

Vroom and Jago (2007) would support this statement, contending that leadership/leaders are not that important for performance. Rather, it is the situation or context which drives or initiates performance and therefore, today, leadership, in practice, merely manages rather than leads. It may therefore be that we have entered the age of the manager and technician and the demise of the leader as the major determinant of and contributor to operational effectiveness, firm performance and survival. If leadership is to have any significant role, relevance and impact within the firm then it must be by some more subtle and sophisticated contribution to performance and firm effectiveness than a primary focus on the ‘dashboard’ and directing appropriate adaptation in terms of regulation, process and technology.

The exposure of this key role is very much central to the substance of subsequent chapters of this book. In brief, we will contend that leadership must be instrumental in ensuring that members of the firm adapt in a coordinated and collaborative fashion to any contextual or environmental change which impacts upon the sustained performance and ultimately the survival of the firm. Podolny, Khurana, and Hill-Popper (2005) conclude that to achieve such coordination and collaboration requires meaningful and purposeful action that is recognised and internalised by individuals as having significance beyond mere technical efficiency and pecuniary remuneration and resonates as being connected to vital aspects of each individual’s life in relation to aspirations, personal values and priorities.

The primary role of leadership is therefore to create a resonant culture of sustained purpose and meaning, of engagement and collaboration, rather than being directly responsible for and focussed upon short-term profit performance. This is concisely encapsulated within the following quote,

Leadership is a process of social influence which maximises the efforts of others, towards the achievement of a goal. (Kruse, 2013, para 11)

The above quote therefore indicates the requirement for leaders to develop greater focus, insight and competence in terms of psychology and behaviour than on the management of profit, process, strategy and technical capabilities. Whether the importance of engagement, coordination and collaboration, through a firm culture of cohesion, purpose and meaning, is today understood and acknowledged, much less is a dominant, front of mind, priority amongst firm leadership cadres I leave readers to reflect upon on the basis of their personal experience and insight. I close this section with a quote from James Comey, former Director of the Federal Bureau of Investigation. This reflects the first steps in the development of the required psychological insight, capabilities and attributes of what may be termed both ‘progressive’ and pragmatic leadership and which will make leadership relevant in the twenty-first century by delivering effective coordination and collaboration through the development of a common purpose and personal meaning and thereby achieving optimal firm performance,

‘With broad support across the organization, I was going to drive leadership into every corner and every conversation in the FBI, until we were consistently excellent across all roles and at all levels. We would teach that great leaders are:

• People of integrity
• Confident enough to be humble
• Both kind and tough
• Transparent
• Aware that we all seek meaning in work
• What they [leaders] say is important, but what they do is far more important, because their people are always watching them’. (Comey, 2018, p. 130)

The terminology used above reflects the enlightened yet pragmatic and practical attributes required for effective progressive leadership in the twenty-first century, compared to that which dominated during the final decades of the twentieth century. However, such an ‘enlightened’ leadership logic is ultimately doomed to failure if the overarching logic or culture within which the leader operates is fundamentally ‘malignant’.

Acknowledge Malignant Normality

The primary role of leadership is to consistently reflect and communicate the values and principles which should direct all of the decisions and actions throughout the firm. In many firms today, leaders have applied a process of ‘gleichschaltung’ or synchronisation which has compelled employees to implement a malignant and unsustainable foundation of values and priorities inconsistent with generally acceptable social norms and long-term firm performance.

Often you have to first reverse in order to go forwards. Our efforts to develop an effective framework and culture of progressive leadership require just such a manoeuvre. It would in practice be impossible to build a progressive logic onto the, to borrow a ‘Trumpism’, ‘swamp’ logic which prevails as the dominant leadership logic of today, a logic which is largely based upon redundant, aberrant and ‘malignant’ values, principles and priorities.

The meaning, practice and credibility of leadership has been undermined by the values, principles, perspectives, priorities and practices which have been applied in its name. Leadership is not a technical capability, that is the preserve of management. The primary role of leadership revolves not around the ‘what’ but around the ‘why’ and the ‘how’. The primary role of effective leaders is not primarily to focus on the vision and objectives of the firm, but rather to define and direct the manner by which they will be achieved. The nature, role and responsibility of real operational leadership is hands in the entrails, not effected from a high hill with binoculars and flags. This is a critical point to highlight and acknowledge, which has significant implications for where within the firm true leaders must be located in order to continuously provide direction, relevance, purpose and meaning for those who ultimately ‘deliver the goods’.

Just as the primary leadership role of the President of the United States and other nation heads is to communicate the why of the values and principles which they consider should underpin the societal culture and how they might be achieved as reflected in their decisions and legislation, so it is with firm leadership. If these values and principles are aberrant, redundant, even malign, then whilst they may bring short-term success, inevitably, if they are not consistent with social and economic stability, well-being and cohesion, then the nation, the firm, the family, the individual, will fail in their objectives. This is not rocket science and applies as a basic principle within all social units. Ask your parents, your friends, your spouse, even your kids.

Effective, progressive leadership starts with the assumption that every developed and democratic society has developed a framework of fundamental values, norms, priorities and perspectives which create a social covenant, resulting in a sense of trust, respect, ‘equity’ and cohesion. Ethics continues to be important in effective leadership and increasingly this requires that we regularly reflect on the logic and priorities of those for whom we work in relation to the framework of accepted social values and priorities. This is important in that what we are saying is that we have a greater responsibility beyond our firm ‘owners’ objectives and priorities to a wider range of ‘investors’ and also to the wider socio-economic context upon which the firm is ultimately highly dependent. Leaders are not merely hired guns, able to train their six shooters at any target for a reward. As leaders we cannot merely palm off to others the responsibility to define and maintain a logic consistent with social norms and values, since such individuals and cadres over the recent past have proven their incompetence if not indifference in shouldering this responsibility.

There was in Germany during World War Two a process called ‘Gleichschaltung’ or synchronisation. This ensured the inculcation and alignment of all of the professions in respect of the new ‘normality’ of values, principles, perspectives and priorities. Due to the number of examples over recent years, we must, if we are honest and objective, accept that this perspective, priority and process of synchronisation is alive, well and thriving within a significant if not substantial number of business firms, to varying but significant degrees. Individuals who might baulk or resist are either inculcated or alternatively side-lined or disposed of in order that there are no obstacles to the effective implementation and ‘synchronisation’ of a form of what has been termed malignant normality. In this respect, whilst readers will recollect more recent examples of this process, I am reminded of Vincent Kaminski, who had served as managing director of research for Enron. He sought to warn those in authority that they had entered business deals which threatened the survival of the organisation. Ultimately, due to his resistance to new deals, Enron stripped him of his authority to review such deals. A short quote encapsulates this malignant process of synchronisation,

There have been some complaints, Vince, that you’re not helping people to do their transactions. Instead, you’re spending all your time acting like cops. We don’t need cops, Vince. (Cain, 2012, p. 165)

As a leader within such a business firm today, your first instinct and indeed responsibility, is to first seek to ignore, then to remonstrate with, to undermine and insult, but then ultimately ‘shoot’ the few people who raise their voice against such a malign and perverse dominant logic. However, the doubts and misgivings which people might initially have held regarding such malign values and priorities will escalate. Ultimately and inevitably unquestioning commitment, engagement and loyalty to apparently outstandingly successful firms will convert amongst an increasing number of valued, ‘thinking’ employees to but grudging acquiescence, minimal co-operation, limited transfer of knowledge and, in some cases, eventually, active resistance and obstruction. In the longer-term, business firms which consistently apply a malign logic will be destroyed from within, although other reasons, usually related to the market context, will be rolled out to explain underperformance and other ‘failures’; indeed, leaders may convince themselves that these are the true reasons. Readers must beware of thinking that if this is indeed the case then it is obviously does not apply to my firm; this may happen in other firms, but not mine. This blinkered perspective is one which is likely to ultimately make you, as a firm’s operational leader, culpable for the next economic and social crisis which is rooted in a ‘somewhere else’ and a ‘somebody else’s fault’ perspective. Those amongst readers who are leaders will recognise that no firms are lily white...

Table of contents

• Cover
• Title
• Introduction
• Part I. Hard Truths and Tough Solutions to Make Firm Leadership Relevant in the Twenty-first Century Business Context
• Part II. Let’s Lay the Foundations for Effective Firm Leadership
• Part III. No Need to Re-invent the Wheel: Profiles of Progressive Individuals and Firms
• Part IV. I Am Spartacus!!, Am I Spartacus?, Operational Implementation
• References
• Index