Daft 2008 the leadership experience

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The Leadership Experience SEVENTH EDITION

RICHARD L. DAFT Owen Graduate School of Management Vanderbilt University

With the assistance of Patricia G. Lane

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The Leadership Experience Seventh Edition Richard L. Daft With the assistance of Patricia G. Lane

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To the spiritual leaders who shaped my growth and development as a leader and as a human being.

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BRIEF CONTENTS

PART 1: INTRODUCTION TO LEADERSHIP 1 1. What Does It Mean to Be a Leader? 2

PART 2: RESEARCH PERSPECTIVES ON LEADERSHIP 33 2. Traits, Behaviors, and Relationships 34 3. Contingency Approaches to Leadership 64

PART 3: THE PERSONAL SIDE OF LEADERSHIP 97 4. The Leader as an Individual 98 5. Leadership Mind and Emotion 134 6. Courage and Moral Leadership 166 7. Followership 196

PART 4: THE LEADER AS A RELATIONSHIP BUILDER 225 8. Motivation and Empowerment 226 9. Leadership Communication 260 10. Leading Teams 292 11. Developing Leadership Diversity 326 12. Leadership Power and Influence 360

PART 5: THE LEADER AS SOCIAL ARCHITECT 393 13. Creating Vision and Strategic Direction 394 14. Shaping Culture and Values 428 15. Leading Change 462

Name Index 494 Index of Organizations 498 Subject Index 502

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CONTENTS

PART 1: INTRODUCTION TO LEADERSHIP 1 Chapter 1: What Does It Mean to Be a Leader? 2 1.1 Why We Need Leadership 4

1.1a Defining Leadership 5 1.1b Everyday Leadership 6

Leader’s Bookshelf 7

1.2 The New Reality for Leaders 8 1.2a From Stabilizer to Change Manager 9 1.2b From Controller to Facilitator 9 1.2c From Competitor to Collaborator 10

Leader’s Self-Insight 1.1 11 1.2d From Diversity Avoider to Diversity Promoter 11

Consider This! 12 1.2e From Hero to Humble 12

In the Lead 13

1.3 How Leadership Differs from Management 14 1.3a Providing Direction 14 1.3b Aligning Followers 15 1.3c Building Relationships 16 1.3d Developing Personal Leadership Qualities 16 1.3e Creating Outcomes 16

Leader’s Self-Insight 1.2 17

1.4 Evolving Theories of Leadership 17 1.4a Historical Overview of Major Approaches 18 1.4b A Model of Leadership Evolution 19

1.5 Leadership Can Be Learned 21 1.5a Leader Fatal Flaws 21

Leader’s Self-Insight 1.3 22 1.5b Leader Good Behaviors 23

In the Lead 23

1.6 Mastering the Art and Science of Leadership 24

1.7 Organization of This Book 24

Leadership Essentials 26

Discussion Questions 27

Leadership at Work 27

Leadership Right–Wrong 27

Leadership Development: Cases for analysis 29

Sales Engineering Division 29

The Marshall Plan 29

References 30

PART 2: RESEARCH PERSPECTIVES ON LEADERSHIP 33 Chapter 2: Traits, Behaviors, and Relationships 34 2.1 The Trait Approach 36

2.1a Optimism and Self-Confidence 37

Leader’s Bookshelf 38 2.1b Honesty and Integrity 38

Leader’s Self-Insight 2.1 40

2.1c Drive 40

In the Lead 40

2.2 Know Your Strengths 41 2.2a What Are Strengths? 41 2.2b Matching Strengths with Roles 42

2.3 Behavior Approaches 43

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2.3a Autocratic versus Democratic Behaviors 43

Consider This! 44

In the Lead 45 2.3b Ohio State Studies 46

Leader’s Self-Insight 2.2 47

In the Lead 47 2.3c University of Michigan Studies 48 2.3d The Leadership Grid 49

In the Lead 50 2.3e Theories of a ‘‘High-High’’ Leader 50

2.4 Individualized Leadership 52 2.4a Vertical Dyad Linkage Model 53 2.4b Leader–Member Exchange 54 2.4c Partnership Building 54

Leader’s Self-Insight 2.3 55

2.5 Entrepreneurial Traits and Behaviors 55

Leadership Essentials 56

Discussion Questions 57

Leadership at Work 58

Your Ideal Leader Traits 58

Leadership Development: Cases for Analysis 58

Consolidated Products 58

Transition to Leadership 60

References 61

Chapter 3: Contingency Approaches to Leadership 64 3.1 The Contingency Approach 66

Leader’s Bookshelf 67

Leader’s Self-Insight 3.1 69

3.2 Hersey and Blanchard’s Situational Theory 69 3.2a Leader Style 70

3.2b Follower Readiness 71

In the Lead 72

Leader’s Self-Insight 3.2 73

3.3 Fiedler’s Contingency Model 73 3.3a Leadership Style 73 3.3b Situation 74 3.3c Contingency Theory 75

In the Lead 75

3.4 Path–Goal Theory 77 3.4a Leader Behavior 77

In the Lead 79 3.4b Situational Contingencies 79

Consider This! 80 3.4c Use of Rewards 80

3.5 The Vroom–Jago Contingency Model 81 3.5a Leader Participation Styles 82 3.5b Diagnostic Questions 83 3.5c Selecting a Decision Style 83

In the Lead 87

3.6 Substitutes for Leadership 88

In the Lead 89

Leader’s Self-Insight 3.3 90

Leadership Essentials 91

Discussion Questions 92

Leadership at Work 92

Task versus Relationship Role Play 92

Leadership Development: Cases for Analysis 93

Alvis Corporation 93

An Impossible Dream? 94

References 95

PART 3: THE PERSONAL SIDE OF LEADERSHIP 97 Chapter 4: The Leader as an Individual 98 4.1 The Secret Ingredient for Leadership Success 100

4.1a The Importance of Self-Awareness 100 4.1b Leader Blind Spots 101

4.2 Personality and Leadership 102

In the Lead 102 4.2a A Model of Personality 102

Leader’s Self-Insight 4.1 103

Leader’s Bookshelf 106

4.2b Personality Traits and Leader Behavior 106

In the Lead 107

Leader’s Self-Insight 4.2 108

4.3 Values and Attitudes 109 4.3a Instrumental and End Values 109

Leader’s Self-Insight 4.3 110

In the Lead 111 4.3b How Attitudes Affect Leadership 112

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Consider This! 112

4.4 Social Perception and Attributions 114 4.4a Perceptual Distortions 114 4.4b Attributions 115

In the Lead 116

4.5 Cognitive Differences 116 4.5a Patterns of Thinking and Brain Dominance 117

Leader’s Self-Insight 4.4 118

In the Lead 119 4.5b Problem-Solving Styles: Jungian Types 120

4.6 Working with Different Personality Types 122

Leader’s Self-Insight 4.5 123

Leadership Essentials 126

Discussion Questions 127

Leadership at Work 127

Past and Future 127

Leadership Development: Cases for Analysis 128

A Nice Manager 128

Environmental Designs International 130

References 131

Chapter 5: Leadership Mind and Emotion 134 5.1 Leading with Head and Heart 136

5.2 Mental Models 136 5.2a Assumptions 138 5.2b Changing or Expanding Mental Models 138

In the Lead 139

5.3 Developing a Leader’s Mind 140 5.3a Independent Thinking 140

Leader’s Bookshelf 141 5.3b Open-Mindedness 142

Leader’s Self-Insight 5.1 143 5.3c Systems Thinking 144 5.3d Personal Mastery 145

5.4 Emotional Intelligence 146 5.4a What Are Emotions? 146 5.4b Why Are Emotions Important? 147 5.4c The Components of Emotional Intelligence 149

In the Lead 152

Leader’s Self-Insight 5.2 153

5.5 Leading with Love versus Leading with Fear 153

Leader’s Self-Insight 5.3 154 5.5a Fear in Organizations 155

In the Lead 155 5.5b Bringing Love to Work 156

Consider This! 157 5.5c Why Followers Respond to Love 158

Leadership Essentials 158

Discussion Questions 159

Leadership at Work 160

Mentors 160

Leadership Development: Cases for Analysis 160

The New Boss 160

The USS Florida 162

References 163

Chapter 6: Courage and Moral Leadership 166 6.1 Moral Leadership Today 168

6.1a The Ethical Climate in Business 168

Leader’s Bookshelf 169 6.1b Leaders Set the Ethical Tone 169

In the Lead 170

Leader’s Self-Insight 6.1 172

6.2 Acting Like a Moral Leader 173

6.3 Becoming a Moral Leader 174

6.4 Servant Leadership 176 6.4a Authoritarian Management 176 6.4b Participative Management 177 6.4c Stewardship 177 6.4d The Servant Leader 178

In the Lead 179

Leader’s Self-Insight 6.2 180

6.5 Leading with Courage 180 6.5a What Is Courage? 181

Consider This! 181

In the Lead 182

Leader’s Self-Insight 6.3 184 6.5b How Does Courage Apply to Moral Leadership? 184 6.5c Finding Personal Courage 185

In the Lead 186

Leadership Essentials 187

CONTENTS vii

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Discussion Questions 188

Leadership at Work 189

Scary Person 189

Leadership Development: Cases for Analysis 189

‘‘What Should I Say?’’ 189

The Boy, the Girl, the Ferryboat Captain, and the Hermits 191

References 192

Chapter 7: Followership 196 7.1 The Art of Followership 198

7.1a Learn to Manage Up as Well as Down 199 7.1b Managing Up Presents Unique Challenges 199

In the Lead 199

7.2 What Your Leader Wants from You 200

7.3 Styles of Followership 201

Leader’s Self-Insight 7.1 203

In the Lead 204

Consider This! 205

7.4 Strategies for Managing Up 205 7.4a Understand the Leader 205 7.4b Tactics for Managing Up 206

Leader’s Self-Insight 7.2 207

Leader’s Bookshelf 209

In the Lead 209

7.5 The Power and Courage to Manage Up 210 7.5a Sources of Power for Managing Up 210 7.5b Necessary Courage to Manage Up 211

In the Lead 213

7.6 What Followers Want from Leaders 213 7.6a Clarity of Direction 214 7.6b Opportunities for Growth 214 7.6c Frequent, Specific, and Immediate

Feedback 216

Leader’s Self-Insight 7.3 217 7.6d Protection from Organizational

Intrusions 217

Leadership Essentials 218

Discussion Questions 218

Leadership at Work 219

Follower Role Play 219

Leadership Development: Cases for Analysis 220

Waiting for Clearance 220

Jake’s Pet Land 221

References 222

PART 4: THE LEADER AS A RELATIONSHIP BUILDER 225 Chapter 8: Motivation and Empowerment 226 8.1 Leadership and Motivation 228

8.1a Intrinsic and Extrinsic Rewards 229 8.1b Positive and Negative Motives 230

Leader’s Bookshelf 232

8.2 Needs-Based Theories of Motivation 232 8.2a Hierarchy of Needs Theory 233 8.2b Two-Factor Theory 234

In the Lead 235 8.2c Acquired Needs Theory 236

Leader’s Self-Insight 8.1 237

8.3 Other Motivation Theories 237

Consider This! 238 8.3a Reinforcement Perspective on Motivation 238 8.3b Expectancy Theory 240 8.3c Equity Theory 241

Leader’s Self-Insight 8.2 242

8.4 Empowering People to Meet Higher Needs 243

8.4a The Psychological Model of Empowerment 244

8.4b Job Design for Empowerment 244 8.4c Empowerment Applications 246

In the Lead 246

Leader’s Self-Insight 8.3 248

8.5 Giving Meaning to Work through Engagement 248

In the Lead 249

8.6 New Ideas for Motivation 250 8.6a The Making Progress Principle 250 8.6b Building a Thriving Workforce 250

Leadership Essentials 251

Discussion Questions 252

Leadership at Work 252

Should, Need, Like, Love 252

Leadership Development: Cases for Analysis 254

Commissions for Charlotte 254

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Sun Spots 255

References 256

Chapter 9: Leadership Communication 260 9.1 How Leaders Communicate 262

9.1a Management Communication 263

Leader’s Self-Insight 9.1 264 9.1b The Leader as Communication

Champion 264

Consider This! 265

9.2 Leading Strategic Conversations 266

In the Lead 266 9.2a Creating an Open Communication

Climate 267 9.2b Asking Questions 267 9.2c Listening 268

Leader’s Self-Insight 9.2 270 9.2d Dialogue 270 9.2e Communicating with Candor 272

Leader’s Self-Insight 9.3 273

In the Lead 273 9.2f The Power of Stories 274

Leader’s Bookshelf 275

9.3 Communicating to Persuade and Influence 275

9.4 Selecting the Correct Communication Channel 276 9.4a The Continuum of Channel Richness 277

In the Lead 278 9.4b Effectively Using Electronic Communication

Channels 279

9.5 Nonverbal Communication 281

9.6 Current Communication Challenges 281 9.6a Leadership via Social Media 281 9.6b Being Crisis-Ready 282

In the Lead 283

Leadership Essentials 283

Discussion Questions 284

Leadership at Work 285

Listen Like a Professional 285

Leadership Development: Cases for Analysis 286

The Superintendent’s Directive 286

Hunter-Worth 287

References 288

Chapter 10: Leading Teams 292 10.1 The Value of Teams 294

10.1a What Is a Team? 294

Consider This! 295 10.1b Types of Teams 295

In the Lead 297

10.2 The Dilemma for Team Members 298

Leader’s Self-Insight 10.1 299

10.3 Leading a Team to High Performance 300

Leader’s Bookshelf 301

10.4 Team Processes 301 10.4a How Teams Develop 302 10.4b Team Cohesiveness 303

In the Lead 304 10.4c Team Norms 305

10.5 What Team Members Must Contribute 306 10.5a Essential Team Competencies 306

Leader’s Self-Insight 10.2 307 10.5b Team Member Roles 307

10.6 Leading a Virtual Team 308

In the Lead 309 10.6a Uses of Virtual Teams 309 10.6b Challenges of Virtual Teams 310

10.7 Handling Team Conflict 311 10.7a Types of Conflict 312 10.7b Balancing Conflict and Cooperation 312 10.7c Causes of Conflict 313 10.7d Styles to Handle Conflict 313

Leader’s Self-Insight 10.3 315 10.7e Negotiation 316

Leadership Essentials 317

Discussion Questions 317

Leadership at Work 318

Team Feedback 318

Leadership Development: Cases for Analysis 319

Decision Time 319

Devereaux-Dering Group 320

References 322

Chapter 11: Developing Leadership Diversity 326 11.1 Leading People Who Aren’t Like You 328

Leader’s Self-Insight 11.1 329

CONTENTS ix

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11.2 Diversity Today 329 11.2a Definition of Diversity 329 11.2b Changing Attitudes toward Diversity 330

In the Lead 331 11.2c The Value of Organizational Diversity 331

11.3 Challenges Minorities Face 332 11.3a Prejudice, Stereotypes, and

Discrimination 332

Leader’s Self-Insight 11.2 333 11.3b The Glass Ceiling 334

Leader’s Bookshelf 336

In the Lead 337

11.4 Ways Women Lead 337

Consider This! 338 11.4a Women as Leaders 339 11.4b Is Leader Style Gender-Driven? 340

In the Lead 340

11.5 Global Diversity 341 11.5a The Sociocultural Environment 341

Leader’s Self-Insight 11.3 342 11.5b Social Value Systems 343 11.5c Developing Cultural Intelligence 344 11.5d Leadership Implications 345

11.6 Becoming an Inclusive Leader 346

In the Lead 347

11.7 Ways to Encourage the Advancement of Women and Minorities 349 11.7a Employee Affinity Groups 349 11.7b Minority Sponsorship 350

Leadership Essentials 351

Discussion Questions 352

Leadership at Work 352

Personal Diversity 352

Leadership Development: Cases for Analysis 353

True to Myself 353

The Trouble with Bangles 355

References 356

Chapter 12: Leadership Power and Influence 360 12.1 Four Kinds of Influential Leadership 362

12.1a Transformational Leadership 362 12.1b Charismatic Leadership 363

Leader’s Self-Insight 12.1 364 12.1c Coalitional Leadership 365

In the Lead 366 12.1d Machiavellian-Style Leadership 368

Leader’s Bookshelf 369

Leader’s Self-Insight 12.2 370

In the Lead 371

12.2 Using Hard versus Soft Power 371 12.2a Specific Types of Power 372

In the Lead 374 12.2b Follower Responses to the Use of

Power 375

Consider This! 376

12.3 Increasing Power through Political Activity 376 12.3a Leader Frames of Reference 377 12.3b Political Tactics for Asserting Leader

Influence 378

Leader’s Self-Insight 12.3 379

In the Lead 382

12.4 Don’t Take Power Personally 382

Leadership Essentials 384

Discussion Questions 385

Leadership at Work 386

Circle of Influence 386

Leadership Development: Cases for Analysis 387

The Suarez Effect 387

Waite Pharmaceuticals 388

References 390

PART 5: THE LEADER AS SOCIAL ARCHITECT 393 Chapter 13: Creating Vision and Strategic Direction 394 13.1 The Leader’s Job: Looking Forward 396

13.1a Stimulating Vision and Action 396

Consider This! 397 13.1b Strategic Leadership 398

In the Lead 399

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13.2 Leadership Vision 400

Leader’s Self-Insight 13.1 402 13.2a What Vision Does 402

Leader’s Self-Insight 13.2 404 13.2b Common Themes of Vision 404

In the Lead 406 13.2c Leader Steps to Creating a Vision 406

13.3 Mission 407 13.3a What Mission Does 407

Leader’s Bookshelf 408 13.3b A Framework for Noble Purpose 410

In the Lead 412

13.4 The Leader as Strategist-in-Chief 413 13.4a How to Achieve the Vision 413 13.4b How to Execute 415

In the Lead 415

Leader’s Self-Insight 13.3 416

Leadership Essentials 419

Discussion Questions 420

Leadership at Work 420

Future Thinking 420

Leadership Development: Cases for Analysis 422

The New Museum 422

The Visionary Leader 423

References 425

Chapter 14: Shaping Culture and Values 428 14.1 Organizational Culture 430

14.1a What Is Culture? 430

Leader’s Bookshelf 431 14.1b Importance of Culture 432

In the Lead 433

Consider This! 434

14.2 Culture Strength, Responsiveness, and Performance 435 14.2a Responsive Cultures 435

Leader’s Self-Insight 14.1 436 14.2b The High-Performance Culture 437

In the Lead 439

14.3 Cultural Leadership 440 14.3a Ceremonies 441 14.3b Stories 441 14.3c Symbols 441

14.3d Specialized Language 442 14.3e Selection and Socialization 442 14.3f Daily Actions 443

14.4 The Competing Values Approach to Shaping Culture 443

Leader’s Self-Insight 14.2 445 14.4a Adaptability Culture 446

In the Lead 446 14.4b Achievement Culture 446 14.4c Involvement Culture 447 14.4d Consistency Culture 447

14.5 Ethical Values in Organizations 448

In the Lead 448

14.6 Values-Based Leadership 449 14.6a Personal Values 449

In the Lead 449 14.6b Spiritual Values 450

Leader’s Self-Insight 14.3 451

Leadership Essentials 453

Discussion Questions 454

Leadership at Work 454

Walk the Talk 454

Leadership Development: Cases for Analysis 456

Culture Clash 456

5 Star and Amtech 457

References 458

Chapter 15: Leading Change 462 15.1 Leadership Means Leading Change 464

15.1a Resistance Is Real 464 15.1b The Leader as Change Agent 465

Leader’s Self-Insight 15.1 466

In the Lead 466

15.2 A Framework for Change 467

15.3 Using Appreciative Inquiry 469 15.3a Applying Appreciative Inquiry on a Large

Scale 469

Leader’s Self-Insight 15.2 470

In the Lead 472 15.3b Applying Appreciative Inquiry Every Day 472

Leader’s Bookshelf 473

15.4 Leading Creativity for Change 473

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15.4a Instilling Creative Values 474 15.4b Leading Creative People 475

Leader’s Self-Insight 15.3 477

15.5 Implementing Change 481

Consider This! 481 15.5a Helping People Change 482 15.5b The Keys That Help People Change 483

In the Lead 484

Leadership Essentials 486

Discussion Questions 486

Leadership at Work 487

Organizational Change Role Play 487

Leadership Development: Cases for Analysis 488

‘‘From This Point On. . .’’ 488

Riverside Pediatric Associates 489

References 491

Name Index 494

Index of Organizations 498

Subject Index 502

xii CONTENTS

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ABOUT THE AUTHOR

Richard L. Daft, Ph.D., is the Brownlee O. Currey, Jr., Professor of Management and Principal Senior Lecturer in the Owen Graduate School of Management at Van- derbilt University. Professor Daft specializes in the study of leadership and organiza- tion theory. Dr. Daft is a Fellow of the Academy of Management and has served on the editorial boards of Academy of Management Journal, Administrative Science Quarterly, and Journal of Management Education. He also served as the associate dean at the Owen School, was the associate editor-in-chief of Organization Science, and served for three years as associate editor of Administrative Science Quarterly.

Professor Daft has authored or coauthored 14 books. His latest books include The Executive and the Elephant: A Leader’s Guide to Building Inner Excellence (Jossey-Bass, 2010) and Building Management Skills: An Action First Approach (with Dorothy Marcic, Cengage/Southwest, 2014). He is also the author of Organi- zation Theory and Design (Cengage/Southwest, 2016), Management (Cengage/ Southwest, 2018), and Fusion Leadership: Unlocking the Subtle Forces That Change People and Organizations (with Robert Lengel, Berrett-Koehler, 2000). He has also authored dozens of scholarly articles, papers, and chapters. His work has been published in Organizational Dynamics, Administrative Science Quarterly, Academy of Management Journal, Academy of Management Review, Strategic Management Journal, Journal of Management, Accounting Organizations and Soci- ety, Management Science, MIS Quarterly, California Management Review, Leader- ship Excellence, Leader to Leader, and Organizational Behavior Teaching Review.

Dr. Daft also is an active teacher and consultant. He has taught leadership, lead- ing change, management, organizational theory, and organizational behavior. He has also produced for-profit theatrical productions and helped manage a start-up enterprise. He has been involved in management development and consulting for many companies and government organizations, including the National Academy of Science, Oak Ridge National Laboratory, American Banking Association, Auto- Zone, Aegis Technology, Bell Canada, Aluminum Bahrain (Alba), Bridgestone, TVA, Cardinal Healthcare, Pratt & Whitney, Allstate Insurance, State Farm Insur- ance, the United States Air Force, the U.S. Army, Central Parking System, USAA, Bristol-Myers Squibb, Eli Lilly, Vulcan Materials, and the Vanderbilt University Medical Center.

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PREFACE

Many leaders have recently had their assumptions challenged about how organiza- tions succeed. Leaders are struggling to make sense of the shifting environment and to learn how to lead the people in their companies effectively and successfully in the midst of turmoil. The crisis in the housing, mortgage, and finance industries and resulting recession; volatile oil prices; ethical scandals; political turmoil; and other events have dramatically shifted the organizational and economic landscape. This edition of The Leadership Experience addresses themes and issues that are directly relevant to the current turbulent environment. My vision for the seventh edition is to give students an exciting, applied, and comprehensive view of what leadership is like in today’s world. The Leadership Experience integrates recent ideas and appli- cations with established scholarly research in a way that makes the topic of leader- ship come alive. Organizations are undergoing major changes, and this textbook addresses the qualities and skills leaders need in this rapidly evolving world.

Recent chaotic events, combined with factors such as a growing need for creativity and innovation in organizations, the rise of social media, the growth of e-business and mobile commerce, the use of virtual teams and telecommuting, glob- alization, the growing problem of cybercrime, and other ongoing transformations place new demands on leaders that go far beyond the topics traditionally taught in courses on management or organizational behavior. My experiences teaching lead- ership to students and managers, and working with leaders to change their organiza- tions, have affirmed for me the value of traditional leadership concepts while highlighting the importance of including new ideas and applications.

The Leadership Experience thoroughly covers the history of leadership studies and the traditional theories but goes beyond that to incorporate valuable ideas such as leadership vision, shaping culture and values, leadership courage, and the impor- tance of moral leadership. The book expands the treatment of leadership to capture the excitement of the subject in a way that motivates students and challenges them to develop their leadership potential.

NEW TO THE SEVENTH EDITION A primary focus for revising The Leadership Experience, seventh edition, has been to relate leadership concepts and theories to real events in today’s turbulent environ- ment. Each chapter has been revised and updated to bring in current issues and events that leaders are facing.

Topics and application examples that have been added or expanded in the sev- enth edition include:

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developing a global mindset leading with humility leadership courage as a skill the influence of emotions on performance the importance of self-awareness for leadership entrepreneurial leadership overcoming bias in the workplace candid communication how leaders use social media leadership coaching balancing conflict and cooperation

agile leadership fostering a thriving workforce team competencies how to confront others during conflict diversity of thought co-creating a vision building a high-performance culture through values and results the mental transition required for people to change behavior using a positive emotional attractor

Some of the new examples of leaders and leadership within organizations that show practical applications of key concepts include:

Pope Francis Mickey Drexler, J. Crew Warren Buffett, Berkshire Hathaway Satya Nadella, Microsoft Laura Smith, Yola Nancy Dubec, A&E Networks Angela Ahrendts, Apple Coach Ron Rivera, Carolina Panthers Chade-Meng Tan, Google Kip Tindell, Container Store Gen. Stanley McChrystal, U. S. Army Rich Gee, Rich Gee Group Dan Price, Gravity Payments Grant Reid, Mars Inc Zingerman’s Honda Engine Plant

Seattle Seahawks Earl’s Restaurants Mattel Toys Chris Rufer, Morning Star Golden State Warriors Vivek Gupta, Zensar Technologies Inga Beale, Lloyd’s of London Intel HealthFitness Norman Seabrook, Riker’s Island Dick Costolo, Twitter BNSF Railway Rui Sousa, Ronnie McKnight,Tom Camp, UPS Natarajan Chandrasekaran, Tata Consultancy Marvin Ellison, J. C. Penney Jon Fairest, Sanofi Canada

The Leadership Experience continues to offer students great opportunities for self-assessment and leadership development. An important aspect of learning to be a leader involves looking inward for greater self-understanding, and the seventh edi- tion provides many opportunities for this type of reflection. Each chapter includes multiple questionnaires or exercises that enable students to learn about their own leadership beliefs, values, competencies, and skills. These exercises help students gauge their current standing and connect the chapter concepts and examples to ideas for expanding their own leadership abilities. A few of the self-assessment topics involve engagement, networking, ethical maturity, personality traits, leading diverse people, developing a personal vision, spiritual leadership, candor, leadership cour- age, optimism, and leading with love versus leading with fear. Self-assessments related to basic leadership abilities such as listening skills, emotional intelligence, motivating others, and using power and influence are also included. Additional self- assessments are available within MindTap.

PREFACE xv

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ORGANIZATION The organization of the book is based on first understanding basic ways in which leaders differ from managers, and the ways leaders set direction, seek alignment between organizations and followers, build relationships, and create change. Thus, the organization of this book is in five parts:

1. Introduction to Leadership 2. Research Perspectives on Leadership 3. The Personal Side of Leadership 4. The Leader as a Relationship Builder 5. The Leader as Social Architect

The book integrates materials from both micro and macro approaches to lead- ership, from both academia and the real world, and from traditional ideas and recent thinking.

DISTINGUISHING FEATURES This book has a number of special features that are designed to make the material accessible and valuable to students.

In the Lead The Leadership Experience is loaded with new examples of leaders in both traditional and contemporary organizations. Each chapter opens with a real- life example that relates to the chapter content, and several additional examples are highlighted within each chapter. These examples are drawn from a wide variety of organizations including education, the military, government agencies, businesses, and nonprofit organizations.

Consider This! Each chapter contains a Consider This box that is personal, compelling, and inspiring. This box may be a saying from a famous leader, or wisdom from the ages. These Consider This boxes provide novel and interesting material to expand the reader’s thinking about the leadership experience.

Leader’s Bookshelf In this edition, six of the 15 chapters have new Leader’s Bookshelf reviews. A unique feature of The Leadership Experience is that each chapter includes a review of a recent book relevant to the chapter’s content. The Leader’s Bookshelf connects students to issues and topics being read and discussed in the worlds of academia, business, military, education, and nonprofit organizations.

New Leader Action Memo This feature helps students apply the chapter concepts in their own lives and leadership activities and directs them to self-assessments related to various chapter topics.

Leader’s Self-Insight These boxes provide self-assessments for learners and an opportu- nity to experience leadership issues in a personal way. These exercises take the form of questionnaires, scenarios, and activities.

xvi PREFACE

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Student Development Each chapter ends with discussion questions and then two activ- ities for student development. The first, Leadership at Work, is a practical, skill- building activity that engages the student in applying chapter concepts to real-life leadership. These exercises are designed so students can complete them on their own outside of class or in class as part of a group activity. Instructor tips are given for maximizing in-class learning with the Leadership at Work exercises. Leadership De- velopment: Cases for Analysis, the second end-of-chapter activity, provides two short, problem-oriented cases for analysis. These cases test the student’s ability to apply concepts when dealing with real-life leadership issues. The cases challenge the student’s cognitive understanding of leadership ideas while the Leadership at Work exercises and the feedback questionnaires assess the student’s progress as a leader.

Business Insights: Essentials’ intuitive user interface makes it easy for students and instruc- tors to search and find in-depth information on businesses, industries, and products. Features and benefits include the ability to search across multiple data types from a single search box with targeted search options by category. This includes company information, articles, industry data, SWOT Reports, Thomson Reuters Company Financials and Investment Reports, Market Share Reports, and Industry Essays. We have created assignments based on articles that connect directly with the content covered in your text, including assessment questions to test students on their knowl- edge of the content and emphasizing real-world examples.

MindTap¤ Management for Daft’s The Leadership Experience, 7th Edition, is the digital learning solution that helps instructors to engage and transform today’s students into critical thinkers. Through paths of dynamic assignments and applications that you can per- sonalize, real-time course analytics, and an accessible reader, MindTap helps you turn cookie-cutter into cutting-edge, apathy into engagement, and memorizers into higher-level thinkers.

As an instructor using MindTap, you have at your fingertips the right content and a unique set of tools curated specifically for your course, all in an interface designed to improve workflow and save time when planning lessons and course structure. The control over building and personalizing your course is all yours, so you can focus on the most relevant material while also lowering costs for your stu- dents. Stay connected and informed in your course through real-time student track- ing that provides the opportunity to adjust the course as needed based on analytics of interactivity in the course.

The MindTap Assignments are fully integrated with the text, providing calcu- lated combinations of lower- and higher-order thinking skills exercises. Students can work together in the experiential exercises to create videos, write papers, deliver pre- sentations, and more. Interactive Self-Assessments engage students by helping them make personal connections to the content presented in each chapter. A flexible grad- ing system offers grade analytics and grade book export tools to work with any learning management system.

ANCILLARIES This edition offers a wide range of instructor ancillaries to fully enable instructors to bring the leadership experience into the classroom. These ancillaries include:

PREFACE xvii

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Instructor’s Manual A comprehensive Instructor’s Manual is available to assist in lecture preparation. Included in the Instructor’s Manual are the chapter outlines, suggested answers to end-of-chapter materials, suggestions for further study, and a quick-glance overview for each chapter of the available MindTap resources to assist instructors in their planning.

Test Bank Cengage Learning Testing Powered by Cognero is a flexible, online system that allows you to author, edit, and manage test bank content from multiple Cengage Learning solutions; create multiple test versions in an instant; and deliver tests from your LMS, your classroom, or wherever you want. The test bank for The Leader- ship Experience, seventh edition, includes approximately 60 questions per chapter to help you in writing examinations. Types of questions include true/false, multiple choice, completion, short-answer, and essay, with all questions tagged to relevant national competencies. To ensure consistency across our entire package, the content of the test bank has been fully reviewed and updated by the same authors who have crafted our new digital resources.

PowerPoint Lecture Presentations An asset to any instructor, the PowerPoint lecture presentations include outlines for every chapter, illustrations from the text, and additional examples to provide learn- ing opportunities for students.

Videos Videos compiled specifically to accompany The Leadership Experience, seventh edi- tion, allow students to engage with the textual material by applying theories and concepts to real-world situations.

ACKNOWLEDGMENTS Textbook writing is a team enterprise. This book has integrated ideas and support from many people whom I want to acknowledge. I want to extend special thanks to my editorial associate, Pat Lane. I could not have undertaken this revision without Pat’s help. She skillfully drafted materials for the chapters, found original sources, and did an outstanding job with last-minute changes, the copyedited manuscript, art, and galley proofs. Pat’s talent and personal enthusiasm for this text added greatly to its excellence.

Here at Vanderbilt I want to thank my assistant, Linda Roberts, for the tremen- dous volume and quality of work she accomplished on my behalf that gave me time to write. Eric Johnson, the dean at Owen, and Sal March, associate dean, have maintained a positive scholarly atmosphere and supported me with the time and resources to complete the revision of this book. I also appreciate the intellectual stimulation and support from friends and colleagues at the Owen School—Bruce Barry, Ray Friedman, Jessica Kennedy, Rich Oliver, David Owens, Ty Park, Ranga Ramanujam, Bart Victor, and Tim Vogus.

xviii PREFACE

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I want to acknowledge the reviewers who provided feedback. Their ideas helped me improve the book in many areas:

Thomas H. Arcy University of Houston—Central Campus

Janey Ayres Purdue University

Kristin Backhaus SUNY New Paltz

Bill Bommer Georgia State University

William Russell Brown Navarro College

Jared Caughron University of Oklahoma

Meredith Rentz Cook North Central Texas College

Glenn K. Cunningham Duquesne University

Jeffrey Fisher Embry Riddle Aeronautical University

Ron Franzen Saint Luke’s Hospital

Adrian Guardia Texas A&M University—San Antonio

Delia J. Haak John Brown University

Nell Hartley Robert Morris College

Ann Horn-Jeddy Medaille College

Ellen Jordan Mount Olive College

Alyson Livingston North Central Texas College

Gregory Manora Auburn University–Montgomery

Joseph Martelli The University of Findlay

Richard T. Martin Washburn University

Jalane Meloun Barry University

Mark Nagel Normandale Community College

Ranjna Patel Bethune Cookman College

Chad Peterson Baylor University

Gordon Riggles University of Colorado

Miriam Rothman University of San Diego

Bill Service Samford University

Dan Sherman University of Alabama at Huntsville

Bret Simmons North Dakota State University

Shane Spiller University of Montevallo

Shand H. Stringham Duquesne University

Ahmad Tootonchi Frostburg State University

Mary L. Tucker Ohio University

Joseph W. Weiss Bentley University

Donald D. White University of Arkansas

Xavier Whitaker Baylor University

Jean Wilson The College of William and Mary

George A. Wynn University of Tampa

The developers at Cengage Learning also deserve special mention. Senior Prod- uct Manager Mike Roche supported the concept for this book and obtained the

PREFACE xix

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resources necessary for its completion. Associate Content Developer Jamie Mack provided terrific support for the book’s writing, reviews, and production.

I also thank Bob Lengel at the University of Texas at San Antonio. Bob’s enthusi- asm for leadership many years ago stimulated me to begin reading, teaching, and training in the area of leadership development. His enthusiasm also led to our collabo- ration on the book Fusion Leadership: Unlocking the Subtle Forces That Change People and Organizations. I thank Bob for keeping the leadership dream alive, which in time enabled me to pursue my dream of writing this leadership textbook.

Finally, I want to acknowledge my loving daughters Danielle, Amy, Roxanne, Solange, and Elizabeth. Although everyone is now pursuing their own lives and careers, I appreciate the good feelings and connections with my children and grand- children. On occasion, we have been able to travel, vacation, watch a play, or just be together—all of which reconnect me to the things that really count.

Richard L. Daft Nashville, Tennessee

xx PREFACE

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Part 1: Introduction to Leadership

Chapter 1: What Does It Mean to Be a Leader?

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Chapter 1: What Does It Mean to Be a Leader?

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YOUR LEADERSHIP CHALLENGE After reading this chapter, you should be able to:

• Understand the full meaning of leadership and see the leadership potential in yourself and others. • Recognize and facilitate the six fundamental transformations in today’s organizations and leaders. • Identify the primary reasons for leadership derailment and the new paradigm skills that can help you avoid it.

• Recognize the traditional functions of management and the fundamental differences between leadership and management.

• Appreciate the crucial importance of providing direction, alignment, relationships, personal qualities, and outcomes.

• Explain how leadership has evolved and how historical approaches apply to the practice of leadership today.

CHAPTER OUTLINE 4 Why We Need Leadership

8 The New Reality for Leaders

14 How Leadership Differs from Management

17 Evolving Theories of Leadership

21 Leadership Can Be Learned

24 Mastering the Art and Science of Leadership

24 Organization of This Book

In the Lead

13 Pope Francis, Roman Catholic Church

23 Google

Leader’s Self-Insight

11 Your Learning Style: Using Multiple Intelligences

17 Your Leadership Potential

22 Are You on a Fast Track to Nowhere?

Leader’s Bookshelf

7 My Life in Leadership: The Journey and Lessons Learned Along the Way

Leadership at Work

27 Leadership Right–Wrong

Leadership Development: Cases for Analysis

29 Sales Engineering Division

29 The Marshall Plan

Abraham Lincoln had less leadership experience than any previous president,but when historians rank the ‘‘greatest presidents,’’ Lincoln frequently topsthe list. Interest in Lincoln’s leadership swelled with the release of Steven Spielberg’s historical film Lincoln, which was a huge critical and commercial suc- cess, grossing more than $250 million at the box office and garnering 12 Academy Award nominations. ‘‘Lincoln’s presidency is a big, well-lit classroom for business leaders seeking to build successful, enduring organizations,’’ said Howard Schultz, CEO of Starbucks. In this era of disconnected and often morally bankrupt leaders, it is no wonder the skills, strengths, and character of Lincoln have struck a chord. Lincoln once provoked an opponent to tears by using his expert communication skills to mimic and ridicule his rival. Soon afterward, the man who would later become the 16th president of the United States felt disappointed and ashamed of his own behavior and sought out his opponent to offer an apology. Lincoln took this as a valuable lesson about channeling his emotions, practicing empathy, and using his abilities to promote good. From then on, Lincoln applied his superb leadership and communication skills to serve the higher interests of the American people rather than his own goals and ego. His ability to control his emotions and stay committed

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to a vision even under intense hardship, his commitment to go into the field and establish connections with soldiers and the general public, and his willingness to lis- ten to different points of view and to share credit for successes and take blame for failures all tap into a deep longing within people for genuine leadership.1

The public trust in leaders may be at an all-time low. Referring to the dire eco- nomic situation that followed the ethical and financial problems in the mortgage and finance industries, David Rothkopf wrote in the Washington Post, ‘‘This is not just a global economic crisis. It is a global leadership crisis.’’2

1-1 WHY WE NEED LEADERSHIP Many of us think of leadership in a way similar to what U.S. Supreme Court Justice Potter Stewart said about obscenity in reviewing a 1964 pornography case: we may not be able to define it but ‘‘we know it when we see it.’’3 People can clearly see leadership in Abraham Lincoln, but many are having a hard time seeing it in current political, business, military, and even religious leaders. General David Petraeus, one of the most decorated military leaders of his generation, stepped down as director of the Central Intelligence Agency after the FBI inadvertently discovered he had an extramarital affair with his biographer and began investigating for potential leaks of classified information. The British Broadcasting Corporation (BBC) was tarnished by allegations that managers covered up years of sexual abuse by a well-known reporter.4 Senator Chuck Grassley recently probed the financial records of six well- known televangelists, including Creflo Dollar and Kenneth Copeland, after reports that tax-exempt donations were financing lavish lifestyles for the religious leaders, including mansions, Rolls Royce cars, and private jets.5 Nearly every month brings a new report of a business leader somewhere lying to, misleading, or cheating employees, customers, or the government. No wonder survey after survey shows that confidence in leaders is sinking and suspicion and distrust are rising.6

Yet there are good leaders working in every organization, large and small. In fact, quality leadership is all around us every day, in all facets of our lives—our fam- ilies, schools, communities, social clubs, and volunteer organizations, as well as in the world of business, sports, religion, government, and the military. Without good leadership, our institutions and society would fall apart.

Before we can examine what makes an effective leader, we need to know what leadership means. Scholars and other writers have offered hundreds of definitions of the term leadership, prompting James McGregor Burns to conclude that leadership ‘‘is one of the most observed and least understood phenomena on earth.’’7 Defining leadership has been a complex and elusive problem largely because the nature of leadership itself is complex. Some have even suggested that leadership is nothing more than a romantic myth, perhaps based on the false hope that someone will come along and solve our problems by sheer force of will.8

There is some evidence that people do pin their hopes on leaders in ways that are not always realistic. Think about how some struggling companies recruit well- known, charismatic CEOs and invest tremendous hopes in them, only to find that their problems actually get worse.9 For example, Yahoo hired former Autodesk CEO Carol Bartz in 2009 with high hopes that the star leader could turn the strug- gling company around, only to ask her to leave a couple of years later as Yahoo’s fortunes continued to slide. In mid-2012, Yahoo hired former Google executive Marissa Mayer as the fifth CEO in five years.

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Particularly when times are tough, people often look to a grand, charismatic type of leader to alleviate fear and uncertainty. Think of how Barack Obama sailed to the U.S. presidency in 2008 based largely on his charisma and the ability to make people feel hopeful in a time of uncertainty. In recent years, the romantic or heroic view of leadership has been challenged.10 Much progress has been made in under- standing the essential nature of leadership as a real and powerful influence in organ- izations and societies.

1-1a Defining Leadership Leadership studies are an evolving discipline, and the concept of leadership will con- tinue to develop. For the purpose of this book, we will focus on a single definition that delineates the essential elements of the leadership process: Leadership is an influ- ence relationship among leaders and followers who intend real changes and out- comes that reflect their shared purposes.11

Exhibit 1.1 summarizes the key elements in this definition. Leadership involves influence; it occurs among people; those people intentionally desire significant changes; and the changes reflect purposes shared by leaders and followers. Influence means that the relationship among people is not passive; however, also inherent in this definition is the concept that influence is multidirectional and noncoercive. The basic cultural values in North America make it easiest to think of leadership as something a leader does to a follower.12 However, leadership is reciprocal. In most organizations, superi- ors influence subordinates, but subordinates also influence superiors. The people involved in the relationship want substantive changes—leadership involves creating change, not maintaining the status quo. In addition, the changes sought are not dictated by leaders but reflect purposes that leaders and followers share. Moreover, change is toward an outcome that both the leader and the followers want, a desired future or shared purpose that motivates them toward this more preferable outcome. An important aspect of leadership is influencing others to come together around a common vision. Thus, leadership involves the influence of people to bring about change toward a desirable future.

EXHIBIT 1.1 What Leadership Involves

Leader

Change Shared purpose

Followers Personal

responsibility and integrity

Influence Intention

Leadership an influence relationship among leaders and followers who intend real changes and outcomes that reflect their shared purposes

CHAPTER 1 WHAT DOES IT MEAN TO BE A LEADER? 5

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Also, leadership is a people activity and is distinct from administrative paper- work or planning activities. Leadership occurs among people; it is not something done to people. Since leadership involves people, there must be followers. An indi- vidual performer who achieves excellence as a scientist, musician, athlete, or wood- carver may be a leader in her field of expertise but is not a leader as defined in this book unless followers are involved. Followers are an important part of the leader- ship process, and all leaders are sometimes followers as well. Good leaders know how to follow, and they set an example for others. The issue of intention or will means that people—leader and followers—are actively involved in the pursuit of change. Each person takes personal responsibility to achieve the desired future.

One stereotype is that leaders are somehow different, that they are above others; however, in reality, the qualities needed for effective leadership are the same as those needed to be an effective follower.13 Effective followers think for themselves and carry out assignments with energy and enthusiasm. They are committed to some- thing outside their own self-interest, and they have the courage to stand up for what they believe. Good followers are not ‘‘yes people’’ who blindly follow a leader. Effective leaders and effective followers may sometimes be the same people, playing different roles at different times. At its best, leadership is shared among leaders and followers, with everyone fully engaged and accepting higher levels of responsibility.

1-1b Everyday Leadership Using this definition of leadership makes clear that leadership can come from any- one. When we stop equating leadership with greatness and public visibility, it becomes easier to see our own opportunities for leadership and recognize the leader- ship of people we interact with every day. Leaders come in all shapes and sizes, and many true leaders are working behind the scenes. Leadership that has big outcomes often starts small.

Wendy Kopp was a senior at Princeton University when she first came up with the idea of a sort of ‘‘Peace Corps for teachers,’’ a national organization that would recruit recent college graduates to commit to teach for two years at some of America’s toughest public schools. One of her Princeton professors admits he called her ‘‘deranged’’ when she proposed the idea to him. Yet Teach for Amer- ica, the organization Kopp started, became one of the most respected educa- tional initiatives in the United States. As the organization has grown larger, it has come under attack, but most observers agree it has changed education for the better and it continues to harness the idealism of young college graduates as a force for good.14

Clinical psychologist Barbara Van Dahlen was working primarily with children in the Washington, D.C., area when she became concerned about the effects of the wars in Iraq and Afghanistan on the mental health of U.S. soldiers, veterans, and their families. Van Dahlen founded Give an Hour to provide free services that give help and hope to returning service members. The organization now has a national network of more than 6,100 mental health professionals who volunteer their time. Give an Hour also works with other organizations, such as Bare the Burden, a nonprofit organization that creates an online community for veterans to heal by connecting with others.15

During his five years working as a car salesman, Robert Chambers was dis- gusted by how some dealers and finance institutions preyed on low-income cus- tomers. After he retired from a varied career, the 62-year-old electrical engineer

6 PART 1 INTRODUCTION TO LEADERSHIP

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decided to do something about it. He founded More Than Wheels, which helps low-income people buy new, base-model cars at low prices and on good loan terms. With branches in New Hampshire, Vermont, and Maine, More Than Wheels has negotiated price and extended warranty deals with a dozen or so auto dealers and worked with banks to provide low interest rates. More Than Wheels guarantees the loan and then works with clients to help them manage their finances, improve their credit scores, and improve their future.16

There are opportunities for leadership all around us that involve influence and change toward a desired goal or outcome. As further illustrated in the Leader’s Bookshelf, widely known and highly respected leaders often begin their leadership journeys in small ways. The leaders of tomorrow’s organizations will come from anywhere and everywhere, just as they always have. Do you have the capacity and commitment required for taking a leadership role in your school, community, or workplace? You can start now, wherever you are, to practice leadership in your own life. Leadership is an everyday way of acting and thinking that has little to do with a title or formal position in an organization. As we will discuss in the following section, business leaders need to understand this tenet more than ever in the world of the twenty-first century.

LEADER’S BOOKSHELF My Life in Leadership: The Journey and Lessons Learned Along the Way

by Frances Hesselbein

What college dropout transformed one of the world’s largest volunteer organiza- tions, was named Fortune magazine’s ‘‘Best Nonprofit Manager in America,’’ and received America’s highest civilian honor, the Presidential Medal of Freedom? The answer: Frances Hesselbein, who began her amazing leadership journey as a somewhat reluctant volunteer leader of Girl Scout Troup 17 in Johnstown, Penn- sylvania, when she was in her early twen- ties. In her autobiography, My Life in Leadership, Hesselbein, now in her late 90s, shares what she has learned about leadership throughout her long career.

‘‘LEADERSHIP IS A MATTER OF HOW TO BE, NOT HOW TO DO’’ Hesselbein argues that ‘‘it is the quality and character of the leader that deter- mines performance.’’ For her, leader- ship is about serving others. From her beginning as a volunteer Scout leader, she eventually became CEO of the Girl Scouts of the USA, and later was found- ing president of famed management scholar Peter Drucker’s Leader to

Leader Institute (she still serves as CEO of the organization, recently renamed the Frances Hesselbein Leadership Insti- tute). Here are a few of the key lessons Hesselbein has learned along the way:

• Have a Clear Mission That Everyone Can Support. As soon as she became CEO of the national Girl Scouts, Hes- selbein took a close look at the mis- sion of the organization and began asking leaders at all levels, as well as girls themselves, what they really val- ued, wanted, and needed. ‘‘Because we included everyone, it became theirs, not ours,’’ she says. Hesselbein calls the mission, vision, and values ‘‘the soul of the organization,’’ which should be central ‘‘even as we aban- don the vestiges of the past that spell irrelevance in the future.’’

• Be Inclusive. Hesselbein also ditched the hierarchy, sharing information and power with leaders at all levels from the beginning. A concept she called ‘‘circular management,’’ put the leader in the middle of the

organizational chart rather than at the top of a hierarchy. Everyone was a member of a team, and there were no superiors and subordinates. Being inclusive develops leaders at every level and increases the energy and creativity of the entire organization.

• Make Learning a Top Priority. Organizations have to keep changing and adapting when it’s necessary. ‘‘The first item in your budget should be learning, education, and develop- ment of your people,’’ she says.

THE GREAT ADVENTURE Hesselbein tells her story in Learning to Lead as a great adventure that she enjoyed every step of the way. It is a story told in a very personal way, but one that is packed with observations and reflections that are as relevant to today’s leaders as when Hesselbein first began her long leadership journey as a volunteer Girl Scout leader.

Source: Learning to Lead, by Frances Hesselbein, is published by Jossey-Bass.

NEW LEADER ACTION MEMO As a leader, you can recognize opportunities for leadership and act to influence others and bring about changes for a better future.

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1-2 THE NEW REALITY FOR LEADERS Social media. Globalization. Mobile commerce. Geopolitical wars. Renewable tech- nologies and smart machines. Outsourcing. Climate change and resource scarcity. Telecommuting and virtual teams. Cybercrime. Redistribution of economic power. Massive changes in the world mean today’s leaders are facing challenges they couldn’t even imagine just a few years ago.17 In a survey by the Center for Creative Leadership, 84 percent of leaders surveyed say the definition of effective leadership changed significantly within the first few years of the twenty-first century.18 And that was even before social and mobile technologies began reshaping everyday life and work. Social connectedness and mobility are becoming central aspects of every leader’s job.

Some historians and other scholars believe our world is undergoing a transfor- mation more profound and far-reaching than any experienced since the dawn of the modern age and the Industrial Revolution more than 500 years ago. Today’s leaders operate in a world where little is certain, the pace is relentless, and everything is more complex. This transformation requires a transition from a traditional to a new leadership paradigm, as outlined in Exhibit 1.2.19 A paradigm is a shared mindset that represents a fundamental way of thinking about, perceiving, and understanding the world.

Although many leaders are still operating from an old-paradigm mindset, as out- lined in the first column of Exhibit 1.2, they are increasingly ineffective. Successful leaders will respond to the new reality outlined in the second column of the exhibit.

EXHIBIT 1.2 The New Reality for Leaders

Old Paradigm Leader

New Paradigm Leader

Stabilizer Change Manager

Diversity Avoider

Diversity Promoter

Hero Humble

Competitor Collaborator

Controller Facilitator

From To

Paradigm a shared mindset that repre- sents a fundamental way of thinking about, perceiving, and understanding the world

8 PART 1 INTRODUCTION TO LEADERSHIP

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1-2a From Stabilizer to Change Manager In the past, many leaders assumed that if they could just keep things running on a steady, even keel, the organization would be successful. Yet today’s world is in constant motion, and nothing seems certain anymore. If leaders still had an illusion of stability at the dawn of the twenty-first century, it is surely shattered by now. Consider the following recent events:

A powerful earthquake in Japan triggered massive tsunami waves that damaged the nuclear reactors at the Fukushima Daiichi power plant and led to the shut- down of numerous companies, creating supply chain disruptions for manufac- turers around the world. In the wake of the disaster, managers at Tokyo Electric Power Company (Tepco) were criticized for failing to act quickly enough to cool the reactors at Fukushima. Trying to protect their investment, they hesitated to use seawater, which they knew could damage the reactors, leading to the second-largest nuclear disaster in history.20

In 2015, the Volkswagen Group, one of the largest car manufacturers in the world and known as maker of ‘‘the people’s car,’’ was discovered to have used software designed to cheat U.S. emissions tests, affecting 11 million vehicles worldwide. Actual exhaust emissions turned out to be up to 40 times higher than the emission tests revealed. VW’s emissions scandal cast doubt on the repu- tations and emissions validity of other auto manufacturers such as Mercedes and BMW. Germany’s national economy and auto suppliers worldwide will likely be hurt as VW sales decline.21

Greece was in a deep recession in 2015 due to huge debts to the European Union (EU). Sharp cutbacks in government spending had decimated personal incomes and businesses in the region. Ireland and Spain faced similar debt prob- lems previously, causing talk of a possible breakup of the euro system (the single currency adopted by EU countries), which would deal a severe blow to the global financial system. Leaders of multinational firms have to take steps to pro- tect themselves, as well as consider what they will do in the event that a return to national currencies requires a rethinking of everything from how to expand operations to how to pick suppliers or pay employees.22

Most leaders, whether in business, politics, the military, education, social services, the arts, or the world of sports, recognize that trying to maintain stability in a world of such unexpected and far-reaching change is a losing battle. ‘‘You have to be able to react very quickly,’’ said Ellen Kullman, recently retired CEO of DuPont, referring to the impact of events such as the Japanese tsunami and the EU financial crisis. ‘‘And the world is so connected that the feedback loops are more intense.’’23

Today’s best leaders accept the inevitability of change and crisis and tap into them as potential sources of energy and self-renewal. Adaptability is the watchword of the day.

1-2b From Controller to Facilitator Leaders in powerful positions once believed strict control was needed for the organi- zation to function efficiently and effectively. Rigid organizational hierarchies, struc- tured jobs and work processes, and detailed, inviolate procedures let everyone know that those at the top had power and those at the bottom had none.

CHAPTER 1 WHAT DOES IT MEAN TO BE A LEADER? 9

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Today, the old assumptions about the distribution of power are no longer valid. An emphasis on control and rigidity serves to squelch motivation, innovation, and morale rather than produce desired results. Effective leaders share power rather than hoard it and find ways to increase an organization’s brainpower by getting everyone in the organization involved and committed. Rather than being a controller, the leader is a facilitator who helps people do and be their best by removing obstacles to performance, getting people what they need, providing learning opportunities, and offering support and feedback.

One reason for this is that the financial basis of today’s economy is becoming information rather than the tangible assets of land, buildings, and machines. This means human capital is becoming more important than financial capital, which increases the power of employees. ‘‘Ideas are now more important than materials,’’ as former Israeli president Shimon Peres once put it.24 When all the organization needed was workers to run machines eight hours a day, traditional command- and-control systems generally worked quite well, but success today depends on the intellectual capacity of all employees. One of the leader’s most challenging jobs is to enable people to embrace and use their power effectively.25

When he took over as CEO of India’s struggling HCL Technologies in 2005, Vineet Nayar took a huge risk that proved to be a highly effective route to true employee empowerment and increasing revenues. His revolutionary move was to organize the company around the principle of ‘‘employees first, customers second.’’ Nayar created an open online forum where people could post questions and leaders would answer. Employees were overjoyed that leaders were willing to acknowledge the problems in the company, and they began proposing solutions. This began the transfer of power and responsibility for solving problems from top executives to employees. In the new HCL, the job of leaders is to serve employees.26 Nayar, who served as CEO until 2013, wrote a book titled Employees First, Customers Second: Turning Conventional Management Upside Down to explain how leaders can tap into the power of this unconventional approach.27

1-2c From Competitor to Collaborator Social media has ‘‘put connectivity on steroids,’’ blurring and sometimes obliterating boundaries within and between organizations.28 In a hyperconnected, networked age, collaboration becomes more important than competition. Successful leaders harness and make the most of ideas, talent, and resources from across boundaries of all kinds. Although some companies still encourage internal competition and aggres- siveness, most successful leaders stress teamwork, compromise, and cooperation. Self-directed teams and other forms of horizontal collaboration spread knowledge and information throughout the organization.

Effective leaders also work collaboratively with suppliers, customers, govern- ments, universities, and other organizations. There is a growing trend within compa- nies to think of themselves as teams that create value jointly rather than as autonomous entities in competition with all others.

Collaboration presents greater leadership challenges than did the old concept of competition. Leaders first have to develop their own collaborative mindset and then create an environment of teamwork and community that fosters collaboration and mutual support. They learn to keep the lines of communication open and use influ- ence rather than wielding their authority to quell harmful politicking, get buy-in on important matters, and move things forward.29

NEW LEADER ACTION MEMO Go to Leader’s Self-Insight 1.1 to learn about your own ‘‘intelligence’’ for dealing with collaboration and with the other new realities facing leaders.

10 PART 1 INTRODUCTION TO LEADERSHIP

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1-2d From Diversity Avoider to Diversity Promoter Many of today’s organizations were built on assumptions of uniformity, separation, and specialization. People who think alike, act alike, and have similar job skills are grouped into a department, such as accounting or manufacturing, separate from other departments. Homogenous groups find it easy to get along, communicate, and understand one another. The uniform thinking that arises, however, can be a disas- ter in a world becoming more multinational and diverse.

LEADER’S SELF-INSIGHT 1.1 Your Learning Style: Using Multiple Intelligences

Instructions: Multiple-intelligence theory suggests that there are several different ways of learning about things in a topsy-turvy world; hence there are multiple ‘‘intelligences,’’ of which five are interpersonal (learn via interactions with others), intrapersonal (own inner states), logical–mathematical (rationality and logic), verbal–linguistic (words and language), and musical (sounds, tonal patterns, and rhythms). Most peo- ple prefer one or two of the intelligences as a way of learning, yet each person has the potential to develop skills in each of the intelligences.

The following items will help you identify the forms of intelligence that you tend to use or enjoy most, as well as the forms that you use less. Please check each item below as Mostly False or Mostly True for you.