The contract marks the second major foray into health services for Knomaze Corporation. Knomaze Corporation has collaborated previously in health services as part of a joint venture between Duke University School of Nursing and Rockcliffe University Consortium. This also marks the fourth contract vehicle involving professional and business services for the Federal Government of Canada since 2005.

It has only been since the introduction of computer systems however that chaotic systems have been able to be modeled due to the complex nature of the calculations. As Lorenz (1963) discovered, small changes in initial conditions can lead to large differences in final results when linear dynamic systems are modeled using computer simulations. Open systems however are not represented by linear systems (Melin & Castillo, 2002).

Since Lorenz’s initial weather simulations, research into non-linear dynamic systems has produced some surprising results as they apply to adaptation. Outcomes in chaotic open systems have been since shown to generate stable ordered patterns which show hallmarks of being adaptive (Packard, 1988). More specifically, order appears spontaneously at the periphery between systems governed by chaotic and non-chaotic rule sets (Packard, 1988; Kauffman, 1995; Marion, 1999). This area, which Kauffman describes as providing order for free, has two very unique characteristics of adaptation – fluidity and memory – fluidity being the ability to communicate information at a distance and memory being the ability to store information (Waldrop, 1992).

These findings have two very real consequences for organizational survivability. The first is that adaptation within organizations must exist at the edge of chaotic environments (non-linear open systems) or else rely on exclusively positive or negative feedback mechanisms (i.e. linear closed systems) for establishing order. The second is that in the absence of ordered feedback mechanisms, an organization must address issues of knowledge emergence to remain sustainable (Nonaka & Nishiguchi, 2001). These ideas are supported by Marion’s (1999) work on complex systems which suggested that an inability to adapt either to environmental factors or shifts in paradigms are the primary causes of organizational extinction.

The non-adapting organization will therefore suffer from a number of serious faults in the organization’s learning capability. These will include:

1. An inability to break with past practices (Govindarajan & Trimble, 2004),
2. An inappropriate sense of future expectations (Weick & Sutcliffe, 2001),
3. An inability to detect and plan for crises (Mitroff, 2004),
4. An inability to reframe thinking to match the situation (Bolman & Deal, 2003),
5. An inability to effectively communicate through political action (Bourdieu, 2003),
6. Ineffective strategies for knowledge emergence (Nonaka & Nishiguchi, 2001),
7. Taking too long to adopt new paradigms (Kuhn, 1996),
8. Not establishing an effective logos around task activities (Frankl, 1984),
9. Not understanding the organization’s resource capabilities (Barney, 1996), and
10. An unwillingness to explore adaptation strategies (March, 2003).

In addition, Barrett and Peterson (2000) noted that there is a large difference between the adaptive learning organization and the generative learning organization. Barrett and Peterson observed that adaptation toward problems fundamentally fragments an organization. Adaptation assumes control over factors of production. That is, it establishes either positive or negative feedback mechanisms which may be argued to drive a complex organization away from a narrow zone in which patterned stability arises. Generative learning, in using a more appreciative approach, is more highly focused on fluidity and memory mechanism rather than control As Barrett and Peterson noted,

Appreciative inquiry takes seriously the notion that how we live our life is a function of where we put our collective attention. Stewards of appreciative learning processes pose a provocative question: What happens if we turn our attention to what is most valuable, to what is most vibrant in a human system? (pp. 13-14)

This line of questioning is very similar to the line of argumentative reasoning used by Kauffman (1995). Kauffman observed that autocatalysis in chaotic systems was not based on controlling mechanisms but rather generative mechanisms (p. 62). This may be due to the fact that controlling mechanisms are focused on using the smallest number of resources to gain a desired outcome whereas autocatalysis doesn’t depend on economies of scale. Rather, order is generated out of phase transitions irrespective of economies. That is, once a sufficiently large enough critical mass is built up, order spontaneous generates. In the case of the non-adaptive organization, this implies the organization either must adapt to its new environment or, if it is unable to leverage controlled feedback mechanisms, inevitably becomes extinct.

Kevin Feenan
Managing Director
Knomaze Corporation

References

Barney, J. B. (1996). Gaining and sustaining competitive advantage. Reading, MA: Addison-Wesley Publishing Company, Inc.

Barrett, F. J. & Peterson, R. (2000). Appreciative learning cultures: Developing competencies for global organizing. Organization Development Journal, 18(2), pp. 10-21.

Bolman, L. G., & Deal, T. E. (2003). Reframing organizations: Artistry, choice, and leadership. 3rd edition. San Francisco: Jossey-Bass.

Bourdieu, P. (2003). Language & symbolic power (7th ed.). Cambridge, MA: Harvard University Press.

Frankl, V. E. (1984). Man’s search for meaning: An introduction to logotherapy. New York: Simon & Schuster.

Govindarajan, V. & Trimble, C. (2004). Strategic innovation and the science of learning. MIT Sloan Management Review, 45(2), 67.

Kauffman, S. (1995). At home in the universe; The search for the laws of self-organization and complexity. New York: Oxford University Press.

Kuhn, T. S. (1996). The structure of scientific revolutions (3rd ed.). Chicago: University of Chicago Press.

Lorenz, E. N. (1963). Deterministic nonperiodic flow. Journal of Atmospheric Sciences, 20, pp. 130—141.

March, J. G. (2003). Organizational adaptation. In Mintzberg, H., Lampel, J., Quinn, J. B., & Ghoshal, S. (Eds) The Strategy Process – Concepts, Contexts, Cases (pp. 468-471). Upper Saddle River, NJ: Prentice Hall.

Marion, R. (1999). The edge of organization; Chaos and complexity theories of formal social systems. London: Sage Publications.

Melin, P., and Castillo, O. (2002). Modelling, simulation, and control on non-linear dynamical systems. An intelligent approach using soft computing and fractal theory. New York: Taylor & Francis Inc.

Mitroff, I. (2004). Crisis leadership: Planning for the unthinkable. New York: John Wiley & Sons.

Moser, P. K., & Vander Nat, A. (2003). Human Knowledge: Classical and contemporary approaches (3rd ed.). New York: Oxford University Press.

Nonaka, I., & Nishiguchi, T. (Eds.). (2001). Knowledge emergence: Social, technical, and evolutionary dimensions of knowledge creation. Oxford: Oxford University Press.

Packard, N. H. (1988). Adaptation toward the edge of chaos. Urbana IL: University of Illinois at Urbana-Champaign, Center for Complex Systems Research.

Scott, W. R. (2003). Organizations: Rational, natural, and open systems (5th ed.). Upper Saddle River, NJ: Prentice Hall.

Waldrop, M. M. (1992). Complexity: The emerging science at the edge of order and chaos. New York: Simon & Schuster.

Weick, K. E., & Sutcliffe, K. M. (2001). Managing the unexpected. San Francisco: Jossey-Bass.

Control, in a post-modern organization, moves away from universality and more towards elements of deconstruction. Correspondingly, data, which previously was used to reinforce universal or centralized control, now is spread across a wider field within the organization. The advent of computers, data storage and retrieval, and more accessible methods of access to the information produced allow such dispersion of information in ways previously not realistically available due to factors of time and cost.

The 21st organization then must adapt itself not simply to new markets, products, and services but also new social constructions of reality (Anderson, 1990). Organizations, as social structures (Scott, 2003, p. 24), are subject to the collective ideology of the people of whom it is comprised. More to the point, the status quo from traditional and modern ideology is increasingly becoming challenged as greater numbers of social groups begin to challenge the legitimization of authority around them. We can clearly see this in the fall of the Berlin Wall, the decline of communism, the institution of social reforms in China, and most recently in the backlash against the attempted assassination of Ukraine Presidential hopeful Viktor Yushchenko (Times Online, 2004).

With the increase in post-modern ideology becoming prevalent on a global scale, closed rational systems of governance are being pressured to conform. Several authors suggest a myriad of ways in which the 21st century organization may rise or fall however in the any open-systems approach, there is rarely one specific method that is all encompassing. Attached then is a short listing of 12 key characteristics that may serve to help define what the 21st century organization is going to look like 20 years from now.

1. Borderless (Ohmae, 2000)
2. Learning centric (Garvin, 2000)
3. Collaborative (Hamel, Doz, & Prahalad, 2000)
4. Knowledge-Creating (Nonaka & Nishiguchi, 2001)
5. Strategically outsourced (Quinn & Hilmer, 1998)
6. Geocentric (Perlmutter, 2000)
7. Ethical (Romar, 2004)
8. Networked (Quinn, Anderson, & Finkelstein, 1998)
9. Loosely coupled (Scott, 2003)
10. Self maintainable (Scott, 2003)
11. Contingency based (Bass, 1990; Scott, 2003)
12. Fostering an environment of high care (Ba) (Nonaka & Nishiguchi, 2001)

At the core will be a firm’s ability to respond to hypercompetition. Quinn, Anderson, & Finkelstein (1998) note that the “hypercompetition concept is that the only enduring advantage results from the ability to generate new advantages: for example, while no cost or quality advantage is sustainable, the skill of generating new cost and quality advantages is sustainable” (p. 162). Each of these core characteristics must then develop as a response to either opportunities or threats in an organization’s ability to leverage one of more of these characteristics and to its competitive advantage.

This doesn’t mean that the essences of the bureaucracy will disappear. In fact, according to Drucker (Romar, 2004) the development of large-scale formal organizations will likely continue to be a centerpiece of the organization into the 21st century. The focus however will continue to move further away from command-and-control to more social based organizations and therefore to more open systems / network based firms. As Drucker notes, “the essence of the corporation is social, that is human, organization (. . . .) it is not based on raw materials or gadgets but on principles of organization – organization not of machines but of human beings, i.e., on social organization” (Drucker, 1983, p. 31).

This process can already be seen taking effect in companies such as IBM that are using a values based, i.e. a social paradigm, approach to reorganizing the multinational firm (Hemp & Stewart, 2004). IBM provides a good example of the switch in paradigm from command-and-control to information-based management and how it can work effectively for IBM, its customers, staff, and shareholders. Despite holding a $100M liability in establishing a post-modern trust relationship with its managers, IBM has managed to gain support for its direction and will likely serve as a model for other large corporations to follow as IBM continues to develop new competitive advantages.

Kevin Feenan
Managing Director
Knomaze Corporation

References

Anderson, W.T. (1992). Reality isn’t what it used to be. San Francisco: Harper and Row.

Bass, M. B. (1990). Bass & Stogdill’s Handbook of Leadership: Theory, Research and Managerial Applications. (3rd ed). New York: The Free Press.

Drucker, P.F. (1983). Concept of the Corporation. New York: New American Library.

Drucker, P.F. (1998). The coming of the new organization. In Harvard business review on knowledge management (pp. 1-19). Boston: Harvard Business School Press.

Garvin, D.A. (2000). Building a Learning Organization. In C.A. Bartlett & S. Ghoshal (Eds) Transnational Management – Text, Casis, and Readings in Cross-Border Management 3rd Edition. (pp. 690-703). Boston: Irwin McGraw-Hill.

Hamel, G., Doz, Y.L., & Prahalad, C.K. (2000). Collaborate with your competitors – and win. In C.A. Bartlett & S. Ghoshal (Eds) Transnational Management – Text, Casis, and Readings in Cross-Border Management 3rd Edition. (pp. 495-502). Boston: Irwin McGraw-Hill.

Hemp, P. & Stewart, T.A.. (2004). Leading Change When Business Is Good: An Interview with Samuel J. Palmisano. Harvard business review. December 2004. Retrieved on December 12, 2004 from http://harvardbusinessonline.hbsp.harvard.edu/b01/en/hbr/hbrsa/current/0412/article/R0412C.jhtml

Nonaka, I., & Nishiguchi, T. (Eds.). (2001). Knowledge emergence: Social, technical, and evolutionary dimensions of knowledge creation. Oxford: Oxford University Press.

Ohmae, K. (2000). Managing in a borderless world. In C.A. Bartlett & S. Ghoshal (Eds) Transnational Management – Text, Casis, and Readings in Cross-Border Management 3rd Edition. (pp. 83-92). Boston: Irwin McGraw-Hill.

Perlmutter, H.V. (2000). The tortuous evolution of the multinational corporation. In C.A. Bartlett & S. Ghoshal (Eds) Transnational Management – Text, Casis, and Readings in Cross-Border Management 3rd Edition. (pp. 73-82). Boston: Irwin McGraw-Hill.

Quinn, J.B., & Hilmer, F.G. (1998) Core Competencies and Strategic Outsourcing. In H. Mintzberg & J.B. Quinn (Eds), Readings in the strategic process (pp. 63-73). Upper Saddle River, NJ: Prentice Hall.

Quinn, J.B., Anderson, P. & Finkelstein, S. (1998) New Forms of Organizing. In H. Mintzberg & J.B. Quinn (Eds), Readings in the strategic process (pp. 162-174). Upper Saddle River, NJ: Prentice Hall.

Romar, E.J. (2004). Managerial Harmony: The Confucian Ethics of Peter F. Drucker. Journal of Business Ethics, 51(2), 199-210. Retrieved December 20, 2004 from ABI/INFORM Global database. (Document ID: 679245441).

Scott, W. R. (2003). Organizations: Rational, natural, and open systems (5th ed.). Upper Saddle River, NJ: Prentice Hall.

Times Online. (2004). Who Poisoned Yushchenko? Retrieved on December 20, 2004 from http://www.timesonline.co.uk/article/0,,3-1393172,00.html

Narayanan and Raman (2004) look at the impact of incentives on supply chains and how structuring the right deal can make or break a company’s competitiveness. Cisco, for example, ended up writing off over $2.5B in inventory as a result of sloppy deal with its suppliers in April 2001 (¶ 1). Campbell’s lost control over their ability to normalize production due to discounts offered to distributors who used the opportunity to forward purchase rather than passing the incentive onto their retailers (¶ 27).

These examples provide both good and bad examples of structural evolution at work. Scott (2003) notes of the impact of structural evolution by observing “Weick rejects the notion that evolution necessarily entails improvements in the surviving forms. He points out that successful interlocking of behaviors (that is, organized patterns of action) ‘can occur without any necessary increase in the productivity or viability of the system’ (1979: 179)” (p. 115). Such is the case with Campbell and Cisco. Scott also notes however that

Evolutionary theories assume that change occurs through a continuous cycle of variation, selection, and retention. New elements such as rules or routines arise through random change; selection occurs primarily through the competition for scarce resources, and retention preserves them through some type of copying or reproduction process. (p. 181)

Again, no more so is this readily apparent than in supply chain management. From looking at the examples provided by Narayanan and Raman (2004), it seems apparent that while there are a myriad of ways organizations can be structured the same does not seem to be true for supply chains. This is mainly attributable to three factors

1. Lack of transparency between the partners,
2. Lack of key information or shared knowledge between the partners, and
3. Badly designed incentive schemes.

Also, supply chain management, since it is seldom under the direct control of a single organization, becomes a game of trial and error that follows Weick’s three phases of evolution: variation, selection, and retention (Scott, 2003, p. 98).

One of the key issues influencing this evolutionary process is the level of trust that must be built up between the various partners. Suppliers to the auto industry, for example, are reluctant to be transparent with their financial data for fear of being pressured to reduce margins. The same can be said for a number of other industries and firms including those mega distributors such as Wal-Mart. The problem can be summed up in a single question: who receives the spoils of the surplus produced when margins are squeezed?

From an outside perspective, the Wal-Mart mentality could be summed up as “if you price it right, it will sell”. Price becomes a major competitive edge for mega distributors. But price isn’t always a deciding factor for the consumer. So is it in a supplier’s best interest to produce $3M in widgets with a ROI of 12% or $12M with a ROI of 3%?

By the mega distributor’s standards, producing more for less is good business practice. However from the supplier standpoint this increase in volume is accompanied by an increase in risk to the firm. If there is no corresponding financial offset the benefits of producing more may put it at a strategic disadvantage. There needs to be some surplus available to mitigate chance shocks to the organization. Distributors that squeeze their supplier’s margins in this way while keeping their own margins intact are therefore reaping the benefits that should, in part, rightly go to the supplier.

It would seem then that Narayanan and Raman (2004) utopia of supply chain management is a near impossible state to achieve. Negotiation of supplier relationships must take into account the fair and equitable distribution of profit surpluses across the entire value chain and not simply between the supplier and the distributor. Those negotiations must balance the opportunity for profit with the opportunity for increased markets, provide a reasonable benefit, and minimize the risk inherent in such systems. The evolutionary approach to negotiation of supply chains becomes important therefore as buyers don’t necessarily want to lose good suppliers and suppliers don’t want to lose markets for their goods. The true competitive advantage of supply chains however can only come about when all the partners have transparency and influence across the entire value chain.

Kevin Feenan
Managing Director
Knomaze Corporation

References

Narayanan, V.G. & Raman, A. (2004). Aligning Incentives in Supply Chains. Harvard Business Review, October 2004. Retrieved on January 20, 2005 from http://harvardbusinessonline.hbsp.harvard.edu/b01/en/hbr/hbrsa/current/0411/article/R0411F.jhtml

Scott, W.R. (2003). Organizations: Rational, natural, and open systems (5th ed.). Upper Saddle, NJ: Prentice Hall.

People who enter into Professional Services Contracting (PSC) do so for many reasons. The pay is better, the hours can often be controlled, time off is yours to decide whether it is 2 weeks, 2 days, or 6 months, and you do not need to report to anyone. The drawbacks however can be both similar and daunting. There are no benefits or retirement plan, hours are more often dictated by the project, contractors can end up with too much or too little time off, and at the very least you must be accountable to your client.

There is a very definite psychology to the Professional Services Contractor. They enjoy a certain amount of freedom in what they do and the pay is good while it lasts. The Professional Services Contractor must be in a position to weather periods where there may simply be no work. They are accountable to be their own legal, accounting, and HR departments. For every 40 hours of work a contractor does they can typically count on spending at least another 10 doing additional administration, networking, and training per week in order to remain competitive.

Those contractors that understand this can typically make their way fairly well. Those that don’t are usually those that cannot handle either the hours or the risk of going into contracting. Contracting is not for the faint of heart. Similar to investing, it therefore becomes important for the contractor to understand what their level of risk is before entering the field.

There are four key skills then that a Professional Services Contractor must maintain in order to ensure their fitness for potential clients: Fully or nearly fully trained, transferable skill sets, the ability to adapt quickly, and personal responsibility for their training and conduct. A failure in any one of these areas may result in the loss of not just an existing contract but also may impact on the ability of a contractor to obtain future contracts.

The Framework of the Professional Services Firm

Professional Services Firm, whether it is a sole owner / operator or a full-fledged recruitment and outsourcing agency, is based mainly on the flagship model of the firm. Developed jointly by Rugman and D’Cruz (2000) during the 1990’s, the flagship model establishes a five partner model of successful firms including the key suppliers, customers, selected competitors, non-business partners (for example government), and the firm itself (p. 8-11). Each of these are fairly self-explanatory and it is not the purpose of this paper to go into each of these in detail.

Competitive Advantage

To the Professional Services Consultant, their primary competitive advantage is knowledge: knowledge of business systems, knowledge of technology, knowledge of software and software products. Each partner a consultant takes on within the flagship model should be based upon increasing the breadth or depth of knowledge of the contractor. Those that don’t should not be pursued unless they can be tied to some type of a strategic objective independent of the flagship relationships.

The second competitive advantage is the relationship itself. Contract opportunities can come from the strangest of places. The relationship itself then must be protected from being competitively undermined. Porter’s (1980) five forces model of competitive strategy was primarily designed to identify strengths and weaknesses in the sales channel with new or existing customers against a field of competition.

The principles however are equally valid to each of the relationships within the flagship model if we replace the idea of the existing competitors with the existing relationships. Those threats and opportunities then are of new entrants, substitutes, and the bargaining power of the inputs to the relationship and the outputs to the relationship. It then becomes one of the objectives of the PSC Firm to develop entry and exit barriers and strategies to the relationship, not necessarily to the individual firm within those relationships.

Philosophy of Contracting

Clients who hire contractors do so for a number of reasons that include

• Temporary Staff Augmentation
• Development of a new Operational Requirement
• One-Time Project Requirement
• Specialized Need

Temporary staff augmentation is probably the most common reason for contract help. This typically might be something such as replacing a person going on maternity leave or providing support during a peak sales period. The knowledge requirement of a staff augmentation contract is no greater than that required for any other full-time member of the existing staff.

Expansion of an organization’s operational capability sometimes requires expertise that is outside of the normal range of duties supplied by in-house staff. In these cases either a specialist, in the case of a project involving a single functional requirement, or a generalist, in the case of a project involving multiple functional requirements, may be necessary to plan, organize, develop, and/or implement the enhanced operations. The primary objective for a contractor in these circumstances is to provide assistance as per their function, and explicit knowledge transference so as ensure the success of the project once it has been transitioned into ongoing operations.

One-time projects are those projects that will not transition into ongoing operations. They have a specific life span and once that life is over the project is completed. Moving office locations, the planning of a specific event (weddings), or the installation of a PBX. The primary objective for a contractor here is not so much to transfer knowledge but rather to have expertise beyond what is found in the organization to plan, organize, develop, and/or implement the project.

Special needs are a unique classification of consulting work in that the requirement is to provide a mentoring role for an organization independent of a specific project. Members of a Board of Directors represent a special needs consultant. Senior business development consultants who are used specifically to train, coach, and mentor junior level business development managers would be another example. The primary objective for the contractor then is the tacit transference of knowledge. Those items that cannot be readily quantified but yet are at the core of an organization’s competitiveness and effectiveness.

Approaches to Personal Services Contracting

The approach consultants take to a given assignment then must change depending on the nature and type of function the consultant is being asked to perform. Many consultants however lead from a specific formula of which there are two extremes.

• Knowledge Transfer as a competitive advantage
• Practical Application as a competitive advantage

Each has its own strengths and weaknesses.

Knowledge Transfer

Knowledge Transfer in Personal Consulting Services provide for greater value add to an organization when the organization’s objectives are systematic or operationally based. The requirements on the consultant are to give as much or more than they receive in terms of knowledge. They should always conclude a contract such that the organization is capable of carrying on, in the contractor’s absence, without undue disruption to the normal flow of daily activity.

Knowledge transfer projects however have two primary weaknesses that an organization must be aware of in hiring a contractor for these purposes. The first is that the contractor loses some of their competitive advantage in the process of fulfilling the contract. Contractors that do their job well are no longer required and quite likely will not need to be asked back. The organization must realize this and be aware that they will get exactly what they pay for. If an organization goes for the lowest bid they may find themselves only getting partially what they are hoping to achieve no matter how well defined the specifications are.

The second is that inefficiently run projects, or projects that are ill defined, may incur significantly increased costs due to long retention periods of contract staff. A project where the full time staff have not fully bought into the project or where there is ambiguity between what the project verses operational components are can create a situation where the company relies on a contractor as a vital component of their operational capability.

Further, getting a contractor to switch to full-time employee may not be a simple as offering them a position if the organization decides that in light of the benefits, the position is one worth keeping long term. A contractor that is worth the money they are being paid will not easily be convinced to switch to full-time employment when their gross pay is 1/3rd higher than the full-time staff and their tax burden is 1/2 to 2/3rd lower.

Neither is the allure of a benefits package necessarily going to sway someone that is in the prime of their physical health for whom health, life, and dental benefits are not a key concern. Independent health and dental benefits can be obtained at extremely reasonable rates for those contractors that want them. In many cases such benefits can be obtained at a cheaper rate than that being offered to large corporations.

Unless the contractor has an internal motivator to switch (such as a new family or recent mortgage), a company may be getting a Trogon Horse. The best way to alleviate this situation is to provide firm commitments to financial packages and career objectives prior to attempting to convert someone and ask for firm guarantees on a minimum length of stay on which such commitments will be contingent.

Practical Application

Practical Application in Personal Consulting Services provides for greater value add to an organization when the organization’s objectives are project based and not necessarily related to an ongoing operational function. The requirements on the consultant are simply to provide their expertise where knowledge gain by the organization is acquired through other means than through the contractor. The contractor should always conclude these contracts such that the stated goals and objectives are fulfilled to the satisfaction of the organization. A contractor is free to walk away once those terms have been met and signed-off.

The benefits for the organization are that it reduces the organization’s overall cost of service (or production) by not having to maintain a specific skill set on salary 100% of the time. By using targeted and specialist resources, the slight increase in cost to a one-time project is more than offset by the reduction in carrying expenses by having a skill set sit ‘on the bench’. In addition, companies that cannot keep people with specialized skill set challenged (and by challenged I do not mean overworked which is a common misperception of the term) will find that what investment they do make in these people quickly goes out the door once an appropriate opportunity comes along.

Practical Application projects have two primary weaknesses that an organization must be aware of in hiring a contractor for these purposes. The first is that the contractor in these situations typically takes more from the organization in terms of knowledge transfer than what they provide in return. Many times a company will hire a consultant with almost all the right skills however is missing one or two skills that are either transferable from the organization or must be provided to the contractor in terms of additional training. This is not necessarily a bad thing – many times the qualification a company needs from a contractor are those experiences they bring from other organizations, not necessarily their own. However, in doing so the organization must be aware that those knowledge assets will walk out the door at the termination of the agreement.

The second weakness is that a practical application consultant may end up inadvertently placing a company in a bind. This normally results when a consultant is brought in to do one job and their “other duties as required” start to take them into areas of operational responsibility. Although morally and ethically the consultant should transfer these skills to full-time staff, if the terms of the contract were to produce a single a widget, there is no requirement for the contractor to tell the organization how they did it. In fact some contractors feel morally obligated not to provide knowledge transfer in these circumstances in that it reduces the ongoing pool of future work opportunities for themselves and other contractors. While this would obviously not be the position of the organization doing the hiring, the argument does have some legitimacy and an organization should be aware that if they change the working conditions without changing the contract, they might be faced with situations whereby the only one capable of managing an operational process is the contractor.

Kevin Feenan
Managing Director
Knomaze Corporation

References

Porter, M.E. (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York: Free Press

Rugman, A.M. & D’Cruz, J.R. (2000). Multinationals as Flagship Firms – Regional Business Networks. Oxford: Oxford University Press.

Personal knowledge may be said to be subjective in that what we perceive and what we cognize can be two different things. Gazzaniga (1998) used information first published by Libet to show that sense perception in the conscious mind is different from that of the sub-conscious. Due to time lags, the sub-conscious mind sorts through the differing signals and presents a coherent but modified version to the conscious mind (p.69-74). Gazzaniga also notes a study by Nijhawan that seem to suggest some things that we think we know, for example a object moving in space, are the result of the sub-conscious predicting future events rather than necessarily objectively reporting on what exactly it is there.

From a purist perspective then, it is clear that where any objective knowledge is suspect, the ability to clearly state that objective knowledge is possible is not true even without having to rely on arguments of people whose senses are impaired. However, this argument assumes that we cannot correct for the impairment through a posteriori means. Correction of such contradictions would entail recognizing the contradiction (is the line yellow or red) or show that the proposition of such knowledge is false (where will the line appear next).

This ability to diagnose contradiction, propose, test, and verify limits the subjectivity inherent in sense perception suggest that self-correction must be taken into account when looking at objective knowledge. A self-correction mechanism suggests that given enough time to identify and correct all contradictions that objective knowledge is possible.

It does however lead to a more insidious side effect and that is whether objective knowledge can exist in societies. Sense perception and individual recall of objective knowledge is limited. As a supplement to how information is stored and retrieved society has developed books, writing, computers, and pictures both moving and static. These stores of information represent a consensus of belief as to what is true knowledge and what isn’t. Hence the reason why a person who is colour blind can understand a priori that there is a difference between brown and red without having experience of that knowledge through sense perception. Stores of information however are subjective based upon the base of power and influence imposed upon them at the time of their encoding.

For example, while the church for years prior to Galileo knew the Earth revolved around the Sun, the base of power that they had developed taught many “truths” to the common people based on knowledge known to be incorrect. The heresy of Galileo was not that he could prove the Earth revolved around the Sun, it was that he contested knowledge that the Church held as truth before the Church was in a position to ‘redefine’ those other pieces of knowledge that were dependent on the existing belief of an Earth-centered universe. As such the self-correction to the objective knowledge of the universe by Galileo represented a fundamental threat to the Church’s base of power and needed to be repressed at all costs.

The question itself then becomes subjective: Can objective knowledge exist in societies? While the basic underpinnings of recognition of contradiction still hold, albeit on what might be longer time scales, if a society is willfully blind to such contradictions then I would suggest that objective knowledge is not possible on a societal level while the will to change is subdued either through ignorance, coercion, or through force of arms.

What this means for business is simply that by being willfully blind to contradictions within the organization, the business runs the risk of losing one of their key competitive advantages – the knowledge base on which the business was originally founded. Knowledge needs to be constantly nourished and maintained the same as your car needs to have gas in the tank and regular tune-ups. Failure to do so can result in the loss of competitive advantage, market share, and in extreme cases result in a poisoned working environment due to a lack of care on the part of the organization.

This emotional connection to knowledge is consistent with dimensions and forms of knowledge creation under conditions of care as proposed by Nonaka & Nishiguchi (2001). While the exact mechanisms are just now beginning to become known (Marquis, 1996), the phenomena of how care impacts knowledge creation are known. Nonaka & Nishiguchi cite 5 dimensions to care as being presence, propensity, accessibility, voice, and emotion.

Training programs, mentor-coaching programs, and focus groups created in a supportive environment where individuals are allowed to explore the aspects of the knowledge they are trying to understand are the simplest ways to achieve such ends. Further enhancement by supplying a working environment where people can apprentice those skills and understandings reinforces such knowledge transfer and can therefore be of substantial benefit to the knowledge worker and the organization. By reestablishing conditions of high care in the working environment the likelihood of an organization’s knowledge resources maintaining objective information is increased and its competitive sustainability maintained.

Kevin Feenan
Managing Director
Knomaze Corporation

References

Gazzaniga, (1998). The Mind’s Past. Berkeley, CA: University of California Press

Marquis, J. (1996, October 14). Our emotions: Why we feel the way we do. New advances are opening our subjective inner worlds to objective study. Discoveries are upsetting long-held notions. Series: The brain. A work in progress. The Los Angeles Times (pre-1997), 1. Retrieved on August 25, 2004 from ProQuest Database.

Nonaka, I., & Nishiguchi, T. (Eds.). (2001). Knowledge emergence: Social, technical, and evolutionary dimensions of knowledge creation. Oxford: Oxford University Press.

Watkins, D. (2003) Invalid Questions and the Roots of Objective Knowledge. Retrieved on August 21, 2004 from http://www.don-watkins.com/aaa1.doc

There is no clear-cut answer to what leadership is. Several definitions exist, each of which focus on a specific aspect of researcher’s frame of reference. Bennis (1997) views leadership as ” the capacity to translate vision into reality.” (p. 14). Brodin (1997) views leadership in terms of power. He notes, “leadership is not wielding authority – it’s empowering people.” (p. 100). Burns views leadership in terms of process and requiring a moral center. Of the term leadership Burns finds that the concept “has dissolved into small and discrete meanings” (as cited in Business, 2002, p. 916).

What makes the task more difficult is that is there is also no clear-cut answer to what leadership isn’t. Leadership, depending on one’s definition, can include elements of sociology, psychology, and history. It can be totally focused on behavioral theory, situational theory, or open-systems theory. It can include all of these elements or none and still be valid.

As such, any definition of leadership will be subject to debate. Regardless, a definition is required to provide context. So for the purposes of this essay, leadership will be defined as being the process of transforming objectives into measurable results using the means, motives, and opportunities at the leader’s disposal for motivating others. Looking at each of these elements in turn can provide some basic guidelines for the establishment of a personal plan for the enhancement of transformational leadership ability.

Units of Analysis

For leadership to be self-evident it must be perceived to represent a measurable difference between what existed before and what existed after. To provide a common basis for comparison some type of units of analysis must be defined. As Bass (1990) points out however, “no one approach is fully adequate, by itself, to understand the leadership process” (p.897).

For transactional objectives, the measurement of result is very straightforward. Objective A did not exist before and afterwards it now exists. Many leadership outcomes are not necessarily that clear, nor are they always attributable to tasks performed in a leadership capacity. These transformational objectives are much harder to identify and measure in terms of effectiveness. For example, leadership may be influenced by the behavior of their subordinates. In these cases the causal relationship between the outcome and leadership does not exist. Rather, the leadership behavior was an effect rather than a cause (Bass, 1990, p.883).

The importance of separation of cause from effect in measuring leadership effectiveness is one of providing a basis for repeatability. While no two objectives are necessarily alike, the characteristics of task objectives can provide a basis for determining which leadership decisions have a high probability of success. On the requirements of task Bass (1990) writes,

The emergence of leadership is correlated with how much the emergent leader’s abilities are relevant to the tasks that the group faces. Different tasks call for different abilities, and the leaders who emerge have difference competencies that are relevant to the requirements of the different tasks. (p. 614)

To establish a measurement of leadership effectiveness, therefore, it is imperative to first define the tasks the group faces, then define the requirements of those tasks, and then define the base line metrics for analysis. The actual tool or method to be used can vary widely however two key points stand out: the use of accepted scales and measurement instruments for comparison across multiple objectives at different times and places, and the consistency of the measurement must be maintained before and after for comparison on individual objectives and task assignments.

Leadership in Crisis

The synchronicity of social need, physical and historical context, and their relative relationships influence leadership in determining the best overall options available. In economic terms, leaders must look at the opportunity costs involved in not moving in a specific direction, the marginal benefit of performing a specific action, and the marginal costs associated with that decision and its potential second round effects. The result is ideally the best overall decision in selecting from a range of opportunities to transform the objectives to results.

There are many aspects of leadership decisions however that are not quantifiable in economic terms. Social relationships, technological change, complex organizational structures, and situational effects are all qualitative aspects to leadership that influence the decision making process. Aguayo (1990) writes, “when all the special causes of problems and variation have been eliminated and statistical control or stability has been established, variation and problems will still exist”  (p. 62).  Because the dynamics of these systems are variable, the nature of leadership from one moment to the next must be constantly changing within a measure of statistical control.

Poor leadership can move these systems out of statistical control and into a state of crisis until control is regained. Whether a leader chooses to look at these situations as threat or opportunity will depend upon each person’s perspective. Opportunities of leadership that can push systems out of statistical control can generally be described as belonging to issues of social change, technological change, and organizational change.

Social Change

Opportunities of social change relate to the social dynamic of the labour pool or corporate social responsibility. Such issue-opportunities may include availability of skilled labour, training, health-care, aging populations, stress, changing social norms, values, and ethics. Gustafson (2002) notes “corporation social responsibility (CSR) is rapidly becoming an expectation of consumers worldwide that requires a fundamental and holistic change in the way that most businesses currently operate” (as cited in Business, 2002, p. 291). He goes on to indicate a number of marginal benefits including new sales, improved relations with customers, increased productivity, and enhanced ability to attract new staff as just a small example.

Technological Change

Opportunities of technological change relate to the increased requirements of placed on business through information and materials improvement. Such issue-opportunities include computer technology, information handling, intellectual capital, patents, and communications. Wren (1994) notes, “information will be the key to future production systems, and the production function must be more closely connected to the overall goals and strategy of the firm” (p. 405). One only needs to look to Wal-Mart as an example of the sustainable competitive advantage that proper use of technology and information control systems can have on a business.

Organizational Change

Opportunities of organizational change relate to those structures between the company, its supplies, its buyers, its staff, outside organizations with vested interest, its shareholders, and others. Such issue-opportunities include mergers and acquisitions, both vertical and horizontal, downsizing, upsizing, relationships with regulators and unions, and internal business processes and systems. Organizational change may also take on a psychological component. Bass (1990) notes one such challenge being that “managers are more likely to be concerned about their personal goals and capabilities than about those of their firm. The psychological contract of managers’ loyalty to the firm is being broken (P. Hirsch 1987; Marks 1988)” (p. 882). The implication is that where goes the manager also goes the organizational structure and all the organizational relationships that manager holds between the company and its business partners.

Common Threads of Leadership

The common threads of leadership provide some basis for the motive of leadership. The internal vision, drive, and determination necessary to do what others will not or can not. Some of what leadership boils down to is how leaders deal with conflicting relational issues of societal values and norms. It is not a subject where there may ever be a clear solution such that the role of leadership, within this context, is more of a balancing act rather than providing a clear vision of the future.

In essence, what you have is the right person, with the right intrinsic qualities, connecting with the societies of their day, throughout their lifetime, in a way that motivates those around them. Leadership and power are all about perception and the willingness of others to be led, whether it is in a corporate setting, politics, or religion. All the different intrinsic qualities of a leader are simply tools that some people use to better effect than others. The common thread therefore is not the quality itself but the context in which those qualities are used and the success of how those qualities are used compared to competitors all vying to fulfill the same societal need at that exact moment in history.

It has been postulated that management thought forms a more coherent picture when viewed in its changing cultural milieu of economic, social, and political forces. (. . .) The era of the social person was an age of individual hopes dashed on the reefs of economic misfortune, of social collisions and maladies, and of political shifts heralding a transformation in traditional relationships (Wren, 1994, p.329).

What can be derived however are the basic underlying relationships that will be important regardless of the tasks at hand. Those relationships are:

1. Personal relationship with oneself (values and characteristics)
2. Leader-Follower relationships (teams dynamics)
3. Peer relationships (networks)
4. Mentor relationships  (role models), and
5. Sociopolitical relationships (social dynamics and situational modifiers)

Personal Values

Strength in a personal value system establishes moral and ethical principles under which a leader operates. These are the learned behaviors passed down within a family, a mentor, learned through experience, or established through articles of a person’s faith, be it religious or spiritual. Toney and Oster (1998) found that senior executives that consciously apply their internal values, faith, and ethics to leadership decision making achieve better results over those that don’t. Regardless of the source, following a set of ethics and morals that is synergistic with the leadership objectives and reinforces the expectation of consistency provides the necessary stability which is crucial for maintaining motivation in both the leaders and their subordinates.

Leader-Follower Relationships

Leader-follower relationships establish the informal context in which the values and cohesiveness of the group express themselves. As Bass (1990) notes, “group effects appear to augment the leader’s impact on the satisfaction of the individual members” (p.596). However as Graen discovered, the “leader-member exchange implies an informally developed role – one that is negotiated between each individual group member and the leader” (as cited in Bass, p.333). The implication is that while the leader may be influenced by the values of the group, the group is far more likely to be influenced by the values of the leader when the leader-member exchange provides positive reinforcement of the subordinate’s satisfaction.

Peer and Mentor Relationships

Peer relationships establish reinforcement of motivational factors in an environment of cooperative learning that is more accessible to a leader than traditional mentor-protégé models and offers greater opportunities for experiential learning. In contrast, the traditional mentor-protégé relationship is more of a top down model that is less accessible however provide greater opportunities for advancement and experience transference. Fine & Pullins (1998) summarize

The general functions that mentors provide for protégés have been classified into two categories: vocational/task training and psychosocial support (Hill et al. 1989; Kram 1985; Noe 1989; Olian et al. 1988; Shockett and Haring-Hidore 1985). Vocational/task functions include sponsorship, exposure and visibility, coaching, protection and giving the protégé challenging assignments. For example, the mentor can encourage the protégé to come into the organization (sponsorship), introduce the protégé to higher-level associates (exposure and visibility), help the protégé develop selling skills (coaching), make sure the protégé avoids violations of organizational norms (protection), and introduce the protégé to potentially profitable customers (challenging assignments). The psychosocial functions include role modeling, acceptance and confirmation, counseling and friendship. (¶ 6)

Sociopolitical Relationships

Sociopolitical values establish the social mechanisms under which leadership addresses stress and conflict to support subordinate motivation. Stress, according to Bass (1990) occurs when social situations are “overly complex, ambiguous, and unclear, as well as highly motivating and demanding in relation to the competence or structural adequacy to deal with the demands” (p. 634). While stress is generally looked upon as a negative thing, conflict can be viewed as either positive or negative depending on the situation and the methods used to manage the conflict. Through the use of transformational compromise (i.e. charismatics, integrative) and transactional agreement (i.e. logical, deductive, economic), most conflict can be reasonably managed (Bass, p. 287).

These common threads are expressed in a number of leadership theories including contingency theory, exchange theory, and open-systems theory and provide the basis from which leadership drives motivation both intrinsic and extrinsic. Each forms part of the motivational web which impacts not only on the leader but also on the subordinates, and other interested third parties such as suppliers, community, customers, and shareholders. But while these relationships form the basis of motivation they are not in of themselves the only tools.

Transcending Leadership Thought

Leadership requires more than simply opportunity and motivation. Leaders must have the means available to them in order to plan, organize and carry out their action plan. It is the effective use of those core personal attributes that differentiates leadership and provides the means for leadership to flourish. Of these attributes three key elements stand out: the legitimacy of a leader’s power base, the innovation used by the leader, and development of self through continuous improvement.

Legitimacy

Leadership can therefore be thought of as a product where all the same rules of gaining and sustaining competitive advantage apply. Leadership is impacted by the same five environmental threats that Barney (1996) indicates their corporations do although on a more personal scale: threat of entry, rivalry, substitutes, suppliers, and buyers. A leader’s personal characteristics may be thought of as their “capital” in which they purchase scarce resources. The best leader is the one that has the best value proposition in terms of cost leadership using this “capital” and can differentiate themselves to the exclusion of other competitors.

Differentiation manifests itself through the different types of power leaders use within a group. This may include the ability to punish, reward, do, charm, administer, or some combination of the aforementioned. The legitimacy of a leader’s power base in combination with the type of objectives a leader is pursuing will determine the means by which they will accomplish those tasks. Lord found in 1977 that “tasks behavior to complete the work of the group correlated with the type of power used, but the leader’s efforts to establish socioemotional relations did not” (as cited in Bass, 1990, p. 247). The implication being that by tailoring the use of different types of power, the leader’s role becomes more legitimized as subordinates identify strongly with the amount of motivation they receive from such direction and the success that ensues to accomplish a given set of tasks.

Innovation

Professional marketing speakers such as Nido Qubein (1990) indicate that to be successful it is not enough to do things better than how other people do them, one must be prepared to do things that others either will not or cannot do. This innovation in approach is the true source of competitive advantage regardless of whether we are talking about leadership or professional selling. However the concept stops short of identifying exactly what innovation is.

By definition, innovation equals change. But change itself does not provide the means to establishing leadership. The transactional change inherent in reorganizing a department may be seen as being proactive in addressing leadership objectives however it may also been seen as simply leadership decisions being altered by situational factors. In essence, it is reactionary, not innovative.

Early adopters of new technology usually gain temporary competitive advantages that are generally difficult to contain and make sustainable (Barney, 1996, p.108). We call these leaders ‘innovators’ because they are on the cutting edge (Bolman & Deal, 1997). However once the innovation has been proven, is it still innovation for those companies that follow in the footsteps of the early adopters? These second movers and other late adopters didn’t develop the technology. They didn’t sweat through the difficulties of reengineering. They didn’t have to develop contingency strategies to mitigate unknown risks. All they had to do was apply proven innovation to their individual circumstances.

Bolman and Deal (1997) identify four main frames that are the basis for innovation in corporate culture. They are the structural frame, the human resource frame, the political frame, and the symbolic frame. They argue that through the integration of each of these frames it is possible to reframe an organization to transform its culture. They state that leaders, “need the capacity to act inconsistently when consistency fails, diplomatically when emotions are raw, non-rationally when reason makes no sense, politically when confronted by parochial self-interests, and playfully when fixation on task and purpose seems counterproductive” (p.377).

By extension then, even though second movers are not innovative in being on the cutting edge of new process or technology, they may be on the edge in terms of defining the innovation for the sociopolitical culture of their specific working environments. In doing so they establish a culture of leadership through specialized knowledge that is unique to the organization. In contrast, bringing knowledge which is innovative but not unique would therefore not establish a culture of leadership. The implication then is that establishment of leadership requires leaders to constantly striving for self improvement and specialized knowledge which promotes innovation and enhances the leader’s base of power.

Continuous Improvement

This continuous improvement is a large part of being a leader. The same way society expects general practitioners to continue their medical training throughout their lives, leaders must also continue to train and grow as well. Vaill (1996) coins the term leaderly learning to describe one of four strategies for life long learning specifically geared towards management. Vaill’s hypothesis is that “managerial leadership is learning” (p.126). He goes on to say that, leadership inherits the characteristics of initiative, exploration and discovery, expression through practical application, self-actualization of the person, practice, continuous improvement, and reflection. Moreover, that for leaderly learning to take place, managers need to understand the relationship between these leadership characteristics and learning as a way of life.

In order to become effective leaders, managers and those in leadership roles must approach leadership as a way of being. The connection between successful leaders, learning, creative and critical thinking, and the challenges of cultivating these qualities requires a dedication to self-development that transcends passive learning models and requires a more dedicated approach. A leader must be able to see continuous improvement opportunities, not limitations, build collaborative relationships, maintain a positive attitude in themselves and those around them, and stimulate dialogue as a result. Moreover, throughout all of this, they still have their own work to do, which may involve other skill sets as diverse as engineering, law, medicine, politic, architecture or any other number of specialties in which they are perceived to be an expert.

Effective leaders cultivate a passion based on intrinsic motivation and the critical and creative thought processes that support mastery of the discipline. It is an evolutionary process that requires constant study and application. The same effort put into maintaining one’s core competencies also needs to be applied to matters of leadership, learning, and embracing innovative ideas.  This requires a willingness to accept that commonly held beliefs and paradigms may need to be stretched or broken, and that the process needs to be focused, targeted, and continual.

Leadership in 21st Century

In a world of permanent white water, leadership objectives in the 21st century create unique challenges which impact on leadership sustainability. Companies come and go rapidly as changing information, computer, and communication technology force companies to adapt or perish. Three key challenges facing leadership are the organizational alignment of companies to their objectives, the situational environment, and corporate ethical behavior that may help or hurt companies in reach those goals. Complicating matters is the fact that these elements may not necessarily be under the direct control of the leader.

Organizational Alignment

A company’s organizational structure is a reflection of the organization’s philosophy and mission that are in turn affected by its leadership (Bass, 1990, p. 574).  Leadership however is affected by an organization’s size, structure, complexity and stability (Bass, p.579). This polytypic relationship between the leader and the organization creates challenging environments at the best of times however when combined with rapid technological pressure for change from outside the organization, insufficient adaptation can result in the business becoming uncompetitive.

The most well known case of a company failing to adapt its organization to rapid information and technological pressure is the example of Kmart verses Wal-Mart. Wal-Mart is first and foremost a logistics company. It gained its competitive edge by building an information infrastructure that monitored everything from supplier shipments, to consumer buying habits, to competitor’s prices, and the way inventory is moved between locations (Stalk & Lachenauer, 2004, p. 65). By the time Kmart knew what was happening in terms of the Wal-Mart competition, Wal-Mart had built up such a competitive edge that it was impossible for Kmart to compete. As professor Stephen Hoch notes of Kmart’s attempt to bridge the gap through exclusive supplier deals, “the problem was, though, that Kmart, unlike Wal-Mart’s, ‘had such a terrible replenishment system that they were always out of stock.’” (techtarget.com, 2002).

What can be seen from the Kmart experience is that it is no longer enough to simply be able to identify that change needs to occur within an organization. Leadership must adapt quickly, and have an organizational structure that is capable of quickly deploying mission critical decisions. Failure in any one area can generate a feedback loop within an organization impacting its philosophy, mission, and stability. For leadership to be effective then it must “avoid allowing the situation to dominate them to such an extent that normlessness results” (Bass, 1990, p. 565).

Situational Factors

As Bass (1990) notes, “the trait approach is not enough for understanding leadership. Above and beyond personal attributes of consequence, the situation can make a difference” (p.563).  In other words, historical and current events have a way of impacting organizational mission objectives and therefore external influence cannot be discounted from organizational leadership decisions. This may include factors of market stability, economic stability, political stability, and the regulatory or social environments in which the organization functions.

Firms that operate in stable environments tend to have more stable processes and require less overall leadership. As conditions change however, leadership becomes more of an issue. To complicate the issue, stability changes in one arena, such as economics, may in fact be best addressed by tackling political issues and visa-versa. For example, Wren (1994) observers that “trade among nations has, more often than not, been initiated and carried out as a political strategy” (p.415).

Many other events can also drastically impact leadership and organizational affects. The events of September 11th, 2001 were a situational modifier that drastically impacted the leadership environment for many companies and firms. The creation of the stock market bubble in the late 1990s and its subsequent crash in 2001 was another. The recessions of the 1990s and 1970s; the political instability of the Watergate trails; the Vietnam War; the fallout of the Kennedy assassination; the Jewish Holocaust during WWII. All were modifiers of the leadership environment that have their origins in the social dynamics of their times and not necessarily the result of a single individual leader even though some events may have been precipitated by a single individual.

Ethics

The last challenge to be examined facing leadership is how to accomplish the organization’s mission and objectives without compromising ethical boundaries. Conflicting priorities may lead some managers to take short cuts, ink deals without fully thinking through the ramifications, or to overlook the wrongful actions of their co-workers. While these actions may be logically justified in specific circumstances, ethical relativism can lead to several problems such as laziness in not developing a moral standard and avoidance of open dialogue to discuss issues and alternatives (Weiss, 1998, p. 71-72).

Conjoined with the idea of corporate ethical behavior is corporate social responsibility and employee social contracts. The level of ethical behavior depends on the type of social responsibility practiced as a result of the organization’s philosophy and the cultural relativism in which the company operates. While it is not possible for every corporation to match every type of individual ethical outlook, leadership must balance the associated needs appropriately in order to avoid amoral management decisions (Weiss, 1998, p. 80).

The accountability for ethical decisions however doesn’t entirely rest with management. Weiss (1998), in citing Pastin, indicates one of the key tenets of high-ethical firms is that ethical responsibility is an individual rather than collective concern (p. 121). The idea of individual responsibility is not new. Wren (1994) states that while “business ethics may not be able to rise above the ethics of society in general. This situation does not release managers from responsibility, but suggest that change must originate from and be implemented by multiple sources” (p. 410).

Personal Transformational Leadership Planning

Planning for the enhancement of transformational leadership ability means preparing for the expected and the unexpected. To accomplish this there are some basic guidelines which define the parameters of leadership planning. Those guidelines include establishing

• A vision of expected outcomes,
• A personal system of values and ethics,
• A system of continuous leadership measurement and feedback,
• A dedication to continuous improvement,
• An open mind to new and innovative ideas,
• An affinity for social relationships,
• An understanding of the external environment, and
• A plan for handling contingencies.

By focusing on a multiple approach to leadership planning, factors that influence the balance of leadership affect can be brought within statistical control and avoid leadership crises. Such plans will derive their base objectives from the personal circumstances in which a leader finds themselves and the possible contingencies that may be required to handle reasonable external influence. Innovation, alignment of organizational structures with organizational objectives and social philosophy, and continuous improvement on relevant skills not only differentiates leadership ability but also reinforces the legitimization of leadership power bases. In effect, resulting in a net positive effect on the business culture and its effective transformation of  objectives into measurable results.

Kevin Feenan
Managing Director
Knomaze Corporation

References

Barney, J.B. (1996). Gaining and sustaining competitive advantage. Reading, MA: Addison-Wesley Publishing Company, Inc.

Bennis, W.G. (1997). In J.C. Maxwell, Leadership 101 (p. 14). Tulsa, OK: Honor Books.

Brodin, B. (1997). In J.C. Maxwell, Leadership 101 (p. 100). Tulsa, OK: Honor Books.

Clark, D. (2000). Concept of Leadership. Big Dog’s Leadership Page. Retrieved March 16, 2004 from http://www.nwlink.com/~donclark/leader/leadcon.html

Fine, L.M. & Pullins, E.B. (1998). Peer mentoring in the industrial sales force: An exploratory investigation of men and women in developmental relationships.  The Journal of Personal Selling & Sales Management. New York:  Fall 1998. Vol. 18, Iss. 4;  pg. 89, 15 pgs

Knowledge@Wharton. (2002). Kmart’s 20-year identity crisis. Retrieved on May 18, 2004 from http://searchcio.techtarget.com/originalContent/0,289142,sid19_gci800567,00.html

Qubein, N. (1990). The 12 essential elements to professional success. Marketing Professional Services. (Cassette Recordings) Chicago: Nightingale-Conant Corporation

Stalk, G & Lachenauer, R. (2004). Hard Ball. Five Killer Strategies for Trouncing the Competition. Harvard Business Review. April 2004

Toney, F., & Oster, M.  (1998).   The leader and religious faith.   Journal of Leadership Studies, 5(1),  135. Retrieved on May 17, 2004 from UOP Apollo Online University Library.

Vaill, P. B. (1996). Learning as a way of being: Strategies for survival in a world of permanent white water. San Francisco, CA: Jossey-Bass.

Weiss, J.W. (1998). Business Ethics. A Stakeholder and Issues Management Approach (2nd ed.). New York: The Dryden Press

Wren, D.A. (1994). The evolution of management thought (4th ed.). John While & Sons.

Great Man Theory

Great man theory is an attempt to explain history by relating it to the impacts of great men, and women, of their times. The theory focuses on the synchronicity that is apparent between key historical events and the personalities of the men and women that were the pivotal point around which those events revolved. As Bass (1990) notes: “The Russian Revolution would have taken a different course if Nikolai Lenin had been hanged by the Old Regime instead of exiled” (p.37). The theory holds that in every age there are those superior few who will rise and give direction as a result of charisma, intellect, and inheritance, among others.

19th century philosopher and historian Thomas Carlyle is commonly known to have commented, “The history of the world is but the biography of great men”. Carlyle is accredited with having written and lectured extensively on the subject of heroes throughout history and is the person most commonly associated with great man theory. In his lecture, The Hero as King, Carlyle tells us:

Find in any country the Ablest Man that exists there; raise him to the supreme place, and loyally reverence him: you have a perfect government for that country; no ballot-box, parliamentary eloquence, voting, constitution-building, or other machinery whatsoever can improve it a whit. (1840).

Other researchers have looked at great man theory from other perspectives. Galton (1869) looked at great men from the perspective of hereditary after observing “how frequently ability seemed to go by descent” (p.27). Frederick Woods also looked at the connection between hereditary and royalty as part of his research. Henry (n.d.) summarizes Woods’ conclusions by stating “Royal geniuses are not scattered haphazard over the genealogical chart; they are concentrated in isolated chains of closely related individuals” (p.53). By extension, other researchers such as Wiggam (1931) looked at biological causes however it was Jennings in 1960 who wrote “The hero of the future will be that individual with the great mission to overcome (. . .) He will recognize that this struggle starts not with his community nor even his family but rather starts with himself” (as cited in StreetNews143, 2003).

While the model of great men provides a frame of reference to look backwards at the traits of key individuals, its success as a forward-looking model are limited. For example, if US society had known about the impending events of September 11th, 2001, would George W. Bush still have become president? There is no way to know. Hence one of the key drawbacks to great man theory as a predictive indicator of great leadership is that sometimes the defining events that prove whether one is a great leader or not occurs after one has achieved legitimate power.

Situational Theory

To address the challenges that situations have on leadership we have situational theory. Situational theory is at the other end of the extreme in stating that the situational factors, and only the situational factors, will determine who will lead. The theory focuses on the synchronicity that is apparent between key historical events and the “state of affairs” (Bass, 1990, p.38) that were the pivotal point around which those events revolved. As Bass notes: “The situationalists advance the view that the emergence of a great leader is a result of time, place and circumstance” (p.38). The theory holds that those who are chosen to lead cannot have done otherwise and give direction regardless of what other non-situational factors may exist.

The documentation for situational leadership goes well back into history. Plutarch (c. AD 46?- 120) who was an influential writer of Greek and Roman history provides many insights into states of affairs that drive situational leaders. Of the history of Numa Pompilius he writes:

Numa accepted and Lycurgus resigned a kingdom; Numa received without desiring it (. . . .) Thus much, meantime, was peculiarly signal and almost divine in the circumstances of Numa, that he was an alien, and yet courted to come and accept a kingdom, the frame of which though he entirely altered, yet he performed it by mere persuasion, and ruled a city that as yet had scarce become one city. (p. 125-130)

Bass (1990) refers to more current research. The works of Mumford, Hocking, Schneider, and Hook appear to represent the key foundational tenants that make up the core of situational theory. Mumford (1909) and Hook (1943) show that social conditions and their associated obstacles are the driving factors that determine which skill sets a leader needs to possess (p.37). Schneider (1937) seems to substantiate this by showing how the leader is more a catalyst for implementing solutions. While Hocking (1924) shows that for situational leaders to be effective, leadership must be given from the grassroots, not commanded from above.

Situational theory solves many problems inherent in the Great Man theory. It is more forward looking in that situational factors can be seen in advance and can account for why some leaders appear to be great after they have achieved a state of legitimate power. For task-oriented situations, situational theory can describe context and task objectives to adequately describe leadership. However the context is limiting and not all leadership situations are task oriented. Many situations are relationship oriented and situation theory fails to adequately address these shortcomings in the model.

Contingency Theory

While great-man and situational theory may be seen to be two extremes of leadership, contingency theory ties to bridge the gap between the two. Contingency theory looks at the effectiveness of leadership based on situational factors, however it does so by looking at both task-oriented and relations-oriented traits used in leadership decisions. The theory focuses on the measurement of successful leadership probability in a given situation through the use of the least preferred co-worker scale (LPC). Bass (1990) notes that contingency theory tends to “emphasize the need to place the person in the situation for which he or she is best suited” (p.47). The theory holds that the relations-oriented leader functions best during times of stability where as the task-oriented leader functions best at the extreme ends of favorable circumstances.

Contingency theory and the LPC scale of measurement is the brainchild of Fred Fiedler. Fiedler’s work has spanned more than 40 years beginning in the 1950’s. According to Dunham (1984), Fiedler feels the effectiveness of a leader “is determined by the degree of match between a dominant trait of the leader and the favorableness of the situation (….) The dominant trait is a personality factor causing the leader to be either relationship-oriented or task-orientated” (p.365). The implication being that personal ability is suited to specific types of tasks and that for leaders to be successful they must either match their personal traits to the task or adapt the tasks so as to fit their personality traits.

Most of the work in contingency theory has focused on how to measure the probability of leadership effectiveness. The LPC scale, which measures effectiveness based on a person’s leadership style compared to their least preferred co-worker, seems to have withstood various competitive models such as those developed by Shifflet in 1974 and Schriesheim, Tepper, & Tetrault in 1988 (Bass, 1990, p.508). “Overall these results supported the greater validity of Feidler’s contingency model than of the proposed alternatives” (Bass, p.509). In Fiedler’s model, 18 characteristics are compared based on the leaders description of their ideal co-worker and their actual least preferred co-worker. High LPC values indicated a relationship motivated style and low values a task-motivated style (Bass, p.495).

While contingency theory bridges some elements of the gap between great-man theory and situational theory, it is not without its problems. One of the key critiques centers around what exactly is being measured. Is the LPC scale in fact a true measure of leadership style or is it measuring something else? Other situational variables such as training and experience do not seem to be taken into account with the model (Antoine, n.d.). The theory assumes a one-sided relationship in terms of who is driving change within an organization, that being from the leadership side. Further, it seems to ignore important points of situation theory which imply that leadership is not always driven top down.

Exchange Theory

Exchange theory addresses some of the criticisms that are inherent of contingency theory but is more of a descendant of great-man theory due to its social connections. Exchange theory looks at the system of exchange inherent in social interactions and their effect on leadership. The theory focuses on the contributions and benefits to both leaders and followers of ‘the exchange’ and what costs are associated with it for both individuals and groups. Bass (1990) notes “leadership implies an equitable exchange relationship between the leader and the followers. When role obligations are mutually acknowledged, each party can satisfy the expectations of the other on an equitable basis” (p.48). The theory holds that for leaders to be successful the social benefits must out weight the costs.

The foundations of exchange theory have their roots in sociology with key aspects introduced from the fields of psychology, economics, and anthropology (Zafirovski, 2003, Introduction 1). Zafirovski notes:

The key tenet of social exchange theory is that human behavior is in essence an exchange (Homans, 1961: 12-3), particularly of rewards (Homans, 1961: 317) or resources of primarily material character (wealth) (Cook, 2000; Stolte et al., 2001) and secondarily of symbolic attributes. Presumably, such exchange transactions permeate all social phenomena (Coleman, 1990: 37), including group processes and intergroup relations, which are conceived as sets or joint outcomes of voluntary individual actions induced by rewards (Blau, 1964: 91). (Introduction, 1)

Or to put a bit more simply, leaders provide guidance, structure, and reward to the group in accomplishing a given task and the group in turn provides status and validation of the leadership position back to the leader. Power then is shared to such an extent that “leaders of more powerful followers are likely to be more powerful than leaders of less powerful followers” (Bass, 1990, p.226). This would therefore imply some type of feedback loop in which the power of a group becomes self-sustaining so long as the social benefits outweigh the effort required to maintain cohesion.

Exchange theory works well to explain social and economic life however the reverse is not always true. Zafirovski (2003) identifies that at the heart of the matter is the fact that social exchange theorist focus almost exclusively on the social interaction and not on defining exactly what exchange is (Conclusion 2). To put it another way, they are looking at the effect and not the cause.

Open-Systems Analysis

Enter Open-Systems Analysis. Open-systems analysis takes the analysis of social systems one step further by introducing cognitive and systems theory into leadership development. The theory focuses on a systems approach to leadership including the inputs, outputs, and flows based on social, organizational and environmental factors. Bass (1990) notes “in open systems, the effect of the outputs on the environment are feedback and new inputs. The relations within the system grow and become more intricate with repeated input-output cycles.” (p.50).

Foundational research into open-systems only seems to date back to about 1966 where Katz and Kahn and Bowers and Seashore where doing complimentary work on the systems theory of organizations. Lieberman used systems analysis to explain chain-induction groups. Jacobs and Jaques used systems theory to further develop bureaucratic leadership functions at the most senior levels. (Bass, 1990, p.51)

It is the Bass-Valenzi model however that provides the key tenets of open systems analysis and the limits of its reach.

Whether leaders are directive, negotiative, consultative, participative, or delegative depends on their perception of the systems’ s inputs and within-systems relations. The leader and his or her immediate work group form an open system of inputs (organizational, task, and work-group variables,), within-systems relations (power and information differentials), and outputs (productivity and satisfaction). (Bass, 1990, p.51)

The predictive nature of open systems seems to be borne out by Shapira using small space analysis. Shapira’s study tried to determine the type of leadership style used when faced with a choice of directive, consultative, negotiative, and delegative. Shapira showed that the leadership style with subordinates was predictive based on the power relationships between the two and knowledge of information that each possessed (Bass, 1990, p.259). The problem however is still in determining which factors of leadership determine the system’s preferred state and how this preferred state is to be reached. Open systems work well when all the necessary variables are defined correctly however its predictive nature when variables are missing can be called into question.

Transformational Leadership

Transformational leadership is an attempt to explain leadership by relating it to the multiplicity of research that came before it. The theory focuses on the ability of groups to take responsibility for transcending personal self-interest and to focus on the needs of the task at hand. As Bass (1990) notes: “Followers are converted into leaders. Among 90 transformational leaders, Bennis (1984) found evidence of competence to manage attention and meaning, to articulate visions of what was possible and to empower the collective effect of their leadership” (p.53). The theory holds that transformational leaders enhance the subordinates satisfaction and effectiveness through a combination of methods.

Early work done by Burns in the 1970’s and then by Bass in the 1980s led to a differentiation between transactional and transformational leadership. Group task objectives which require leaders to work within and established framework are considered transactional where as group task objectives that require change to the underlying framework are considered transformational (Bass, 1990, p.23). Where Bass and Burns tie transformational leadership to personal traits, other researchers such as Tichy and Devanna have shown the hybrid nature of the transformational model by tying it to other leadership models such as the open-systems framework. “It’s a leadership process that is systematic, consisting of purposeful and organized search for changes, systematic analysis, and the capacity to move resources from areas of lesser to greater productivity” (Bass, p. 53-54). Other researchers have tied these concepts in with other leadership theories including Hater and Bass to contingency theory, and Seltzer, Nemerof, and Bass whose four correlated dimensions of charisma, inspiration, intellect, and individualized consideration can be paralleled to ideas first proposed as part of great-man theory.

Methods and Measurements

The ability to rate each of these models ability to address contemporary leadership environments presents challenges that have nothing to do with the individual models discussed. The challenge, as noted by Avolio, Bass, and Jung (1999), is in the nature of the tools we have to measure effectiveness in the first place. Avolio notes “The challenge still remains how we can best measure such exemplary leadership styles beyond simply using survey tools, as well as to develop them over time in organizations” (Implications 4). Each type of leadership theory, be it situational, cognitive, interactive, social, or hybrid, presents its own unique set of tools for measurement.

This does not mean that the any of these models are invalid or that one model stands out above the rest. The defining factor will always be the point of view of the researcher or sponsor and what objectives they have in mind in terms of outcomes. For example, contingency theory may be the preferred method of addressing issues within a company that suffers from a poisoned work environment as it may provide points of view that would encourage personal transformation and transactional reorganization that are necessary to alleviate those types of conditions. Similarly open-systems analysis may be the preferred theory for a new business or industry that is dependent on feedback systems of input and output leading to dynamic growth. More established businesses, such as insurance companies, with long business cycles and established products lines might prefer to rely on influences brought about by great-man theory.

Convergence and Divergence

Convergence and divergence in leadership models is primarily a factor of evolution of management thought over time. As each new theory appears its similarities and differences will be predicated based upon what came before. Once new ideas are introduced, fields of specialization appear, some fields take new directions, and other ideas that cannot withstand the test of scrutiny disappear. As Wren (1994) so aptly put it:

The past must not be buried but used as a foundation and guide for the footprints that will be made in the future. (. . . .) new ideas, subtle shifts in themes, and emerging environmental events all bring new directions to evolving management thought. (p.427)

Looking at the 6 models discussed, some general trends of evolution become clear. The foremost being that each of these models is predicated on each of the models that came before it, although some more than others. Exchange theory is an extension of the social implication of great-man theory. Contingency theory was born out of the need for a more centralized view of great-man and situational theory. Open-Systems theory takes many of its epoch and philosophy from contingency theory and exchange theory. While these may be considered in some way divergent evolutionary paths from their root predecessors, transformational theory is a converging evolutionary path, bring back the best of contingency, exchange and open-systems thinking in more holistic approach to management.

While there are a number of permutations available to discuss similarities and differences between each of the models there are four key divisions that should stand out: Great-man and situational theory; contingency and exchange theory; open-systems and non-open systems; and transformational and transactional.

Great-man and situational theory, as mentioned previously, are at apparent opposite end of the spectrum. Where great-man theory references personal characteristics, intellect, inheritance, and questionably biology, situational theory focuses exclusively on the external situational factors. As such the two theories can be considered mutually exclusive. Their application however is not mutually exclusive. Great leaders such as John F Kennedy and Winston Churchill can be framed under both theories and come to perfectly valid conclusions of the nature of leadership. What they have in common is a relationship to the understandings of leadership with a historical context as each focuses a lens into the past to try to understand the future.

Contingency theory and exchange theory are both structural theories of leadership and each is just one step into the center of the spectrum from their most dominant predecessor. Both have elements of great-man and situational theory however for contingency theory the dominant influence is situational theory and for exchange theory the dominant influence is great-man theory. The two however are not as mutually exclusive as their forebears. Each is also characterized by a structural component to their outlook on leadership. The difference major difference is in the types of applications that each would be applied to. Whereas contingency theory is better suited to task-oriented leadership questions that have a small relationship component, exchange theory is better suited to social-oriented leadership questions that have a small task oriented component.

Open-Systems analysis is process-based theory of leadership and is most applicable to those theories that operate in the center of the spectrum. The key difference of open-systems compared with non-open theories is the ability to define parameters of volatility, such at that used for total quality management, and then redefine the system as required in terms of elimination of the error delta occurring in the model. This is difficult to do however in a strictly social or strictly situational based model, which is the key differentiator that separates out the application of this framework from others. Structure and organization are also key in determining which leadership situations to apply the model to.

Most, but not all, non-hybrid theories are generally considered to be transactional theories of leadership. This is due to the nature of the applications that these theories are applied to as being self-contained within an established structure or organization. Transformational leadership operates under no such conditions. The keys here are change to the underlying framework supporting the structure, be it physical or situational, and transcending social cultural norms in order to achieve task objectives. Wren (1994) properly summarizes the high level view of the transformational leader by saying:

Transformational leaders are often described as those who bring a vision of the major changes needed in the organization’s structure, culture, market or whatever. This distant vision will succeed, however, only if the leader can transform the high-powered vision of the future into localized implementation in the present. (p. 386-387)

Conclusions

In the history of leadership models in the 20th century, there is no such thing as the perfect model of leadership. Of the six models presented, it may seem that the more recent theories are more applicable to address contemporary leadership issues however each brings its own set of unique perspectives on situations, culture, structure, and process that need to be taken into account. In applying any leadership model to a given set of circumstances, it is important to understand the context, limitations, and biases introduced by each one so as to understand the limitations of the solutions they present as alternatives. It is also important to understand that measuring the effectiveness of each model may present unique challenges as new techniques for measuring the success are improved upon.

Kevin Feenan
Managing Director
Knomaze Corporation

References

Antoine, P. (n.d.) Fiedler’s Contingency Theory of Leadership Retrieved on April 21, 2004 from http://www.stfrancis.edu/ba/ghkickul/stuwebs/btopics/works/fied.htm

Avolio, B. J., Bass, B. M., & Jung, D. I. (1999, December). Re-examining the components of transformational and transactional leadership using the multifactor leadership questionnaire. Journal of Occupational and Organizational Psychology, 72(4), 441-462. Retrieved on April 21, 2004 from ProQuest Database.

Bass, M. B. (1990). Bass & Stogdill’s Handbook of Leadership: Theory, Research and Managerial Applications. (3rd ed). New York: The Free Press.

Carlyle, T. (1840, May) Lecture VI. The Hero As King. Cromwell, Napoleon: Modern Revolutionism. Retrieved on April 21, 2004 from http://www.mcgees.net/fragments/primary%20documents/rhetorical%20theory/Carlyle%20Heroes/king.htm

Dunham, R.B. (1984). Organizational Behavior. Homewood, Illinois: Richard D. Irwin

Galton, F. (1869). Hereditary Genius An Inquiry Into Its Laws And Consequences. New York: London Macmillan and Co. Retrieved on April 21, 2004 from http://www.mugu.com/galton/books/hereditary-genius/text/html/galton-1869-genius.html

Henry, P. (n.d.). Chapter II – The Iron Law of Inequality. Retrieved on April 21, 2004 from http://users.mo-net.com/mlindste/revtciv2.html

Indo. (2003). Ready, Willing & Able Graduation. Retrieved April 21, 2004 from http://members.aol.com/Streetnews143/Articl03.htm

Plutarch, (n.d.). Parallel Lives. Candida Martinelli’s Italophile Site. Retrieved on April 21, 2004 from http://home.wanadoo.nl/cecilia.mccabe/plutarch_lives.pdf

Wren, D.A. (1994). The evolution of management thought (4th ed.). New York: John Wiley & Sons.

Zafirovski, M. (2003) Some Amendments to Social Exchange Theory: A Sociological Perspective. CAAP. Retrieved on April 21, 2004 from http://theoryandscience.icaap.org/content/vol004.002/01_zafirovski.html

Leadership and Learning

Successful leadership is exemplified by the results it generates. Ask any group of individuals involved in leadership ‘what makes a successful leader?’ and the answers will be as diverse as the group asked the question. The characteristics may include the ability to motivate, empower, listen, facilitate, mentor, analyze, empathize, and mediate. A leader must be able to see opportunities, not limitations, build collaborative relationships, maintain a positive attitude in themselves and those around him, and stimulate dialogue. Moreover, throughout all of this, they still have their own work to do, which may involve other skill sets as diverse as engineering, law, medicine, politic, architecture or any other number of specialties in which they are an expert.

Learning is a large part of being a leader. The same way society expects general practitioners to continue their medical training throughout their lives, leaders must also continue to train and grow as well. Vaill (1996) coins the term leaderly learning to describe one of four strategies for life long learning specifically geared towards management. Vaill’s hypothesis is that “managerial leadership is learning” (p.126). He goes on to say that, leadership inherits the characteristics of initiative, exploration and discovery, expression through practical application, self actualization of the person, practice, continuous improvement, and reflection. Moreover, that for leaderly learning to take place, managers need to understand the relationship between these leadership characteristics and learning as a way of life.

The Relevancy of Leadership and Influence

For learning to be relevant, it must be targeted and directed. Successful business leaders need to balance their objectives with that of their shareholders, their employees, their suppliers, and their customers. Unlike a business’ employees, who generally only focus on the customer-business relationship, leaders must keep relationships focused in two, three, or all four of these areas as part of their accountabilities. This diverse mix of interests requires successful leaders to make the best use critical and creative thinking to balance these conflicting influences.

 Without critical thinking skills, managers risk upsetting the equilibrium that exists with each of these special interest groups. Too much or too little time spent addressing the concerns of one group can raise issues in another. For example, the need to service the customer at the lowest cost can lead to moral and staffing issues when the needs of the customer overly outweigh the needs of the staff.

Without creative thinking skills, managers risk upsetting the equilibrium that exists between each of these special interest groups. The dynamic and systemic relationships that exist between the customer and the supplier, or the staff and the shareholders, require creative solutions that influence the entire value chain and that straightforward critical thinking may not be sufficient to provide. For example, a group of squeegee kids frequenting the front of an upscale hotel can be an eye sore for hotel patrons that could indirectly affect revenues for the hotel. The immediate critical solution would be to phone the police. The creative solution would be to hire the kids as car wash attendants and/or car jockeys that would add value to the customers, relieve the problem of vagrancy, and possibly increase revenues for the shareholders.

Relevancy does not just apply to business situations or to the present day. Gardner (1993) provides some unique insight into the inner creative minds of Einstein, Freud, Stravinsky, and Eliot. These were influential leaders of their day, who possessed and exemplified the intrinsic motivation and directed focus necessary to be leaders.

Leadership Challenges

To be effective critical and creative thinkers, leaders face the challenge of how to enhance their creative thinking abilities. One such challenge is how to expand the ability to think. While Vaill (1996) tells us that learning is a continual process, McFadzean (2000) proposes that thinking, specifically creative thinking “can be encouraged by changing a person’s mindset or paradigm” (para. 4) using three different strategies: association, stimulation, and expression. Consider the following example that will have varying degrees of effectiveness from paradigm preserving to paradigm stretching to paradigm breaking depending on the depth and scope of the activity and analysis.

Paradigms can be broken, however, by using unlimited methods of expression as well as unrelated stimuli and forced association. [. . . .] Here, participants are asked to draw a picture of where they see their company in ten years’ time. They are then asked to draw a picture of how they see the company at the present time. Next, each participant describes the two pictures and gives reasons for why he/she has used these particular images to represent the company. The technique can draw out a lot of information that would not necessarily have been revealed using more conventional techniques. (McFadzean, E. 2000. para. 10)

This is only one such example. This does however lead to a second challenge that is how to effectively deal with creativity blocks. DeSalvo (1999) cites several barriers to creativity including lack of passion, fear, negativity, lack of motivation, and disrespect. Primary among these are lack of passion and fear. Leaders and organizations can overcome barriers when creativity and innovation are supported as part of the cultural environment. This means understanding your staff’s needs, understanding what inspires them, and fostering a trust that raises people’s intrinsic motivation to be creative.

Many other activities and exercises will enhance critical and creative cognitive ability. For example, Gryskiewicz and Epstein (2000) propose a number of alternative activities all designed to stimulate the creative process. These activities center on four basic skill types that include:

• Capturing – the preserving of ideas,
• Challenging – difficult problems or challenges,
• Broadening – problems or challenges unrelated to our field of expertise.
• Surrounding – problems or challenges involving unique environments

None of these techniques are all encompassing, exhaustive, or quick fixes. The number and types of theories on how to enhance critical thinking are as varied and diverse as the number of theories on how the brain works. This may help explain why leadership is such an evolutionary process.

Leadership as a Way of Being

Leadership is one of those nebulous qualifications that every organization wants but few cultivate. Effective leaders cultivate a passion based on intrinsic motivation and the critical and creative thought processes that support mastery of the discipline. It is an evolutionary process requires constant study and application.

In essence, leadership is a way of being. Persons in leadership roles within highly dynamic systems and processes cannot simply rely on passive participation to develop solutions. The same effort put into maintaining one’s core competencies needs to also apply to matters of leadership, learning, and fostering creative thinking. This requires a willingness to accept that commonly held beliefs and paradigms may need to stretch or break, and that the process needs to be focused, targeted, and continual.

Kevin Feenan
Managing Director
Knomaze Corporation

References

DeSalvo, T. (1999, June). Unleash the creativity in your organization. HRMagazine, 44(6), 154-164. Retrieved March 12, 2004 from ProQuest Database.

Gardner, H. (1993). Creating minds. New York, NY: BasicBooks.

Gryskiewicz, S. S., & Epstein, R. (2000, September/October). Cashing in on creativity at work. Psychology Today, 33(5), 62-65. Retrieved March 12, 2004 from ProQuest Database.

McFadzean, E. (2000). Techniques to enhance creative thinking. Team Performance Management, 6(3/4), 62-72. Retrieved March 12, 2004 from ProQuest Database.

Vaill, P. B. (1996). Learning as a way of being: Strategies for survival in a world of permanent white water. San Francisco, CA: Jossey-Bass.

Why? Because in order to create a sustainable business model, the business owner must forge a relationship with their customers which is also sustainable and competitive in relationship to all of its competition. When a business owner focuses a disproportionate amount of time on the media, they increase their competition in the market place to include markets that wouldn’t normally be considered competition. While the strategy may provide for a temporary influx of hits, without the underlying strategic infrastructure, the relationship becomes transient and therefore the business model becomes unsustainable.

This article will provide an overview of the key elements required to develop a successful eBusiness from first principles through to the promotion of the venture.

Building the Foundation

There are three key areas that a business needs to focus on prior to developing its electronic presence.

• Product and/or Service Development
• Target Demographics and Marketing
• Financial Budget

Product/Service Development is the primary driver for everything else in the business model. The business owner must understand their product or service inside and out. The product dictates everything from budgets, to infrastructures, to marketing and how the business owner needs to build their relationship with their customers. A poorly understood product or service will move the business in the wrong direction. Marketing of the product ends up focusing on the wrong emotional triggers or wrong demographics. Financially the business may start sinking money into the strategic infrastructures that are either poorly placed or unsustainable.

Once the product is well understood, the next drivers are both related to Marketing: Understanding your target demographics and establishing the marketing plan. In order for any business to survive, it needs to develop a sustainable customer base that can support both continued product development and the basic financial obligations of the business. This means knowing who the potential customers are and planning the content such that it supports the information requirements of both the product and the customer.

For example, a number of web sites have developed around the promotion of discount drug cards. The one of the key markets for this type of product are Seniors. This is also one of the key demographics that least understands technology and is the least likely to disseminate credit card information for online purchases. Web sites that focused their marketing efforts strictly online with minimal real world sales / technical support found themselves at a disadvantage to other “bricks and clicks” companies who focused on the needs of the market rather than the medium.

Financial budgets are critical to the success of any business, and nowhere is this truer than in businesses that have a substantial online presence. Between 1996 and 2002, one of the key factors in the dot com crash was the overspending that occurred in the creation of eBusiness web sites. Too much emphasis was focused on a “build it and they will come” philosophy. The ease for which a web site could be built suggested a level of strategic business knowledge that was far below what was actually required to run a successful business.

eBay is a phenomenal case study in how a properly managed business using the internet as its primary distribution channel can work. One of the key considerations for eBay has always been to grow the technological infrastructure at a pace which matches the ability of the company to generate income. The growth of eBay in terms of content, technology, and market share has allowed for it to become one of the most profitable electronic based companies to-date.

It is only once these three components are firmly understood as part of an overall business strategy that attention should be turned to the development of the internet presence itself.

Establishing the Infrastructure

Once the strategy, marketing, and financials of the business have been mapped out, many key questions can be easily answered directly from the business strategy. Key content and infrastructure questions such as:

• What type of information to put onto the web site
• Is an electronic payment gateway required
• What are the data storage / retrieval requirements
• What technologies should be considered for use
• What type of security precautions are required
• How will the web site be administered
• How will the web site be monitored

These questions must be answered before the first design elements are considered. Unless the business has very deep pockets, there is always a trade-off between time, money, and functionality. It is important to qualify the infrastructure aspects of the presence first before determining where those trade-offs need to be made.

For example, if your business is considering an online payment gateway and an updatable database of personally identifiable information (names, addresses, credit card numbers) then one of the key considerations has to be security. A breach in security can result in personally identifiable information being stolen and the company legally liable for any misuse of that information. Depending on the type of information being retained, the company may have a requirement to use dedicated servers with multiple firewalls in order to ensure privacy and security.

It is not possible to underestimate the importance of getting a business’s underlying infrastructure correct up front in the process. A business’s infrastructure has a tendency to take on a life of its own independent from the business model. This can lead to complications. Too little technology and the business stands the risk of not being able to manage it’s operations effectively. Too much technology and the business can spend more time managing the infrastructure rather than the customer.

Content is King

There are two aspects to content that must work in conjunction in order to retain a customer. The site content and the site navigation. Most people will not simply stumble upon your web site by accident. They are there because they already have a good idea that your business has something that they need. What they want now is to be shown what you can do for them.

When designing for success there is one simple rule to keep in mind: Content is King. Content will make or break a business’s web presence. The best graphics and the latest in cutting edge technology will not help a web presence that has little to say.

Content will generally fall into one of three different categories:

• Marketing (Promotion),
• Information (Training, Diagnostic), or
• Distribution (Direct Sales)

Marketing Content will include any content that promotes your business’s identity, products, or services. Of all the pages that could be included, one of the key pages which is often overlooked in its importance is the ‘Contact Us’ page. Many businesses that focus exclusively on electronic commerce also fail to provide valid contact information. They use the internet as a barrier between themselves and their customers. By hiding behind the technology, many companies typically lose potential sales and are seen as transient organizations without any staying power.

Informational Content is information that goes beyond the marketing of your product or service. Self-help guides with frequently asked questions or additional information on product and services would be a typical example. Informational content can be of great importance in the retention of customers. Businesses that provide informational content on a regular basis tend to get more hits, especially when that content is relevant to the changing needs of the customer base.

A common mistake made in providing frequently asked question (FAQ) information is to not pay attention to the questions which are actually being asked but rather provide answers to questions the company wishes people would ask. Support forums are a good way to help avoid this pitfall however even these should be monitored periodically to ensure that the most relevant information is easily accessible by customers.

Distribution Content will include information necessary to provision the sale. This information may be stored in a database and require some type of search and display program. This information also typically requires specially handing. What may surprise a good many customers is that many business web presences are not fully integrated with the ‘back office’. This isn’t necessarily a bad thing. For many smaller businesses it is more efficient and less expensive to manually process an order than to fully integrate the complete supply chain. Businesses that do this however should ensure they have the appropriate reserves to do further back-end development as the company grows. Several electronic businesses have disappeared directly as a result of their inability to keep up with online orders once the company became successful through internet sales.

Supporting Design Elements

If content is king, then Navigation must be Queen. It is the marriage of these two aspects that will retain customers. Navigational aids must be clear, concise, and allows a customer to easily move forward and back through your information with a minimum amount of effort. Everything else on a web site is basically a supporting design element and should only be used in so far as it supports the content or the navigation of the site.

A good test of any web site is to strip away all supporting design elements and see if the web site is still competitive. The term competitive in this case requires a bit of explanation. In a medium where information is everything, competitiveness needs to be based on how quickly a customer can find relevant information on your web site verses your competitors’ web sites. If the web site can maintain competitive parity with its major competition then it is ready for supporting design elements to be added.

There are a number of generic rules about how to build a good web site and considerably more about what makes a bad web site. The best advice is to keep it short and simple. Only use those design elements that reinforce the message or clarify a particular element of information.

Jacob Neilson (www.useit.com) is an Analyst who focuses on usability and has spent a number of years analyzing what works and what doesn’t in terms of website design. Most of his recommendations are good rules to follow for the average web however for some businesses (such as the movie industry) some of his advice is counter to the direction of the content being marketed. Some of the more pertinent recommendations include avoiding:

• Gratuitous Use of Bleeding Edge Technologies
• Scrolling Text, Marquees, and Constantly Running Animations
• Complex URLs
• Long Scrolling Pages
• Overly Long Download Times
• Anything that looks like Advertising

Graphical design elements can substantially enhance a web site’s appearance and retain customers. Professional graphical elements can mean the difference between someone skipping by your web site and making a sale. Graphics should be small, crisp, and clean. Clip art should be avoided wherever possible.

Promoting Your Business

In order to market your new web presence, it is extremely important to remember:

The Internet cannot be used as a substitute for building
deep personalized business relationships with your customers.

In other words, all the standard marketing techniques still apply for marketing your business. What is different is the introduction of a few additional outlets for those same marketing techniques.

Direct Marketing is probably the most known type of marketing on the internet and is most commonly referred to as SPAM. Similar to postal Ad-Mail, Spam in of itself is not necessarily bad in cases where legitimate marketing is conducted through the use of double opt-in mail distribution lists. These are lists where a person has signed up to accept advertisement through the use of double confirmation process; one at the time of sign-up and a second one confirming the sign-up. All legitimate direct marketing companies use double opt-in email lists.

Unfortunately this is not always the case with a large number of direct marketing firms. A business owner considering this type promotion should be extremely wary as a direct marketing campaign by an unscrupulous firm can result in the business being banned, sued, or their contract with their ISP terminated. Word does get around and repeat offenders quite frequently find themselves unable to procure stable internet hosting services.

Search Engines are probably the most useful and yet benign method of promotion. Some of the more popular search engines charge to be placed on their sites or to expedite the update process. Others are free of charge. The four key search engines to be listed on are Google, Yahoo, MSN, and AOL. Most of the other major search engines all derive their information based on one of these four such that if you get listed on these, you will eventually be listed on the others.

There are also a large number of specialty search engines and directories that are much smaller. These search engines / directories tend to have focus within a given specialty. As part of the marketing plan for the business is it a good idea to research which directories are of key importance for being found.

Web Advertising, such as banner ads, is another good way to get noticed. Knowing your target market and demographics should assist you in identifying other vertical and horizontal markets that may be good sources for purchasing web advertisement.

Summary

The creation of an eBusiness is no different from that of any other business. The idea that an eBusiness is easier and cheaper is simply not the case. While their were several stories in the early days of the Internet which supported the idea that two teenagers working with second hand equipment in their basement can make millions, the number of failures far outstripped the successes.

In order to establish a sustainable ongoing enterprise, the business must pay close attention to the fundamentals and not allow the Internet medium to overtake solid business planning and financial accountability. In the end, it will be those businesses that find a balanced approach to the electronic world and the real world that will end up gaining the most benefit out of electronic commerce satisfying both themselves and their customers.

Kevin Feenan
Managing Director
Knomaze Corporation