Tuesday, February 08, 2011

The Wisdom of Crowds and the Changing Nature of Leadership

The Center for Creative Leadership has published a research white paper on the changing nature of leadership. They interviewed 389 individuals about leadership and organizations, and I found the results to be very interesting.

According to the research, 84% of respondents believe that the definition of what is effective leadership has changed in the past five years. 60% believe that leaders face challenges that go beyond their individual capabilities, and 58% believe that interdependence work is the foundation of effective leadership. To me this means that the concept of a leader as the person out front, singularly leading the troops to some semi-distant goal is no longer accurate. Perhaps either because of the growing complexity of problems, or the flood of data, more and more of what identifies true leaders is their ability to effectively team with others.

A second area of study seems to reinforce this conclusion. CCL asked about the three core competencies that they use to define leadership: setting direction, gaining commitment, and creating alignment. According to the study, only 50% agreed that leadership in their organizations sets direction effectively. Only 46% said leadership gains commitment effectively. And perhaps most telling, only 40% felt that leadership exhibited the the competency that seems to be the most connected to working with others, creating alignment effectively.

The notion of the wisdom of crowds isn't a fad or the latest business buzz term with no substance behind it. It actually represents a fundamental change in the way people view reality. The challenge will be to lead people with this changed worldview, especially since the manager who strives to lead them attained his/her position by successfully manipulating the old paradigm!

The whit epaper also reports on activities that are rewarded by companies, comparing what is happening currently with what the crowd felt should be rewarded. While behaviors like "making the numbers" and individual performance are currently what is rewarded, the crowd thought that teamwork, collaboration, long-term objectives and working across boundaries should be rewarded. The paper didn't discuss how this fundamental disconnect between what the organization is doing and what the crowd feels is the more appropriate action tends to undermine leadership. Perhaps this is why leadership can't create alignment effectively.

The worker bees of the organization do understand the trade off between "making the numbers" -- an activity with monthly or quarterly horizons -- and long-term objectives, which ultimately will create a more stable environment, foster innovation, and invest in quality. Some time ago, I worked for a company that was purchased by another company. Immediately before the sale, we were pushed hard to "make the numbers", so our balance sheet wotul be as attractive as possible to potential suitors. This caused our management to attempt to make as much salable product as possible, with little thought to quality. After the new company made the purchase, we had a period of relative calm. But eventually, the new ownership began to exert that pressure again. There was no desire to listen to the wisdom of the crowd, and ultimately many excellent people left the organization. Until management is rewarded for having a longer view and encouraging collaboration and innovation, the organization is going to be in conflict with the current values of it's workers. Not only does it miss out on all that wisdom, and make suboptimal decisions, but it is going to loose the best workers, who simply will not stay where they can't participate in a meaningful way. And this is going to happen even in a sub par economy.

The Changing Nature of Leadership, by Andre Martin for the Center for Creative Leadership, can be found here.


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