How Great Leaders Think

by Lee G Bolman

  Exhibit 2.1. Structural Contingencies

  Dimension Structural Implications

  Size and age Organizations become more complex and formal as they get bigger and older.

  Core process Simple, top-down structures work for stable and predictable tasks, but not for more complex and turbulent ones.

  Environment Stable environments reward simpler structures; uncertain, chaotic conditions require a more complex, flexible structure.

  Strategy and goals Top-down structures work better with consistent, well-defined goals; more ambiguous goals and strategies usually work better with more flexible, decentralized structures.

  Information technology Information technology permits flatter, more flexible, and more decentralized structures.

  Nature of the workforce More educated and professional workers need and want greater autonomy and discretion.

  Core Process

  Core technologies vary in clarity, predictability, complexity, and effectiveness. Assembling a Big Mac is relatively routine and programmed. The task is clear, most potential problems are known in advance, and the probability of success is high. A tightly scripted, top-down structure is often perfect when the structural design can anticipate almost every major contingency people might encounter.

  In contrast, Harvard’s two core processes—research and teaching—are complex and unpredictable. Teaching objectives are knotty and amorphous. Unlike hamburger buns, students are active agents. Which teaching strategies best yield desired results is more a matter of faith than of fact. Even if students could be molded predictably, mystery surrounds the knowledge and skills they will need to succeed in life. Harvard’s uncertain technologies of teaching and research, dependent on the skills and knowledge of highly educated professionals, are a key source of its loosely coordinated structure.

  Strategy and Goals

  Across sectors, a major task of leadership is “the determination of long-range goals and objectives of an enterprise and the adoption of courses of action and allocation of resources necessary for carrying out these goals.”5

  A variety of goals is embedded in strategy. In business firms, goals related to profitability, growth, and market share are relatively specific and easy to measure. Goals of educational or human services organizations are typically much more diffuse: “producing educated men and women” or “improving individual well-being,” for example. This is another reason why Harvard adopts a more decentralized, loosely integrated system of roles and relationships.

  Information Technology

  In the 2003 invasion of Iraq, the United States and its allies had an obvious advantage in military hardware. They also had a powerful structural advantage because their superior information technology gave them a much more flexible and decentralized command structure. Commanders in the field could quickly change their plans to respond to new developments. Iraqi forces, meanwhile, had a much slower, more vertical structure that relied on decisions from the top. One reason that Iraqi resistance was lighter than expected in the early weeks was that field commanders waited for instructions that never came because they were cut off from their chain of command.6

  Later, the structure and technology so effective against Iraq’s military had more difficulty with the emerging resistance movement. The Internet and cell phones enabled the resistance to structure itself as a network of loosely connected cells, each pursuing its own agenda in response to local conditions. The absence of strong central control in such networks impedes coordination, but can still be a virtue because local units can adapt very quickly to new developments and because the loss of any one outpost does little damage to the whole.

  Nature of the Workforce

  Top-down structure works particularly well for jobs that can be programmed in advance, so that workers don’t need to make complex, independent judgments in response to changing conditions. There used to be more jobs like that, but the world has been changing, and many lower-level jobs now require higher levels of skill. A better-educated workforce expects and often demands more discretion in daily work routines. Increasing specialization has professionalized many functions. Dramatically different structures are emerging as a result of changes in workforce demographics. These include atomized or networked organizations, made up of small, autonomous, often geographically dispersed work groups tied together by information systems and symbols. Work from home is another example of a trend moving work to where the people are rather than moving people to where the work is.7

  APPLYING THE STRUCTURAL FRAME

  Suppose for the moment that you have become a regional sales manager for an investment bank.8 You manage a group that sells sophisticated financial instruments (bonds, mortgage-backed securities, options, futures, and so on) to institutional clients such as banks, insurance companies, and pension funds. Your office has been profitable and successful, but the business has become more competitive and complex in recent years. New low-cost competitors are entering the market and siphoning away sales of low-end, simpler products. Your firm is trying to shift its marketing mix to sell more complex products that have less competition and higher profit margins.

  Most of your sales are generated by a small group of major account representatives who have the experience, people skills, intellect, and street smarts the work requires. Each of them sells your full line of products to a specific group of a dozen or so big institutional clients. A strong relationship with customers is vital, and each salesperson has a large expense account for entertaining. Top salespeople can make as much as $1 million a year in salary and commissions.

  Here’s what worries you. As the products keep getting more complicated, it’s becoming very hard for your major account representatives and their customers to keep up. Your salespeople can get help from in-house specialists, but when a customer asks about a particular product, the account representative would rather give an answer than say, “I’ll have to get back to you on that.” Even more important, it’s hard to sell what you don’t understand, but the most profitable products are the hardest to decode. Market data suggests that competitors are gaining on you because of this expertise gap. What should you do now? Your first thought might be to put in some kind of training or motivational program for the salespeople. Managers often try to fix problems by fixing the people, but miss structural solutions that are more effective and easier to implement. Three simple questions can help guide a structural analysis:

  What’s going on? What’s working and not working?

  What’s changing (in your organization, your technology, or your environment) that creates an opportunity, a threat, or both?

  What problem do you need to solve? What options should you consider?

  In this case, your thinking might take you in a direction similar to the following:

  What’s going on? Start by examining how the job of the account representatives is defined. Consider the options for dividing work (function, time, product, customer, place, process), and you’ll see that the role has been defined by customer. All the representatives sell the same products, but each has a unique group of clients. Examine the advantages and disadvantages of this arrangement, and you’ll see that it’s a good way to create strong relationships between representatives and their clients while giving customers the convenience of one-stop shopping. Whatever question they have or product they want, clients only need contact information for one person. It’s a straightforward structure that’s easy to understand and reduces the need for coordination among the sales staff.

  What’s changing? A central idea in the structural frame is that structure needs to align with circumstances. If the environment changes, there’s a good chance that the structure has to adapt. The representatives have been generalists who cover the entire product line. That used to work well enough, but it is turning into a liability as the firm tries to shift to more sophisticated products. The representatives can’t always answer clients’ questions, and may miss opportunities because they don’t see
the connection between client needs and the more specialized offerings. It’s tempting for them to keep selling the simpler, lower-margin products that they understand, but the high end is where competitors have been eating market share.

  What problem do you need to solve? What options should you consider? The problem you’d like to solve is that of shifting the sales mix toward more high-margin products. What structural change would help solve that problem? If the goal is to increase the representatives’ ability to sell more complex products, a promising fix is to define the representatives’ job by product rather than customer. That would let each of the representatives specialize and become an expert on a segment of the product line. But there are trade-offs. Customers might be unhappy because it would make things more complicated; they’d have to contact different people depending on which product they were interested in. Moreover, it’s a structure that would require more coordination among the sales representatives in order to keep track of what’s happening with each customer. You don’t want customers feeling neglected because no one calls or harassed because everyone does. A third risk is that the new structure could fail if the representatives resist it or can’t adjust to it.

  What to do? The analysis suggests that it makes sense to explore a move from a structure based on the customer to one built around products, but it’s not likely to work unless the representatives support the change and work as a team. That suggests involving the representatives in a discussion of how to solve the current problem, knowing that a solution that they believe in has a good chance of working and that the odds are against anything that doesn’t make sense to them.

  In a real-world case similar to this one, that’s basically what happened. The regional sales manager held extensive discussions of the issue with the major account representatives, who eventually agreed to restructure so that each became a specialist in a particular product line. Seeing the importance of working together in this new structure, they defined themselves as the “key account team,” with one of their members serving as the coordinator.

  After structural change, it is often the case that things get worse before they get better, and that was true in this case. There was short-term confusion as everyone tried to adapt to the new arrangement. Some customers saw the new structure as an improvement; others preferred the old one. Some of the representatives struggled with the transition. The new structure wasn’t perfect—no structure is—but six months later, the team was achieving the central goal: profits were up because they were selling more high-margin products to satisfied customers.

  CONCLUSION

  When leaders neglect structure and strategy, or buy into the two structural fallacies we discussed, they and their organizations pay a price. Units perform far below their potential. They waste time and money on training programs in a vain effort to solve problems that have more to do with social architecture than with people’s skills or attitudes. The right social architecture depends on prevailing circumstances and considers an organization’s strategies, technology, people, and environment. Understanding the complexity and variety of design possibilities can help you create patterns and prototypes that work for, rather than against, both your people and your purposes.

  Ideally, leaders would be fluent and skilled in all four frames, but few of us are perfectly balanced. If structural thinking is one of your strengths, your natural inclinations can make you a valuable contributor in any team or organizational context. You can help diagnose structural gaps or overlaps and suggest ways to fix them. However, devotees of structural thinking often have difficulty seeing and dealing with messier and less rational human, political, and symbolic issues. Structure is important, but it is not the only dimension critical to top performance. Leaders who lean heavily toward structural thinking will typically feel comfortable organizing tight, well-managed teams focused on the task. But leaders need to be aware of the risk of becoming rigid, authoritarian micromanagers. They may have noble intentions and admirable concern for getting the job done, but may overlook human emotions, politics, and the cohesion that comes from cultural bonds rather than structure. We explore these important dimensions of leadership in subsequent chapters. In Chapter Three, we will home in on the structure of teams and small groups. More and more work gets done in such small units. But the call for more leadership talent grows stronger as these teams encounter structural issues that dampen performance.

  NOTES

  1. Niemann, G. Big Brown: The Untold Story of UPS. San Francisco: Jossey-Bass: 2007, p. 189.

  2. Ibid., p. 8.

  3. Galbraith, J. R. Designing Organizations: An Executive Briefing on Strategy, Structure, and Process. San Francisco: Jossey-Bass, 2001.

  4. Love, J. F. McDonald’s: Behind the Arches. New York: Bantam Books, 1986.

  5. Chandler, A. D., Jr. Strategy and Market Structure. Cambridge, Mass.: Harvard University Press, 1962, p. 13.

  6. Broder, J. M., and Schmitt, E. “U.S. Attacks on Holdouts Dealt Iraqis Final Blow.” New York Times, Apr. 13, 2003, p. B1.

  7. Drucker, P. F. “Peter Drucker’s 1990s: The Futures That Have Already Happened.” Economist, Oct. 21, 1989, p. 20.

  8. This case is loosely adapted from Anne Donnellon and Dun Gifford Jr., “Campbell and Bailyn’s Boston Office: Managing the Reorganization.” Case study. Prod. no.: 2182-PDF-ENG. Boston: Harvard Business Publishing, Apr. 11, 2008.

  Chapter 3

  Organizing Groups and Teams

  Organizations depend on groups and teams to do much of their work, but teams often founder on structural flaws. A team’s structure may come from the top initially, but often needs to evolve locally to meet the challenges of the game, the work at hand. That’s where leadership comes in. Whether you’re formally in charge or just one of the members, if you’re on a team that is going off the rails, there’s a leadership opportunity you can seize.

  Social architecture is often taken for granted and almost invisible to the members of veteran teams. It is easier for leaders to perceive structural patterns by observing carefully as they emerge in a new team or as changes evolve in an existing one. This chapter begins with two cases of teams in crisis. Together, they illustrate many of the things that can go wrong, including weak leadership, conflict, resistance to authority, lack of accountability, and ball hogging. In one case, the challenges overwhelmed the team’s capacities and led to tragedy. In the other, the team, pushed to its limits in a life-and-death test, managed to survive by adapting an idiosyncratic leadership pact. These case stories lead to a discussion of team leadership and the relationship between task and structure. Following this, we explore the task-structure relationship in team sports.

  LORD OF THE FLIES

  Fiction often illuminates issues that reality obscures. Lord of the Flies is a classic novel about a group of boys marooned on a remote island after a plane crash. In the wake of the disaster, the boys were scattered over unknown territory. Two of them came upon a conch shell lying on the beach and found that they were able to summon the others by blowing into the shell.

  The boys gathered and decided to elect a leader. Jack, already the official leader of a group of choir boys, proposed himself for the role and was annoyed when the whole group chose Ralph instead. To avoid a divisive struggle, Ralph appointed Jack as the leader of a subgroup charged with killing the plentiful native pigs for food. In a subsequent meeting, Ralph gave everyone a chance to participate in group decisions, declaring that whoever held the conch shell had the floor at communal meetings. With a fragile authority system in place, the group assigned responsibilities for the basic tasks of building shelter, gathering water, and tending the signal fire.

  The frail structure soon began to fall apart. Roles and rules were ignored. Duties were neglected. Boys pursued individual interests and took advantage of the freedom to frolic. The neglected signal fire went out, allowing a large ship to pass by without noticing the marooned group. The group split in two. Jack solidified his command of the pig hunte
rs and ruled with an iron hand. His group’s hunting activities quickly became a pagan rite, with a pig’s head rather than the conch shell as a unifying symbol. Ralph maintained control of his orderly subgroup. He tried to exercise his authority to bring the two groups together, but lacked the clout and command skill to pull it off.

  From there, Jack’s group spiraled into anarchy, becoming a barbaric band of savages with paint on their faces and pagan ceremonial rites to bond them together, especially after a pig kill. Finally, group members turned on each other in senseless killing. Brute force, mainly wielded by Jack, was the only source of control. When help finally arrived, both the boys and their rescuers were stunned at the striking descent from reason to bedlam.

  In the story, we see a structural death spiral. Ralph and Jack were wrapped in a struggle for leadership and unable to establish viable authority. Splintered roles and unheeded rules undermined accountability and reliable performance of essential tasks. In the absence of effective guardrails, the group veered off course. Chaos, divided leadership, and conflict led to tragedy.

  Lord of the Flies tells a story of group dynamics that mirrors the reality of many real-life tragedies in which leadership fails, structure fractures, and a group falls apart. Yet failure is not inevitable. In a real-world life-and-death situation that became a major media event, inventive leadership turned potential tragedy into a remarkable story of courage, fortitude, and success.