Level 5 Leadership – Leading Organizations

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Level 4 – Creating Leaders

Being an organizational leader requires having certain attributes

  • In many ways, a Level 5 Leader is the convergence of marketing, financial principles personally and in business, and all levels of leadership
  • A great organizational leader can turn a devastated culture into a productive and engaging environment
  • A vision can only be carried out by a charismatic, intelligent and socially intelligent leader
    • Builds great relationships and teams that naturally fosters trust and encourages groups to be more connected
  • Visionaries have to creatively look beyond conventional models and previous experience
    • Operates within the boundaries and limitations to build something from the ground upwards
    • Believes that the most effective things are often the simplest
  • Focused on the final results that the project is aiming towards
    • Looks ahead at obstacles to success and removes them as fast as possible
    • Never feels fully satisfied with the current status of success and always wants a little more
    • Realistic about costs compared to the budget, and regularly looks at the organization’s financial state

Organizations only succeed if its vision is properly communicated

  • It needs to bring a passion to serve a purpose greater than itself
    • The procedures and tasks will change with culture and situation, but the vision won’t move
    • This purpose must form into something that can help someone in a specific way
  • Effective leaders convey this vision correctly
    • The simpler and more focused the message is, the farther and quicker it will travel
    • There is more than enough training to equip everyone to succeed at working toward the vision
  • Rolling out products and services needs to be its own cultural experience
    • Advertise the new with a fanfare, and make it a ceremonious occasion
    • Old and discontinued products or services should be publicly put to rest, a bit like a eulogy of a great idea that ran its course
    • Dysfunctional products and services need to be invalidated publicly, but learned from to ensure that the situation isn’t repeated
  • Everyone in the organization must be devoted wholly to the vision of the organization
    • The culture should highly value the principles of the organization where they have to adapt or leave
    • They need to feel their input is contributing to the collective vision
    • If done correctly, the vision will carry itself far beyond the individual and into future generations
  • Not everyone will like working in a visionary organization
    • They must like being demanded to seek accomplishment
    • Naturally adapts to the established work culture
    • Feels proud to be a part of the organization
    • Open and interested in change in everything related to their work
    • Values clear and honest communication

Each organization is different, but grows in the same way

  • There is a life cycle of 4 periods that every organization goes through
    1. Formation period – a new organization is started, there is a founding vision but no formal definitions
    2. Rapid growth period – the organization adds direction and coordination to keep growing and guaranteeing success
    3. Mature period – the rate of growth levels off to the overall pace of the economy
    4. Declining period – often means laying off workers and reorganizing, success in this creates a new Formation period
  • The Greiner Curve tracks how organizations grow based on their leadership, though their rate varies and the crises aren’t always in order
    1. Growth through creativity
      • The founders of the organization are busy making products and opening markets
      • Not many staff, so informal communication is perfectly acceptable
      • The rewards for long hours and hard work are often sharing in profits or in company stock
      • Ends with a leadership crisis where professional management is needed
    2. Growth through direction
      • Often to make up for a lack of leadership someone new is brought in
      • More formal communications
      • More budgeting and focus on separate activities like marketing, production or sales
      • Incentive benefits largely replace stock or profit as a financial reward
      • Ends with an autonomy crisis once the products or processes are so numerous one person can’t manage or remember all of them
    3. Growth through delegation
      • Mid-level managers are freed up to react quickly to new market or product opportunities
      • Top management simply monitors and deals with bigger issues like mergers and acquisition opportunities
      • Most businesses fail at this stage, since the primary manager often doesn’t want to let go of control
      • Ends with a control crisis, where a more complex head office function is needed to manage the separate parts of the organization
    4. Growth through coordination and monitoring
      • The previously isolated business units are reorganized into product groups or service practices
      • Investing is turned into a central management and focuses on ROI (return on investment) and not just profits
      • Benefits will include company-wide profit sharing arrangements lined up with company goals
      • Ends with a red-tape crisis, where bureaucracy stops growth from advancing any further
    5. Growth through collaboration
      • A new culture and structure is introduced where professional sensibility replaces a fixed hierarchy structure
      • Teams are tasked to deliver projects and regrouped as needed instead of complex systems that give financial rewards to rigid team setups
      • Ends with an internal growth crisis, where the organization can only grow more from partnerships with organizations that complement it
    6. Growth through extra-organizational answers
      • Growth continues through merger, outsourcing, networks and other answers that involve other companies
  • Changes are always definite and clear in larger organizations
    • The situation is “unfrozen” from its static format by reducing the need to fulfill certain requirements
    • There is a movement marked with some confusion and inefficiency as everyone adjusts to a new way of doing things
      • These changes have to come from an open system that combines internal feedback and external signals
    • The new standards are “frozen” as everyone agrees to the new changes
  • As an organization expands its influence, it will expand across cultural boundaries
    • Because of globalization, organizations become well-known extremely fast compared to anything in past history
    • The vision should be formed with this global effect in mind
    • Often, developed parts of the world will forget the many opportunities and risks that come from the developing world

There are many employee benefits that will improve an organization’s culture

  • To increase focus on results
    • Give cash rewards based on performance
    • Provide a company car or a car program with insurance, maintenance and repair
    • Give extra time off for reaching certain periods of time or certain goals
    • Celebrate high achievers with a very lavish ceremony
    • Provide nap rooms or lodging to allow working on heavy projects
    • Discounts or free productivity and management software that can also be used for personal purposes
  • To enable openness to change
    • Provide an adoption assistance program
    • Pay employees for personal philanthropic time
    • Provide educational reimbursement or professional development services
    • Create opportunities for workers to have a different role to learn about its position
    • Provide an on-site gym or give incentives for their weight loss
    • Provide programs for alcohol or tobacco recovery
  • To give a feeling of freedom and priority
    • Give unlimited vacation days or flexible hours
    • Mandatory holidays off or mandatory half-day Fridays
    • Allow pets into an office space
    • Give a few hours up to 20% of the employees’ time to explore their own projects
    • Allow them to be part of an exclusive organization even after they leave the company
  • To foster a feeling of safety and community
    • Provide surviving spouse support and extended parental leave
    • Provide an on-campus health center for minor medical problems or create a wellness program
    • Have a generous retirement plan package and healthcare plan
    • Allow the company travel expenses to be used for personal needs
    • Give free or discounted legal, financial and referral services
    • Give gifts when the employee reaches certain life landmarks like marriage, a new baby, etc
  • To make employees feel like their workplace is more fun to be at
    • Give massive discounts to the company’s product or free merchandise to employees
    • Free food, juice bars or unlimited snacks
    • Free services such as massages
    • Give employees fun distractions at the workplace like video games, pool tables, fields or courts
    • Sponsor events for the employees like concerts, parties or amusement parks
    • Partner with affiliates to share discounts across organizations

Many cultural risks will damage an organization on every level

  • An organization can become dysfunctional if it connects bonuses to a measurement not directly connected to success
    • People will find ways to “game” the system to their advantage and the organization’s loss
    • Over time, the focus can become distorted into a completely arbitrary set of rules that don’t produce results
  • One of the greatest risks of an organization are automatically connecting an increase in revenue to financial success
    • It completely overlooks profitability, inventory management and cash flow by looking at revenue alone
    • It also doesn’t talk about the marketability of the product or how likely money owed to the organization will be paid
  • Bringing together multiple unrelated groups always has risks, and there are ways to protect from the worst of it
    • Be bold in the negotiations and discussions, uncertainty will easily cripple morale and inspire fear
      • When negotiating don’t pay too much additional for the workers, 5% is fine but 20-30% loses the value
    • Avoid any merging of perceived equals
      • Though it sounds good, it implies that nobody has to adopt the group culture of the other
      • Decide who’s really in charge to decide on differences that can’t be reconciled
    • Make sure the cultures of the groups matches naturally
      • To simply combine based on products, technologies or numbers will lead to huge conflicts
    • If it’s an acquisition, don’t let the acquired group be the one ultimately in charge after all of the concessions and clarifications
    • On the other hand, don’t install your own group all over the new acquisition without any respect to their talent or work environment
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