The Hidden Side of Organizational Leadership

I’ll be damned if I understand how we make some of our most important decisions around here.

–CEO of a Fortune 500 company

“The (Mustang) model (of 1964) was totally completed by the time Lee (Iacocca) saw it,”; says (Gene) Bordinat, now retired. “We conceived the car, and he pimped it after it was born.”

–Time, April 1, 1985

Leadership is one of the most observed and least understood phenomena on earth.

–James MacGregor Burns

LET’S START WITH the premise that no one has a good all-purpose definition of leadership. For most of us, the word conjures up an image of one leader with followers. However, the quotes above suggest that understanding—and assigning credit for—leadership can be confusing and highly emotional. James MacGregor Burns’s recent book, Leadership, cites one study with 130 definitions of the term.1 Another book notes over 5,000 research studies and monographs on the subject. The editor concludes that there is no common set of factors, traits, or processes that identifies the qualities of effective leadership.2 Most of these books equate leadership with the leader who is a hero-person. That is one extreme. The other extreme is found in studies that view leadership as a set of personal attributes such as energy, charisma, or style. In between are the contingency theorists who argue that leadership depends upon anything from task conditions to subordinate expectations.

In a sense, all of these approaches are correct, but none is sufficient. All deal more with the single leader and multi-follower concept than with organizational leadership in a pluralistic sense.3 None deals very well with the complexities that arise from the fact that managers are both leaders and followers, because of the very nature of organizational hierarchies. All bosses, including CEOs, are also subordinate to other people or pressures.

Nor do any of these approaches deal effectively with another fact of organizational life—that informal social networks exert an immense influence which sometimes overrides the formal hierarchy. A boss in one context may be a subordinate, relative, friend, or colleague in other company settings. A person’s formal job status may be clear in the hierarchy, but that is only one part of an organization’s network of relationships. Less formal network ties often dominate a person’s or group’s role behavior.

All of this reminds us of what we often forget. Leadership goes beyond a person’s formal position into realms of informal, hidden, or unauthorized influence. Moreover, we need to remember that leadership, or the lack of it, is usually better recognized by the so-called followers than by the formal leaders, To some extent, these perceptions depend upon a person’s formal status, but they also depend upon the roles that a person is assigned, chooses, or is allowed to take by others.

Yet studies of organizational leadership still focus mostly upon the formal leader who symbolizes all leadership, whether he or she is the CEO, Lee Iacocca, or Ronald Reagan. Such people not only get the public spotlight, but they also are placed on pedestals as heroes or scapegoats. Their associates become followers or lesser adversaries almost by default. Only rarely, sometimes in historical accounts written years later, do we learn of a formal leader’s dependence on followers, spouses, or friends and of their critical leadership roles at strategic times. Sometimes we learn later of revised leader/follower combinations brought on by external crises, as in the case of Richard Nixon, Henry Kissinger, and Alexander Haig after Watergate. More often, though, the myth of the hero prevails.

In our experience, hero-leaders were only one small part of organizational leadership. We felt there was a need for leadership concepts that go beyond the notion of a formal leader with many followers. We had in mind a more wholistic organizational picture, where leader roles overlapped, complemented each other, and shifted from time to time and from person to person.4

We began to look for ways in which this more inclusive concept of leadership (as opposed to the concept of leader) worked in large organizations. We wanted to see if leadership changed depending upon time, place, situation, and people. As we shall see, our perspective on organizational leadership made us feel like theater critics; we observed everyone from executives to workers as though they were producers, directors, actors, and audience at different times in a complex decision drama.

Decision Dramas

We began our study by focusing on decision making in large organizations, because we believed that effective decision making is part of effective leadership. As with leadership, our concept of decision making differed from some prevailing views. We defined it as the entire “decision process” surrounding a complex issue. This definition includes follow up actions and implementations, not just the actual decisions themselves. We wanted to understand how people formally and informally transformed decision ingredients into decision actions in pursuit of agreed upon or competing goals. This process resembled complex spirals of formulation and implementation. It took time, was difficult to measure, and often involved hundreds of organizational producers, directors, actors, and audiences. We came to think of the process as an extended decision drama that involved a multitude of shifting roles.5

We knew we could encompass only a small part of this vast subject area in our study. However, sacrificing rigor for relevance, we struggled to broaden and deepen our understanding of how organizational leadership really worked in crucial decision dramas.

To begin our field study, we asked CEOs and other senior managers in several very large companies to suggest critical decision issues for study. They did. We also sought out some smaller firms in the same industries. Over a three-year period, we examined thirty major decision dramas in twelve different companies.6 Since then, we have closely studied another half dozen situations and reviewed over one hundred specific company decisions drawn from teaching case files. All of the examples came from companies in heavy manufacturing, high technology, or financial services.

In all of the companies we studied closely, the CEOs and other executives were generous with their time, often giving us far more than the designated few hours that had been requested for interviews. Of the original thirty examples we studied, twenty-two involved multiple interviews; in these cases we also had access to company archives, could attend meetings, and interviewed retired as well as current employees. The other eight studies were based on interviews of five or six hours each with one or two key executives.

In each company, we asked senior executives to focus on the roles of key actors and to evaluate a decision process, not just its outcome, as a relative success or failure. This proved difficult. Simpler decision processes tended to be more clear cut; outcomes or products dominated perceptions of the process. Sometimes the perceptions changed. In one case, a decision drama perceived by most managers to be a disaster in 1963 looked like a smashing success by 1980 because of changing market conditions in the industry. Nevertheless, opinions on success or failure were strong in some cases, and we shall refer to them when one consistent opinion seemed to prevail. The thirty original decision processes fell into seven major topic areas:

• Expanding into new world markets.
• Bringing new products into current markets.
• Major acquisition efforts.
• Developing a new manufacturing process.
• Reorganization and restructuring at the top.
• Executive rivalries, upheavals, and replacements.
• The rise and fall of international joint ventures.

Let us summarize and briefly state the “theory” we brought to this study. In retrospect, it seems consistent with our major findings. Our theory of organizational leadership involved: (1) many potential “leaders” in changing role relationships who, (2) moved from often vague concepts of purpose and vision into, (3) struggles with perceived certainty and uncertainty, and (4) reached patched-together decision actions in, (5) a spiraling process involving higher and lower, newer and older producers, actors, and audiences.7 This concept of organizational leadership included both formal hierarchy and informal or quasi-formal networks.

The inclusion of these social networks was an important part of this study. Effective organizational leadership involved hierarchical and social network leaderships working in complementary tension patterns over time. Multiple leaderships and their tensions came from competing hierarchies and networks.

The drama metaphor helps to suggest why these complex relationships often failed to work effectively. The producer-directors, stars, supporting cast, and audiences often change roles, disappear, and reappear during a decision drama, but sometimes individuals cannot handle the ambiguity and tensions that arise from those changing roles. Each drama had its ongoing dialogues, multiple settings, and changing plots. Each had backstage tensions, emotions, and power struggles as well as more politic behavior on stage. The tensions often swung from perceived ambiguity to polarized conflict, sometimes useful, sometimes not. Bridges of multiple and complementary leadership actions were sometimes built. Sometimes they weren’t. Sometimes the enemy was an individual’s limited perspective on the potential sources of leadership.

It might help to take several examples of clear failure, then look at some more successful cases. The first failure example comes from a multi-billion dollar heavy manufacturing company. This decision process was seen by almost all of the company’s senior management as a failure. It involved new manufacturing techniques which might have revolutionized the entire industry had they worked. The drama began slowly in the late 1940s and built up for over twenty years; the project cost more than $30 million before it was abandoned. The executive who sponsored the project was a vice president for research and development (R&D) and a member of the company’s board of directors. He was perceived as a strong leader by many employees. Neither this vice president nor his immediate subordinate, who became the new technology project director, ever saw the project’s failure as a failure to add network patterns of leadership to their own hierarchical controls and formal authority. As we will show, they relied upon hierarchical position almost exclusively.

New Technology Process

ACT I

This heavy manufacturing company purchased several new patents abroad shortly after World War II, when it appeared that the competition might gain control of a new technology process. The major force behind the purchase was the vice president of R&D. He persuaded a new president/CEO and other senior managers to adopt his vision of what the patents could mean. The vice president’s task was made easier, others said, because the company’s top management was separated into a set of autonomous fiefdoms loosely coordinated by the president. Each vice president dominated his own functional territory. The norm was to run your own operation and not interfere with other territories. The R&D vice president rigidly subscribed to this hierarchical principle. As he noted in an interview in 1983:

I firmly believe that each person should have only one boss and know exactly what his responsibilities are. Debates are good if the two parties are equally informed and competent to judge, but if they’re not, it’s a waste of time.

That kind of wall building soon led to isolated thinking within R&D as well as tensions between R&D and other parts of the company. The tensions became conflicts when two functional areas laid claim to an issue. Manufacturing people saw the project evolving exclusively within R&D, and wanted to become involved, but the R&D project director did not want outside interference. As one R&D manager observed:

We were trying to move too fast then . . . one reason for this was that we had heard that our major competition and a European firm were about to announce a new process. In addition, the manufacturing and R&D people had polarized on the whole issue. Manufacturing felt squeezed out. They had the feeling that R&D was operating in secrecy, and that was absolutely true. At one point, the project director refused to let the plant manager of our largest plant even visit our pilot operation. That really made people in manufacturing mad. Some of them set out to destroy R&D.

ACT II

The pilot plant never did get up to speed or meet its goals. Meanwhile, the project had assumed top priority within R&D, often to the chagrin of other project engineers. The vice president of corporate manufacturing became highly critical of the project. He felt that his people should take charge of the new project once it left the laboratory and moved into pilot plant operations. He finally wrote an unsolicited “Review of the New Technology Project” and gave copies to the president and to the vice president of R&D. The latter reacted angrily. He demanded that the manufacturing vice president stay away from the project. That did happen for a period of time, but the situation continued to degenerate and increased conflict developed both inside and outside of R&D. The project fell further and further behind.

ACT III

About the time the vice president of R&D was due to retire, other board of director members and the president became greatly concerned about the non-producing pilot plant and continual cost overruns. After considerable activity behind the scenes, they set up a Project Appraisal Committee. The committee chairman was the vice president of manufacturing. The vice president of R&D, his new successor, and one other manufacturing executive were also on the committee. Several months later, the appraisal committee delivered two conflicting reports. One favored continuing the project. The other argued for termination. The board of directors voted for termination.

Within a few years, the entire R&D organization had been placed under manufacturing. The new corporate emphasis was on applied research. An R&D manager of that time stated:

Many R&D people got pushed out (of the company) and there were some pretty sad human situations. The worst thing was that senior management watched the whole thing go on. They didn’t have to. The problems were on the horizon long before the R&D vice president retired, but they waited for his successor to come on. They could have asked the R&D vice president for the same kind of accounting five years earlier.

And the new vice president of R&D later said:

The decision to divisionalize the laboratories was the only one that was tougher than the one to abandon the New Technology project. It broke up the research labs for all practical purposes, and R&D suffered mightily for the next ten years. During that time, I never could get the CEO’s ear on technical matters.

WHAT WENT WRONG?

Over the many years that the new technology drama went on, hundreds of people made thousands of decisions, many of them critical, To be sure, the project was a technical failure. Possibly that could not have been helped. However, the human pain and crippled research efforts in this drama also raise questions of leadership. For example:

1. What should have been the role of the president and the board of directors? One could argue that this was a case of failed leadership at the very top. According to the president, he was trying to give his vice presidents the autonomy they needed to run their operations. However, neither he nor the board seemed to be aware of the rifts within R&D as a result of the R&D vice president’s rigid control of the project. One senior laboratory manager of that time said, “Board members kept assuring us that they were behind the project. If they had only asked me for my opinion they would have felt different.” In this case, there seemed to be too much laissez-faire ambiguity at the very top of the organization and too much conflict down below.
2. Why couldn’t the vice presidents of manufacturing and R&D bridge their separate hierarchies and work together? There is considerable evidence that their conflict fueled the schism between R&D and manufacturing. Certainly the lack of lateral networking helped intensify those antagonisms.
3. Who was responsible for getting valid information to the president and the board of directors? There was much they never knew during this period. Should the dissenting managers within R&D have jumped over their own superiors with their opinions? Several of them felt that their vice president was pushing the project too fast and recklessly. They also felt powerless to argue their case above the project director or the vice president. Chains of command and hierarchy were considered too sacred.

Altogether, hierarchical leadership prevailed. The assumption was that someone in the right formal position should take care of things. However, in this case nobody did, at least not for some time. Meanwhile, less formal networks failed to tie hierarchies together across formal lines. There was no hierarchical call for them, nor were they volunteered. If they had been built, the information exchange upward, sideways, and diagonally might have made a vast difference. Unfortunately, assumptions of strong hierarchy like the R&D vice president’s created defensive island domains. This isolation led to contempt, which led to destructive conflicts, and these conflicts multiplied.

These island antagonisms seem to go on when hierarchies operate without complementary networking across formal lines. As in the new technology case, one “leader” becomes the hero for some people while another “outside” leader becomes the villain. Territorialism takes over. Biased supporters identify themselves with one side or the other. A crisis mentality emerges. Some form of conflict or purge often follows unless a crisscrossing network is established to ease the tensions. Sometimes this can be a truly neutral third party like a fact-finding task force, a strong mediator, negotiations, or more senior executives resolving the conflict from above as the president and the board of directors eventually did in this case. They did so, however, only after the vice president of R&D had retired. The power struggle between the two vice presidents and their subordinates had already done its damage.

The Dangers of Dichotomy

In our study, ineffective decision processes seemed to result not from conflict per se but from: (1) tension avoidance and unclear problem definition by formal hierarchical leaders, and (2) when those tensions became conflicts that polarized people and issues into what we saw as false and dangerous dichotomies. In the first instance, people at the top of the hierarchy did not get network acceptance of their own perspectives or transcend their own confusion with a sense of vision or mission. In the second instance, they and others failed to build bridges across escalating conflicts between different hierarchies. In both cases, hierarchies and networks failed to complement each other.

Of the two, the polarized conflicts are more dangerous, because all the elements get exaggerated and seem much clearer. Simplistic dichotomies can hurt people, delay needed cooperative efforts, and ultimately lead to internal warfare. That often happened during the less effective decision dramas we studied. Players became convinced of their inherent separateness and superiority. Leaders like the vice president of R&D above differentiated themselves from perceived rival leaders and their followers. People in formal roles differentiated themselves from those lower down or in “less” legitimate roles. As decision producers, they differentiated themselves from mere actors and each group differentiated itself from other groups. Such differences might seem very natural and necessary. In fact, however, noses went out of joint, actors became polarized antagonists, and the dangerous dichotomies emerged. It was a fairly common pattern. Take another example. This one occurred between the board of directors and the CEO.

In one company we studied, the founding entrepreneur was fired by the board of directors fifteen years after he and several others started the company. The board decision evolved after its outside members concluded that the CEO would never share decision-making authority with either them or his senior managers after the company grew in size and had gone public. His unilateral hirings and firings, endless problems with litigation, temper tantrums, condescending behavior, and erratic use of product development resources alienated all parties. This spiraled into a mass exodus by members of one project group and a palace revolution led by two of the other founding senior executives. Things went from bad to worse until the CEO was removed by the board.

In this case, the qualities that helped the CEO to stand out as an entrepreneur worked against him as others challenged his hierarchical authority. He had never learned to build work-related social networks and could accept no network challenges from inside or outside a company which was beginning to require multiple leaderships.

Some recent writers on leadership have contributed to the false mythology of the individual leader, thus increasing the dichotomy problem. Discussions of the difference between leaders and managers—a variation on the leader-follower distinction—have recently become popular. Note the following comments from one article on those differences:

Managers relate to people according to the role that they play in a sequence of events in a decision making process, while leaders, who are concerned with ideas, relate in more intuitive and empathic ways. The manager’s orientation to people as actors, in a sequence of events, deflects his or her attention away from the substance of other people’s concerns and toward their roles in a process. The distinction is simply between a manager’s attention to how things are done and a leader’s to what the events and decisions mean to participants.9

The writer found that some executives resisted his distinction between leaders and managers. They saw themselves as both—leaders in some situations and managers or audience in others. In a more recent article, the same author wrote:

Executives often reject the view that managers and leaders are different. Because uncertainty makes their jobs so extremely difficult, they feel that being a top manager takes more talent and ability than I appreciate.10

We would add that it isn’t only uncertainty that causes the resistance. It is also the reluctance of executives to set up another dichotomy: a first and second class citizenry dividing leaders from (follower) managers. It doesn’t take long for the leader-manager distinction to become a dangerous, counterproductive dichotomy. The CEO of one large, fast-changing company in our sample put it a little differently. He not only denied the difference but went on to stress the importance of multiple leaderships:

I’ve seen many recent articles which ask me to separate managers from leaders. That’s too simple and naive. I think that I’m both at different times. Our major changes around here reflect a lot more leadership than is represented by me alone or what I’ve done.

Formula for Failure: One-sided Leadership

What can we learn from the elements of failure in these decision dramas? The tentative conclusions may seem strange at first. They all hinge upon an assumed complementarity of hierarchies and networks. Effective organizational leadership needs both hierarchical and network leadership. We must learn to advocate two seemingly different and sometimes opposite perspectives. The two are hard for one person to assume simultaneously without living a paradox and, at times, advocating almost the opposite of what he or she may represent publicly. It means two very different roles. One endorses and advocates hierarchy. The other builds and supports network leadership. Only this double perspective helps managers to sponsor and champion such apparent contradictions as the dependent boss, actors in the audience, and followers who lead. Several hypotheses then emerge with regard to effective organizational leadership:

• A major purpose for those with hierarchical status should be to create and strengthen independent but complementary network leaderships. These should include networks in which these sponsors are not directly involved.
• A major purpose for those in network roles should be to create and strengthen independent but complementary hierarchical leaderships. These should include hierarchies in which these sponsors are not directly involved.

The basic notion of complementarity is elusive but important. It is critical to modern physics. It has even deeper roots in the world’s major philosophies and religions. It came to physics in 1927 when Niels Bohr, a close reader of the Danish philosopher Kierkegaard, introduced it as a way of thinking about the physics of light.11 Scientists had recently struggled with two totally different perspectives known as wave theory and particle theory. Both seemed important and useful, but the differences seemed irreconcilable. Gary Zukav describes the double perspective in a recent book on the new physics, The Dancing Wu Li Masters.12

Complementarity is the concept developed by Niels Bohr to explain the wave-particle duality of light. No one has thought of a better one yet. Wave-like characteristics and particle-like characteristics, the theory goes, are mutually exclusive, or complementary aspects of light. Although one of them always excludes the other, both of them are necessary to understand light. One of them always excludes the other because light, or anything else, cannot be both wave-like and particle-like at the same time.

How can mutually exclusive wave-like and particle-like behaviors both be properties of one and the same light? They are not properties of light. They are properties of our interaction with light. Depending upon our choice of experiment, we can cause light to manifest either particle-like properties or wave-like properties.13

With apologies to Zukav, we want to paraphrase and emphasize several parts of this passage. Take the same words and make a few changes and emphases:

Hierarchies and networks, the theory goes, are mutually exclusive, or complementary aspects of leadership. Although one of them always excludes the other, both of them are necessary to understand leadership. One of them always excludes the other, because leadership, or anything else, cannot be both hierarchy-like and network-like at the same time.

How can mutually exclusive hierarchies and networks both be properties of one and the same leadership? They are not properties of leadership. They are properties of our interaction with leadership. Depending upon our choice of behavior, we can cause leadership to manifest either hierarchical or network properties.

These paraphrased passages pose a tough assignment for both superior and subordinate managers. Yet we did find decision dramas where managers adopted such a double perspective. In one 1979 case study the CEO consciously blurred his role in the hierarchy and became an organizational network builder among his subordinates. He practiced MBWA (Management By Wandering Around) long before the concept became popular. He consciously sponsored networks among other people in different parts of the company. As he noted:

I spend a fair amount of my time trying to reduce contempt in the organization. It is absolutely deadly. Not conflict but contempt. It is the ultimate in desecrating people’s self image. Contempt, for example, can easily develop in an organization like ours between the production and the marketing people. It is essential to keep a dialogue going between them. Many companies fail because they do not. . . . The general manager’s role is making sure the dialogue happens.14

We saw other examples of complementarity approaches at work. In one smaller successful manufacturing company, the president wrote a business plan in 1969 before the company began. He wanted no job descriptions, organization charts, formal titles, or formal hierarchies within the company. Most readers of the business plan conclude, even today, that it will never work.

As of 1985, the company had achieved an impressive growth record, was the most profitable in its field, paid only competitive salaries, had attracted almost half of the key technical experts in its field, had lost not one critical person in fifteen years except for a retirement due to health problems, and was on target with its ambitious business plan. There were still no job descriptions, organization charts, formal titles, or official hierarchies in the company, but everyone knew who did what or belonged where in the informal hierarchies and networks. The “president” said that he spent most of his time passing decision issues on to others and building cooperative networks. During the year of our study, he spent over five months away from the company exploring other technical and non-technical issues relevant to it. Yet according to other employees, the founder’s beliefs and philosophy were crucial to the company’s spirit and success even when he was not there.

The new businesses example was another decision drama which we will examine more closely in order to see these complementarity principles at work. It occurred in a large insurance company which made some pioneer moves into overall financial services by developing completely new product lines and businesses. It was a period of successful and radical transition; people in the firm referred to it as a major turnaround.

New Businesses

ACT I

The president of a multi-billion dollar insurance firm became chairman and CEO when the old chief executive retired. At that time, a senior vice president became president and chief operating officer. According to the new chairman/CEO:

There is the perception around here that, since the new president and I came in, things have really turned around. But that’s wrong. Some of the change started some time back when the two of us began needling our predecessors from below. But the main thing was the pressure from outside which we helped the former CEO to translate and articulate. Several of us, including the old CEO, expressed concern to each other about the effects of economic inflation on our business as early as the mid-1970s.

The transition thus began when company executives first saw critical problems in the business environment and because the two new officers pushed their concerns upward. The old CEO, close to retirement, began to build a new leadership network by closely involving his two subordinates, who had very distinct skills. The new chairman had come up through the administrative side of the company. The new president had an actuarial background. As the chairman noted, leadership at this stage came from a triad of people. They operated more as a problem-solving network than a hierarchy.

ACT II

Several months before officially taking office, the new chairman made a list of candidates for several vacant executive committee jobs. Before this time, the executive committee had a reputation as a battleground for special interests. It was described by one member as “a body of competing gladiators.”

The new chairman visited each candidate and spelled out his requirements: no territorialism, a strong concern for total company interests, a sustained effort to trust the other members, a willingness to experiment with change, and a desire to build complementary team interests with other members. He said that failure to contribute to such a climate would not be tolerated and could result in discharge. He asked each person to consider whether these rules were acceptable and to let him know. The eventual result was an executive committee with high commitment to these values and norms of behavior. According to one executive:

I’m terribly high on our present executive committee. . . . We now have an executive committee which can take both an analytical approach and also has a sense of the whole. They’ve developed a really good knack of knowing when the time is right for something. My understanding is that they know that they’ve got to work together with none of the historical turf battles.

ACT III

A major test for the new executive committee came in early 1980 when it became clear that increased inflation rates were forcing the company into a perilous financial condition. The new president described how networking leadership really emerged at this time.

The three or four of us who were ultimately responsible for the safety and the future of the company began holding a series of very informal meetings. We found that we were in agreement on two points which I might paraphrase as follows. “First, things ain’t never going to be the same again. Second, but, we don’t know how they ain’t never going to be the same again.”

We approached this dilemma by forming a new committee, but we genuinely wanted this committee to be different. So, rather than following our traditional course of collecting our most senior executives and having them produce over a two year period a three volume report . . . we collected what we felt were a group of the best and brightest younger people. We told them we wanted them to look ten years into the future and tell us what was in store for the business and what steps we should take to ensure that at the end of that time we were a prominent presence in the radically new and rapidly evolving financial sector.

This was a new approach for the company. With little relief from their regular jobs, and given only this vague assignment, the task force struggled to organize itself. According to interviews with members, its early days were filled with tension and frustration. Members searched blindly for direction and clarity. They worked through that phase. In the second phase, tremendous enthusiasm developed. One member said that the committee had gone from being clearly the worst one he had ever served on to being the best by far. Recommendations came together and were presented to the executive committee on schedule. Another member added:

I don’t feel even now that I can talk about that task force easily. I was there and it was a mess at times. The chairman of the task force provided integration, but at the time it felt like a lot of wheel spinning. A number of members were pretty frustrated. What were we to study? Everybody was sending around copies of speeches, analyses of different data, etc. It all ended up with an astronomical amount of paper—seven full notebooks.

However, all of that may have been a necessary and desirable part of the process. Eventually we knew that it was not just the spinning of wheels. We were learning about points such as how inflation had a differential effect on different parts of society. Another realization was that the world really was changing on us and that, even though inflation was to go away, we should make the changes we were proposing.

The task force then provided what the president later called “a bewildering list” of goals and challenges to pursue if the firm was to compete effectively in the future. Implementing even a few of these ideas would lead to major changes in the company. The president’s honesty is impressive. As he noted:

Well, we gulped and essentially said, OK. We said that we think your version of the future is credible and while your laundry list of projects is formidable, it fits the vision, so let’s get on with it. . . . At first, the process was dreadfully confusing . . . the confusion and apprehension of those early days was not confined to the troops. Those of us managing the undertaking—or being managed by it, if you will—were also concerned and uncertain. We were putting an enormous amount of pressure on the company. . . .

Our uneasiness was not helped by the rumblings that soon came to our ears. . . . We found that it wasn’t much comfort to anyone when we told them—we sure do know where we’re going—it’s over there somewhere.

RADICAL SUCCESS

The results were impressive. Two years after the executive committee received the “bewildering list” twenty-two new task forces were at work. They, in turn, set in motion seventeen major product modifications, new business lines, and company acquisitions. The whole effort involved thousands of new executive decisions, hundreds of new roles, and millions of dollars. Despite the tension and uncertainty, the results were regarded as highly successful.

But what about the leadership patterns? There were a number of them. Top management began as producers, directors, and authors in this drama with only a vague idea of what the script and scenery would look like. They became the key actors during Act II. The chairman had set the stage by using hierarchical authority to set up an executive committee network based on team principles. This group ended up during later scenes in supporting cast, audience, and backer roles for the new ventures. New hierarchies were built as new businesses evolved, but the organization took on more networklike characteristics overall. There are several other points of interest we should note.

1. Outside economic tensions initially led top management to conclude that: “Things ain’t never going to be the same again.” They took those words seriously. By turning that script over to a group of subordinate authors, they avoided creating a future that would simply mirror their old images of the past. During those early days, the executive committee had neither the data nor the direction to create specific goals, but they knew that things had to change. Their initial vision was unclear, and their initial steps were unclear even to themselves. Their early joint decisions thus became tentative markers on new paths. The emphasis was on creating a wobbly but continuing process. It was the process more than any products that held management’s attention during this phase since there were few early products. It was a time for flexible and exploring networks.
2. Top management resisted the temptation to pretend that everything was under their control. Instead of centralizing or taking direct responsibility for action among themselves, the chairman, the president, and the executive committee created their own supportive network and then sponsored new networks below them. These subordinate networks went on to create their own new decision dramas as authors and actors.
3. These network leaderships combined the energy and ideas of more junior staff members with executive committee guidance, vision, and approval. It was not a question of one group formulating and the other implementing. Each was doing both. The higher and lower level networks provided balance and perspective for each other. The chairman and president both made important decisions, but so did others. The critical process involved getting complementary implementation agreements which could work effectively across different functions and lines and vertically up and down the hierarchy.

Most of the leadership patterns described resembled other effective decision dramas we studied in one important respect. People ended up feeling good about working with each other and about their own leadership contributions. We found only one other generalization with specific regard to the formal leaders. Each used his hierarchical leadership in order to sponsor leadership networks among other people. Otherwise, the formal leaders we interviewed had little in common when it came to energy, charisma, intelligence, and sensitivity.

In the more effective decision dramas, the subordinates of these CEOs, while below them in the executive hierarchy, contributed greatly to the organization’s leadership through their own networking and hierarchical actions. As actors, authors, or producer-directors they operated within and beyond the immediate top management. What is interesting is that relative success in one decision-making effort served as no guarantee for success the next time. The networks had to be reestablished each time around the new drama.

Since organizations will inevitably have informal networks and formal hierarchies, management must constantly develop new leadership patterns in each. The danger is that if each does not get active sponsorship from the other, they will simply perpetuate themselves, which leads to isolation, polarization, and contempt. In addition, hierarchy will always dominate, since it controls the most rewards. Without sponsorship, networks will go underground or remain passive. That is what happened in the new technology drama, unbeknownst to an isolated top management. It happened in other situations we studied as well.

Breaking these dichotomy patterns seems to require an almost exaggerated act of trust, the taking on of new roles, and creating new interdependent patterns. Both formal management and the “best and the brightest” group did this initially in the new businesses situation. As the new president of the insurance company noted above: “We genuinely wanted this committee to be different.” Top management moved into new roles and created network patterns upward, laterally, and diagonally. It required the networking task forces to find their own sharper vision and to take leadership into the new areas they wished to explore. Each group had to live a high tension paradox, going well beyond its traditional role.

The Shoelace Theory

One other metaphor may help to clarify what we mean. By assuming complementarity rather than isolation or antagonism between hierarchies and networks, we create a “shoelace” assumption or theory which in the minds and behavior of the actors holds potentially opposite or isolated sides together in a changing but constructive tension. These separate “sides” may represent different hierarchies or hierarchies competing with networks. We saw the new chairman and president use this shoelace theory in several ways during the new businesses example. Each had his separate strengths, which could either complement or compete with the other man’s. Each was strong in certain areas, but was organizationally stronger with the other’s sponsorship and support. Hierarchy rarely prevailed in their working relationship, and yet it was always there. The two men used their hierarchical positions to expand their own complementary networking within the executive committee. The executive committee, in turn, also shoelaced lower levels of network leadership into existence. The shoelace assumption permitted a constructive tension between separate hierarchies by setting up network forms of leadership. It tied different leaders in with each other in a nonpolarized, nonisolated fashion.

The “best and the brightest” planning group was another example of the shoelace theory at work. Its members were potential rivals for promotion coming from separate hierarchies. Rivalries surfaced as members tried to create a working task force. But the group began to succeed as the chairman helped pull individuals together, as members gained respect for, and contributed to, each other’s work, and as deadline pressures increased. In this sense, the top management hierarchy helped to create an effective task force network. By the same token, the task forces provided new “leadership” roles for top management as they reviewed and coached the network leaders. Task force proposals also served as a sponsoring springboard for new hierarchies and businesses.

In this article, we have tried to suggest a way of looking at pluralistic leadership in organizational decision dramas. The ideas are based upon our own research and upon the thoughts and actions of managers involved in this study. The research suggests that executives might consciously consider shoelacing theory as a way to develop multiple and complementary leadership roles. We also suggest that the more typical focus of leadership on the single person leader has not paid off.

Shoelace assumptions of complementarity also have some implications for action. They suggest:

1. We need to stop talking as though executive leadership in decision making is primarily a one-person drama played by CEOs or leaders only. That’s an illusion, not an accurate report of how organizational leadership works.
2. We also need to observe and use paradox as a clue for action.15 For example, it takes a hierarchical leader to take the step toward exaggerated trust. Only such a step can begin the complementary networking process. That means stepping outside of one’s hierarchical role to create potentially competitive networks. Hierarchical leadership is needed to create and support useful networking leaderships. Though less obvious, the opposite is also true.
3. Managers need to consider, and work on developing, complementarity skills. They need to create bases of trust across formal boundaries, built more upon what one is willing to give up than upon what one can take away. Managers must also face up to the meaning of networking leadership as complementary to hierarchies, so that people in both roles maintain some autonomy while also looking for ways to shoelace across the gaps. They might begin by looking beyond any critical tension, dichotomy, or opposite.
4. Networking leaderships offer flexibility for exploring uncertainty and ambiguity, as when hierarchical leadership wishes to search out an uncertain environment or explore new areas of opportunity which will eventually need hierarchical leaderships to run them. The two perspectives must be shoelaced actively back and forth so that neither, especially the more dominant hierarchical perspective, prevails when the other would be more useful. The skill is to keep each independent and yet complementary. That is easy to say and very difficult to do.