Leading at the Enterprise Level

For the past couple of decades, companies have focused on creating strong leaders of business units and influential heads of functions — men and women responsible for achieving results in one corner of an organization. But they have not paid as much attention to a more important challenge: developing leaders who see the enterprise as a whole and act for its greater good. And that perspective has become increasingly necessary as companies seek to provide not just products but broad-based customer solutions.

It is easy to understand why companies emphasized the development of strong unit and functional leaders. Since the 1980s, the dominant view has been that effective organizations are highly decentralized and therefore, in theory, able to respond more quickly to customers. As business units became increasingly autonomous, the leaders who reaped the most praise and attention were bold, independent business builders. The challenge for those in the corporate center was to manage, not to lead, and to be as hands-off as possible in their dealings with those running the businesses or the regions.

But left unchecked, such autonomy can produce an organizational culture defined by a take-it-or-leave-it, product-push mentality. The demise of companies that were icons of their industries, such as Digital Equipment Corp. or Polaroid Corp., is evidence of this danger. These companies were once technology leaders with great products, but the spirit of autonomy that they fostered eventually led to the creation of product silos overseen by powerful leaders. Customers had a choice: They could buy the products on offer or go elsewhere. When other companies began to offer better technologies, the two giants’ products were no longer competitive, and customers fled.

Today, even cutting-edge products are not enough to ensure customer loyalty. Customers are stepping up demands for integrated solutions to their problems. While companies have developed new strategies for meeting those demands, many have yet to change their thinking about what constitutes effective leadership in this environment. Decentralization itself is not the issue. The main point is that solutions strategies cannot be implemented by leaders who have a product-push silo mentality. Until companies recognize this fact, they will be frustrated in their efforts to deliver integrated customer solutions by a gap between their strategies and their capabilities.