Having described the generic characteristics of a learning culture and the implications in general for the learning leader, it remains to examine briefly whether learning-oriented leadership varies as a function of the different stages of organizational evolution.
1. Learning Leadership in Culture Creation
In a rapidly changing world, the learning leader/founder must not only have vision but also be able both to impose it and to evolve it further as external circumstances change. Just as the new members of an organization arrive with prior organizational and cultural experiences, a common set of assumptions can only be forged by clear and consistent messages as the group encounters and survives its own crises. The culture creation leader therefore needs persistence and patience, yet as a learner must be flexible and ready to change.
As groups and organizations develop, certain key emotional issues arise: those having to do with dependence on the leader, with peer relationships, and with how to work effectively. At each of these stages of group development, leadership is needed to help the group identify the issues and deal with them. During these stages, leaders often have to absorb and contain the anxiety that is unleashed when things do not work as they should (Hirschhorn, 1988; Schein, 1983, Frost, 2003). The leader may not have the answer, but he or she must provide temporary stability and emotional reassurance while the answer is being worked out. This anxiety-containing function is especially relevant during periods of learning, when old habits and ways must be given up before new ones are learned. And, if the world is becoming more changeable, such anxiety may be perpetual, requiring the learning leader to play a perpetual supportive role.
The difficult learning agenda for founder leaders is how to be simultaneously clear and strong in articulating their vision and yet open to change as that very vision becomes maladaptive in a turbulent environment.
2. Leadership in Organizational Midlife
Once the organization develops a substantial history of its own, its culture becomes more of a cause than an effect. The culture now influences the strategy, the structure, the procedures, and the ways in which the group members will relate to each other. Culture becomes a powerful influence on members’ perceiving, thinking, and feeling, and these predispositions, along with situational factors, will influence the members’ behavior. Because it serves an important anxiety-reducing function, culture will be clung to even if it becomes dysfunctional in relationship to environmental opportunities and constraints.
Midlife organizations show two basically different patterns, however. Some, under the influence of one or more generations of leaders, develop a highly integrated culture even though they have become large and diversified; others allow growth and diversification in cultural assumptions as well and, therefore, can be described as culturally diverse with respect to their business, functional, geographical, and even hierarchical subunits. How leaders manage culture at this stage of organizational evolution depends on which pattern they perceive and which pattern they decide is best for the future.
Leaders at this stage need, above all, the insight and skill to help the organization evolve into whatever will make it most effective in the future. In some instances, this may mean increasing cultural diversity, allowing some of the uniformity that may have been built up in the growth stage to erode; in other instances, it may mean pulling together a culturally diverse set of organizational units and attempting to impose new common assumptions on them. In either case, the leader needs to (1) be able to analyze the culture in sufficient detail to know which cultural assumptions can aid and which ones will hinder the fulfillment of the organizational mission, and (2) have the intervention skills to make desired changes happen.
Most of the prescriptive analyses of how to bring organizations through this period emphasize that the leader must have certain insights, clear vision, and the skills to articulate, communicate, and implement the vision, but they say nothing about how a given organization can find and install such a leader. In U.S. organizations in particular, the outside board members probably play a critical role in this process, but if the organization has had a strong founding culture, its board may be composed exclusively of people who share the founder ’s vision. Consequently, real changes in direction may not become possible until the organization gets into serious survival difficulties and begins to search for a person with different assumptions to lead it.
3. Leadership in Mature and Declining Organizations
In the mature organization, if it has developed a strong unifying culture, that culture now defines even what is thought of as “leadership,” what is heroic or sinful behavior, how authority and power are allocated and managed, and what the rules of intimacy are. Thus, what leadership has created now either blindly perpetuates itself or creates new definitions of leadership, which may not even include the kinds of entrepreneurial assumptions that started the organization in the first place. The first problem of the mature and possibly declining organization, then, is to find a process to empower a potential leader who may have enough insight and power to overcome some of the constraining cultural assumptions.
Leaders capable of such managed culture change can come from inside the organization, if they have acquired objectivity and insight into elements of the culture. However, the formally designated senior managers of a given organization may not be willing or able to provide such culture change leadership. If a leader is imposed from the outside, he or she must have the skill to diagnose accurately what the culture of the organization is, which elements are well adapted, which elements are problematic for future adaptation, and how to change that which needs changing.
Leadership conceived of in this way is, first of all, the capacity to surmount your own organizational culture, to be able to perceive and think about ways of doing things that are different from what the current assumptions imply. Learning leaders therefore must become somewhat marginal and must be somewhat embedded in the organization’s external environment to fulfill this role adequately. At the same time, learning leaders must be well connected to those parts of the organization that are themselves well connected to the environment—the sales organization, purchasing, marketing, public relations, and legal, finance, and R&D. Learning leaders must be able to listen to disconfirming information coming from these sources and to assess the implications for the future of the organization. Only when they truly understand what is happening and what will be required in the way of organizational change can they begin to take action in starting a culture learning process.
Much has been said of the need for vision in leaders, but too little has been said of their need to listen, to absorb, to search the environment for trends, to seek and accept help, and to build the organization’s capacity to learn (Schein, 2009a). Especially at the strategic level, the ability to see and acknowledge the full complexity of problems becomes critical. The ability to acknowledge complexity may also imply the willingness and emotional strength to admit uncertainty and to embrace experimentation and possible errors as the only way to learn (Michael, 1985). In our obsession with leadership vision, we may have made it difficult for the learning leader to admit that his or her vision is not clear and that the whole organization together will have to learn. And, as I have repeatedly argued, vision only helps when the organization has already been disconfirmed, and members feel anxious and in need of a solution. Much of what the learning leaders must do occurs before vision even becomes relevant.
4. Leadership and Culture in Mergers and Acquisitions
When the management of a company decides to merge with or acquire another company, it usually checks carefully the financial strength, market position, management strength, and various other concrete aspects pertaining to the “health” of the other company. Rarely checked, however, are those aspects that might be considered “cultural”: the philosophy or style of the company, its technological origins, its structure, and its ways of operating, all of which might provide clues as to its basic assumptions about its mission and its future. Yet, if culture determines and limits strategy, a cultural mismatch in an acquisition or merger is as great a risk as a financial, product, or market mismatch (Buono & Bowditch, 1989; COS, 1990; McManus & Hergert, 1988).
For example, at one point in its history, General Foods (GF) purchased Burger Chef, a successful chain of hamburger restaurants. Despite ten years of concerted effort, GF could not make the acquisition profitable. First of all, GF did not anticipate that many of the best Burger Chef managers would leave because they did not like the GF philosophy. Then, instead of hiring new managers with experience in the fast-food business, GF assigned some of its own managers to run the new business. This was its second mistake because these managers did not understand the technology of the fast-food business and hence were unable to use many of the marketing techniques that had proved effective in the parent company. Third, GF imposed many of the control systems and procedures that had historically proved useful for it, driving Burger Chef’s operating costs up too high. The GF managers could never completely understand franchise operations and hence could not get a “feel” for what it would take to run that kind of business profitably. Eventually GF sold Burger Chef, having lost many millions of dollars over the course of a decade.
Another example highlights the clash of two sets of assumptions about authority. A first-generation company, run by a founder who injected strong beliefs that success resulted from stimulating initiative and egalitarianism, was bought by another first-generation company, which was run by a strong autocratic entrepreneur who had trained his employees to be highly disciplined and formal. The purchasing company wanted and needed the new talent it acquired, but within one year of the purchase, most of the best managers from the acquired company had left because they could not adapt to the formal autocratic style of the parent company. The autocratic entrepreneur could not understand why this had happened and had no sensitivity to the cultural differences between the two companies. What is striking in both of these cases is the acquiring company’s lack of insight into its own unconscious assumptions about how a business should be run.
In a third example, we see a case of cultural misdiagnosis. A U.S. company realized that it was about to be acquired by a larger British firm. The company conducted an internal audit of its own culture and concluded that being taken over by the British company would be highly unpalatable. It therefore instituted a set of procedures that made them unattractive (such as poison pills) and waited for a situation that looked more promising. A French company came onto the scene as a potential buyer and was perceived to be a much better cultural match, so the company allowed itself to be bought. Six months later, the French parent sent over a management team that decimated the U.S. company and imposed all kinds of processes that were much less compatible than anything the U.S. company had imagined. But it was too late.
After mergers, acquisitions, or diversifications have run into trouble, managers frequently say that cultural incompatibilities were at the root of it, but somehow these factors rarely get taken into account during the initial decision-making process. What then is the role of leadership in these situations? Four critical tasks can be identified:
- Leaders must understand their own culture well enough to be able to detect where there are potential incompatibilities with the culture of the other organization.
- Leaders must be able to decipher the other culture to engage in the kinds of activities that will reveal to them and to the other organization what some of its assumptions are.
- Leaders must be able to articulate the potential synergies or incompatibilities in such a way that others involved in the decision process can understand and deal with the cultural realities.
- If the leader is not the CEO, she or he must be able to convince the CEO or the executive team to take the cultural issues seriously.
Members of planning groups or acquisition teams often develop the cross-cultural insights necessary to make good decisions about mergers and acquisitions but lack the skills to convince their own senior managers to take the culture issues seriously. Or, alternatively, they get caught up in political processes that prevent the cultural realities from being attended to until after the key decisions have been made. In any case, cultural diagnosis based on marginality and the ability to surmount one ’s own culture again surfaces as the critical characteristic of learning leaders.
5. Leadership and Culture in Partnerships, Joint Ventures, and Strategic Alliances
Joint ventures and strategic alliances require cultural analysis even more than mergers and acquisitions because in today’s rapidly globalizing world, cross-national boundaries are increasingly involved. Deciphering differences between two companies in the same national culture is not as difficult as deciphering both national and company differences when engaging in a partnership or joint venture across national boundaries (Salk, 1997). One of the special difficulties is to determine whether the differences that are perceived are attributable to national or organizational cultures, yet it is important to make this determination because the likelihood of changing national or other macrocultural characteristics is very low.
The role of learning leadership in these situations is much the same as in mergers and acquisitions, except that leaders must even surmount their national identities. For example, Essochem Europe, the European subsidiary of Exxon, could never find local managers to put on their board because they were all “too emotional.” They never came to terms with their own stereotype of managers as intrinsically unemotional sorts of people and never realized or accepted that this was based on assumptions of the U.S culture. Many organizations make international assignments a requirement for a developing general manager, with the explicit notion that such experiences are essential if potential leaders with broader outlooks are to surface. In other words, the learning leader must become marginal not only with respect to the organizational culture but even with respect to national and ethnic culture.
Source: Schein Edgar H. (2010), Organizational Culture and Leadership, Jossey-Bass; 4th edition
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