Leadership / Management

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In the Industrial Age, top managers hoarded knowledge at the top and made all the decisions.  Doing business today, however, is more complicated than in the past.  Managers face a barrage of uncertainties that their counterparts in the past did not. Technology is always changing, new products are brought to market at lightning speed, and the global competitors and markets are becoming more complex.  No leader can master the breadth of knowledge that it takes to understand and react to all of these complex, evolving variables.

As a result, knowledge is now distributed throughout the organization.  One part of the organization may have the knowledge to monitor and predict global events while another part can monitor or predict technological advances.  Knowledgeable employees give organizations a competitive advantage over other companies.  Knowledge is the new core competence of organizations. 

In this new “knowledge era,” the role of leaders is not to know everything but rather to reach down into the organization and find the knowledge that they need to make the right decisions.  To take advantage of an organization’s knowledge, leaders have to be willing to admit that they and their staffs do not know everything.  They have to recognize that they depend on the knowledge of colleagues, reports, and peers. 

Confident leaders are comfortable with this dependence.  They do not deny it or see it as an insult to their leadership capabilities.  Instead, they use these interdependent relationships to stimulate teamwork and creativity.  Effective leaders master the art of bringing knowledge (information & insight), trust (integrity & honesty), and power (organizational authority) together for the benefit of the organization and its people. 

Arrogant Leaders 

Arrogant leaders resent or deny their dependence on others.  Using the power of their position or personality, they intimidate others into silence or they may dismiss the views of others as inferior to their own.  Faced with this condescending attitude, peers and reports may become fearful of presenting new views and decide to withhold their knowledge.  Withholding their knowledge can and often does, become a way of punishing the arrogant leader. 

Leaders have the right to give orders.  But to give the right orders and to make the right decisions, leaders must depend on the knowledge and trust of others.  The effective leader today is not one who knows everything, but one who knows where to find everything. 

Finding Your Organization’s Existing Knowledge 

Since leaders depend on the knowledge of others, they must have access to that knowledge.  As mentioned earlier, poor leaders ignore knowledge or intimidate knowledge carriers.  They base their decisions on ignorance or incomplete information and wrong assumptions. 

How do you gain access to the knowledge you need?  First, you have to ensure that the lines of communication are open.  Your organization must be a seamless network that reaches up, down, and across the organization.  But you cannot just open the floodgates either.  You do not want to receive a one-hundred-page detailed inventory report every month if it does not help you make decisions. 

You and the other leaders in your organization have to receive worthwhile knowledge, the knowledge that helps you resolve the uncertainties and questions that block your decision making. The key to uncovering worthwhile knowledge is asking the right questions — incisive questions that focus and direct the search.  These questions will trigger waves of follow-up questions, prompting your people to search and learn the answers, explore new concepts, and challenge assumptions — provided you have modeled a double-loop relationship. 

Acquiring New Knowledge 

Even by asking the right questions, you will not always find the knowledge you need in-house.  Sometimes you have to reach outside of the organization to acquire new knowledge — knowledge that is new, that is, to your organization.  Bench marking other companies to learn how they do things is one method of acquiring knowledge. 

Another way to reach outside is to bring new blood into your organization. This fresh perspective can be provided by moving people between internal locations and/or by bringing someone in from outside your organization   altogether.  However, other companies and new blood may not provide the knowledge you seek either. When developing strategies for the future, for example, your organization may have to create new knowledge from scratch. 

The best organizations know that to be competitive in the future they need to invest in learning today.  Your organization cannot be focused only on its short-term production needs.  It must give people the time to learn and create for tomorrow.  It is your job as a leader to encourage both productivity and learning. 

Demand Guides Learning 

As with existing knowledge, effective leaders can focus the quest for new knowledge by asking the right questions. While people occasionally stumble onto new knowledge by accident, most learning is driven by what leaders’ request.  How you define a problem or an issue guides what knowledge people will find. 

For example, AT&T’s leaders, foreseeing an explosive growth in telephone traffic, demanded a system that would reduce the need for human operators.  Those demands resulted in a system of direct, touch-tone dialing, area codes, country codes, and switching centers that allowed callers to phone around the world without human intervention.  Without the knowledge that led to these developments, phone companies would have to interview a million people a year to hire enough telephone operators for today’s phone traffic. 

From Knowledge to Action 

A leader’s search for knowledge is just a first step.  Effective leaders convert that knowledge into action. It is not an easy conversion.  Knowledge does not arrive in a neat package with a set of “next steps” for leaders to take.  Instead, knowledge is raw material that you must fashion into a course of action. 

Designing Actions: More Questions 

Questions help you collect knowledge from within and outside the company.  Further questions will help you convert that knowledge into appropriate action plans.  To evaluate the best action, ask the following questions: 

1.  Who are your customers, what do they need, and how does this action satisfy those needs? 

2.  How will this action contribute to your organization’s goals?   

3.  What are the productivity and cost-efficiency of the action?  Ponder the long-term costs and expected financial results of the action. 

4.  How does the action fit into the organization’s plans?  Do not get distracted.

5.  What are the human and social costs of this action?  For example, does the action put workers or the environment in danger?

Linking Knowledge to Action 

Let’s say that based on your knowledge of the competition and customers’ preferences, you believe the electric utility industry must produce cheaper, more reliable electricity.  Further, let’s say you have acquired knowledge and designed an action.  Now how do you make it happen? 

Involve people with different perspectives and knowledge in the early stages of a new project.  Who you choose to participate in a project is key to the success of that project. 

Manage the conflicts between your operating people, such as line managers, and your knowledge of people, such as project managers or functional experts.  Both sides are already struggling to meet deadlines and budget restrictions.  A new project only adds pressure, leading to more conflicts. 

Make your company a radial organization.  Converting knowledge to action is hindered if the process must flow through the organization’s formal channels.  A radial organization is a temporary, ad-hoc group of people brought together by, and radiating from, a person with a problem.  Problem-centered instead of territory or structure-centered radial organizations allow leaders to move across functional boundaries and levels of authority, bringing the best minds to bear on converting knowledge into action. 

Traps on the Path from Knowledge to Action 

A number of obstacles and invisible traps can lull leaders into “status-quo” leadership — postponing the use of knowledge until forced to act. 

One obstacle is conflicting knowledge.  For example, you might receive completely different assessments of a “turf issue” in a generating plant.  Keep in mind that turf issues, by their nature, are symptoms of even more unacceptable dynamics in your organization.  Do not allow symptoms to become issues before you have spent time on causes.  Concentrating on symptoms will pull you toward single-loop solutions (i.e. short-term solutions). And do not let conflicting viewpoints immobilize you.  It is your job to bring resolution, for better or worse, and choose a course of action. 

Other barriers on the path from knowledge to action are less visible.  Success can lull leaders into thinking they do not have to act on the knowledge they have.  IBM’s dominance of the mainframe market, for example, caused its leaders to ignore the explosive growth in the mini and microcomputer markets.  Fear of technology and cultural resistance are other traps waiting to paralyze leaders. 

Building Relationships of Mutual Trust 

A leader’s access to knowledge can be blocked by mistrust.  Reports will not share information if they believe leaders will misuse or ignore it — for example, leaders who punish the bearer of bad news. 

Some leaders mistakenly confuse trust with affection or friendliness.  It is much more.  A definition of trust is to make yourself vulnerable to people you cannot control, putting your fate in their hands.  People might be friendly with you, but are they ready to put their fate in your hands? 

How does a leader build trust?  The first step is for you to trust others. Here are some ways you can demonstrate trust in others: 

1. Spend time with your people.

2. Listen to your people without judgment or critique.

3. Permit others to influence your decisions rather than dismissing their opinions.

4. Reveal and share relevant information with your people.

5. Be willing to depend on your people rather than keeping total control in your hands.

6. Give the complex a common sense edge.

7. Teach your people.

8. Ask your people to help you identify obstacles to their success and then remove those obstacles quickly.

Three Sign Posts 

Information, influence, and control are three signal posts of trust.  When people see these manifestations of trust, they become more trusting. They share information, accept your influence, and willingly give up control. The result is a spiral of trust starting with the leader and continually spiraling upward until it reaches a plateau of mutual trust.  A leader’s mistrust, in contrast, kicks off a downward spiral as people mistrust leaders who do not trust them. 

Take the Initiative 

If the organization is already spinning in a cycle of mistrust, you can break that cycle with the following complimentary steps: 

Increase your trust slowly and then seek a similar response from others.  People do not move from mistrusting to trusting relationships quickly.  They take one step at a time, testing your trust with each step. 

Remember that people trust or distrust not only on the basis of your personal behavior, but also on the basis of the behavior you tolerate in your reporting line. Be sure the people closest to you are effective representatives of the leadership principles you are espousing. 

Finally, a relationship analysis in which you and your people discuss in honest detail your relationship, can unveil the causes of mistrust. Needless to say, such a conversation must be followed by a vigilant effort on your part to avoid even the appearance of retribution.

Four Laws of Trust 

What happens when you trust or mistrust others?  Here are some of the “laws of trust.” 

1.  Mistrust drives out trust.  To defend against repeated attacks from mistrusting leaders, people are driven to mistrust, thereby withholding information and hiding opinions. 

2.  Trust increases cohesion.  People who trust each other cooperate and support each other.  The corollary law — mistrust fragments the cooperation and cohesion of groups. 

3.  Trust stimulates productivity.  People who trust each other are confident, creative, and work together well.  Mistrust, on the other hand, depresses productivity.  People suppress information and inhibit cooperation.  Creativity is diverted into defensiveness rather than productivity. 

4.  Rapid growth masks distrust.  Leaders in rapidly changing companies often move to other jobs before the legacy of mistrust they have created is revealed.  Performance plans should include a leader’s plan for not repeating mistakes made in previous positions.   

Building Trust 

The following are the conditions or situations that contribute to trust:

•  Competence.  Demonstrate that you can do your  job.  

• Openness. Share relevant information, including, for example, your lack of competence in certain areas. 

•   Supportiveness.  Accept people as they are and tolerate disagreement.  People will not hide their thoughts and opinions. 

•  Reward systems.  Create win-win reward systems in which everyone benefits from a person’s or department’s success. 

•  Intentions.  Demonstrate that you have only the best intentions for the company and its people. 

Why People Distrust 

Despite optimum conditions, some people never trust others.

One reason is that early childhood experiences instill a sense of trust or mistrust that becomes part of the personality of the adult. 

Experience also influences the ability to trust. The person who runs into a series of dishonest individuals in quick succession may conclude that all people are dishonest to one degree or another.  Therefore, their inability to trust may be no more than an emotional defense mechanism.  Such mechanism can only be disarmed over time. 

Goal Setting: The Leader’s Job 

Agenda Power 

As a leader you have the responsibility to set the agenda for the organization.

Setting the agenda means defining the organization’s goals and then designing strategies to achieve those goals.  Those strategies will determine everything from organizational structure and operational systems to the choice of staff.

Staffing Power 

Staffing consists of selecting, developing, and motivating people to help leaders achieve the company’s goals.  Because you are more dependent than ever on the skills and knowledge of others, staffing the organization with the right people is key to the success of your company. 

When choosing your team members, carefully consider the challenges your organization will be facing, and then determine whether the candidates have the knowledge, creativity, integrity, and leadership abilities to meet those challenges. 

The best leaders are those who can recognize and develop the hidden potential of others.  Wal-Mart founder Sam Walton, for example, was highly skilled at recognizing employees who had the potential to become store managers.  This included the insight to move beyond what can be superficial and unreliable indicators such as degrees and certifications. 

Review Power 

Review power allows leaders to continuously measure and evaluate the organization’s progress toward its goals and to take corrective action if necessary. There are three types of reviews — individual, operational, and strategic.

You must review the individual performance of your people — their accomplishments and growth and how well they achieved their goals.  At the same time, you must set goals for the next review period. Above all, your people must know what is expected of them and that they will be held accountable.  

Operational reviews concern the operation of your organization.  How does work flow through the company?  Are there recurrent inefficiencies and errors?  What processes need to be improved?  How can I improve employee productivity?  These are the types of questions that will help you review the operation of your organization. 

Strategic Reviews 

A strategic review examines the strategy of the organization and compares it to internal expectations and external competition.  Reviewing strategy is a major responsibility of leaders.  Strategic reviews can have drastic effects on the success of the team or organization. 

Bringing Knowledge, Trust, and Power Together 

Effective leaders work with their employees in two modes of organization, a production mode and a knowledge mode. 

The production mode is for well-structured work — routine physical or low-level mental work.  Totaling purchases at the check out counter or working on an assembly line is well-structured work. 

The production mode standardizes procedures.  It uses a hierarchy to control people and divides jobs into small, specific tasks. 

The knowledge mode is for ill-structured work — work that is complex, nonroutine, and more mental than physical.  This work involves situations that are uncertain and affected by outside forces not in your control.  Determining where to spend shrinking budget dollars or figuring out how to get more work done with fewer people is ill-structured work. 

The knowledge mode flattens the organization into a seamless communications network through which knowledge and information flow freely.  The knowledge mode encourages questioning, creativity, and information sharing to define and solve problems. 

Knowledge, Trust, and Power 

The knowledge mode uses the same people as in the formal production mode but without relying on hierarchy and the formal power structure.  Instead, leaders in the knowledge mode cut across vertical and horizontal boundaries to find the knowledge they need.  They build trusting relationships with others to encourage cooperation and information sharing.  Knowledge cannot travel through the barrier of distrust.  

Finally, they use power differently than in the production mode. Hierarchical power may fit the stiff structure of production work.  Finding, acquiring, or creating knowledge, however, requires flexible power structures.  Leaders may command in some situations, but more likely use consultations, concurrence, and consignment to encourage initiative and creativity. 

The knowledge mode integrates the three essential elements of leadership we have been exploring: knowledge, trust, and power. 

Blending the Modes 

As a leader of a formal organization, you are part of the production mode structure.  At the same time, you must remain connected to the knowledge mode network.  It is a good idea to balance the two modes with the balance tilted slightly in favor of the knowledge mode. 

The structure and inflexibility of the production mode stifles creativity and knowledge.  Too much flexibility, however, can lead to inefficiency and low productivity. 

As an effective leader, your job is to facilitate the knowledge mode and blend it with the production mode. Sometimes you will take command and focus on daily production.  Other times, you will put aside your power to launch a search for knowledge. The effective leader shifts smoothly between these two modes.

Three Characteristics of Effective Leaders 

Effective leaders share three characteristics.  They have wisdom that combines knowledge, insight, and judgment.  They have the integrity to be direct and honest, thereby inspiring trust.  Finally, they have courage, to tackle uncertainty, for example, or to give up power if appropriate.  

For more information about Ken Chapman and Associates’ Leadership Development Programs, contact Ken Chapman at 205.366.0265 or email Ken at kchapman@leaderscode.com.

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