Chapter OneTHE SHIFTING LEADERSHIP LANDSCAPE
Today's most pressing challenges span boundaries, and so too must leadership. A recent Center for Creative Leadership (CCL) survey paints a compelling picture of the many boundaries leaders must navigate in today's environment. We see a shifting leadership landscape that is rocky and jagged, filled with many turns and sharp curves, and constantly in flux. It is a landscape that is cause for concern and action. Among the 128 senior-level executives who participated in the CCL survey, 86 percent told us that it is "extremely important" that they collaborate effectively across boundaries in their current leadership roles. However, just 7 percent of those executives believed they were "very effective" at doing so. That's a 79 percent "critical gap," the largest anyone can ever recall in our decades of collecting senior executive participant data at the Center for Creative Leadership (see Figure 1.1). These leaders are the CEOs, presidents, senior vice presidents, and directors of the world's best companies. Their candor serves as a call to action for us all.
In the CCL research, we also asked the 128 senior executives to describe the types of boundaries they needed to work across. The boundaries they described were multifaceted and distinct, but there was considerable overlap. They included spanning vertical boundaries between hierarchical levels of the organization, horizontal boundaries between functions, stakeholder boundaries with customers and suppliers, demographic boundaries in working with people from diverse groups, and geographic boundaries of distance and region (see Figure 1.2).
Our research at CCL, along with the work of others in the field, allows us to state confidently that these five types of boundaries are universal, transcending cultures, contexts, and time. They've been an integral aspect of organizational life in the past, they're with us today, and they'll be here tomorrow. But as the senior executives made clear, today's shifting leadership landscape requires thinking and acting beyond limiting borders and embracing new frontiers where wide-ranging expertise, diverse experiences, and varied identities collide. When we asked the executives why it was important for them to work across the five types of boundaries, they spoke about human relationships. The boundaries that keep leaders up at night are not those which can be solved by simply restructuring the organizational chart or reconfiguring distribution channels. The boundaries that are the most challenging to leaders today are more psychological in nature. They involve relationships and thus are associated with strong emotions such as loyalty, pride, respect, and trust.
Here's a snapshot of various executives' responses in their own words:
"Positive relationships are necessary for the integration of tasks."
"We must find a way to create paths of communication across silos."
"In order to implement any large-scale initiative, I need support and commitment from all levels in the company."
"Collaboration and integrating diverse viewpoints are the keys to improving performance."
"Building coalitions with stakeholders is essential to get the work done."
"You must work across boundaries to see the full picture."
"You need to bring people together and create buy-in. Collaboration makes the difference between average and great results."
"Trying to find synergy and areas of mutual interest is a constant challenge."
"As a leader, you need to cross over boundaries all day, every day."
The Five Boundaries of Leadership
Below, we describe the five boundary dimensions associated with boundary spanning leadership. Although we conceptually separate the five dimensions for ease of discussion, they are closely linked. For each boundary type, we provide a definition and examples, an explanation of the management origins of the boundary, and a discussion of how boundary spanning leaders are going beyond current borders to lead across new frontiers at the nexus between groups.
"We have a boundary that runs up and down the organizational chart," laments the senior vice president of a retail company. "We have work to do to create better interaction between senior executives and middle to entry management." Today's shifting leadership landscape requires the establishment of direction, alignment, and commitment between groups from different levels and ranks in the organizational hierarchy. Vertical boundaries are the floors and ceilings that separate groups by title, rank, power, and privilege. Common terms within your organization that convey vertical boundaries may include span of control, hierarchy chart, seniority, top-down/bottom-up, superior/subordinate, exempt/nonexempt, and cascade through the ranks. The separation of groups into layers of top, middle, and entry level, each with corresponding levels of authority, is a ubiquitous feature in nearly all organizations. "I've grown up in an environment where perfection and information were subtle power tools—the old adage of information is power," explains a commander working in a division of the U.S. military. "There is a reluctance to change to an inclusive environment as you move up the hierarchy."
Span of control—the dividing of lower-level subordinates under a higher- level supervisor—is the traditional approach for managing the boundaries between levels. Strategy flows down, with production flowing up. "Within the big banks, the hierarchies are still very rigid and bureaucratic," explained the general manager of a state-owned bank in China. "Senior managers will go to great effort to maintain their boundaries." Yes, hierarchy endures.
Yet without question, today's shifting leadership landscape is transforming vertical boundaries, enabling new levels of interaction up and down the organizational chart. For example, the drive for innovation requires engaging the heads, hearts, and minds of people across levels. Expanding globally necessitates ongoing dialogue between senior executives at headquarters and country managers in the field. Rapid change in information and communication technologies has sped up the pace, increased the reach, reduced the cost, and dramatically leveled the playing field in organizations today. This much is clear: The shifting leadership landscape is redefining the "control" long associated with span of control.
Leading beyond borders, boundary spanning leadership seeks to create shared direction, alignment, and commitment across the lines of power and authority. In the CCL research, we found that executives are calling for a clear shift from hierarchy to partnership and from a culture of leadership at the top to a culture of leadership as shared responsibility. Less concerned with traditional issues of rank, power, and status, boundary spanners hunt for ideas and skills wherever they may be located in the organization. The practice of leadership is no longer tethered to the belief that authority is unidirectional, flowing from top to bottom. Rather, the authority to think and act is multidirectional in that talented people must be empowered to collaborate and make an impact at all levels. The result is that boundary spanning leadership leads to faster and better decisions being made by more engaged and involved people up and down the organizational chart.
"My organization consists of eight functional units and seven laboratories in which more and more of our problems require interdisciplinary solutions," explains the top executive of a government research and development (R&D) agency. "Unfortunately, each lab has its own management culture, and this causes real challenges in partnering. I have a mandate to attack this challenge." Today's shifting leadership landscape requires the facilitation of collaboration and common purpose across horizontal boundaries that mark functions, units, and disciplines. Horizontal boundaries also are found when two organizations merge or one organization acquires another. They are the walls that separate groups by areas of experience and expertise. Terms within your organization that commonly convey horizontal boundaries may include division of labor, task differentiation, silos, stovepipes, turf battles, navigating the matrix, front office/back office, revenue center/cost center, legacy organizations, functions, units, and peers. As these words convey, the negative costs of horizontal boundaries are manifest when one function is favored over another, when the work of one unit or product line threatens the viability of another, or when departments work at cross-purposes. Intergroup conflict, rather than collaboration, rules the day. "Functional groups within my division are siloed and just want to get things done within their own department," explains an executive in marketing and sales in a retail company. "They need to think and care about the whole."
Managing the boundaries between functional groups originates in the need for the division of labor. Today's organizations contain many functional groups, from marketing, to operations, to sales, and beyond. As organizations continue to grow, expand, and become more complex and global, the challenges associated with integrating horizontal boundaries are compounded. "With rapid growth over the past three years, clear roles and responsibilities have not been outlined ... and therefore there is considerable jockeying for control," explains the chief scientific officer of an educational institution.
Advocates of matrix structures argue that multiple reporting relationships facilitate integration by encouraging collaboration and information sharing across boundaries. Yet critics argue that these benefits are outweighed by the confusion created when employees have to navigate conflicting loyalties. Regardless of one's point of view, matrix structures undeniably add new challenges in leading across horizontal boundaries. "We need to deliver results with matrixed resources," explain the CEO of an American pharmaceutical company. "Setting priorities and aligning resources is complex when leaders find themselves operating without direct lines of authority. It requires strong influencing and collaboration skills."
A related challenge is the need to bring groups together after an organizational merger or acquisition. Explains a manager at an insurance company in China, "Our biggest challenge is how to create a coherent new organizational culture after the merger. We need to find a way to integrate our distinct values and habits." A remarkable aspect of mergers is the way competitors are transformed into collaborators overnight. "We merged with another retail organization," explains a pharmaceutical executive. "Whereas in the past we competed ... now we are working together to develop and deliver new products to the market." Consider how the iconic American company Anheuser-Busch was recently bought by InBev, a conglomerate in Belgium, or how the quintessential British luxury automobile Jaguar is now owned by India's Tata Motors. In mergers such as these, any number of challenges may arise regarding the integration of technical and operational systems. Yet when the production line employees who make Budweiser beer now work for a company based in Leuven, Belgium, and when Jaguar executives now travel to Mumbai to meet with their parent company, the greatest challenges involve aspects of identity and managing relationships. Indeed, the need for the division of labor is fast being replaced by an even more pressing need: the integration of labor.
Boundary spanning leadership strives for direction, alignment, and commitment across the frontier of varied expertise and experience. In the executive sample, we found that these leaders are pushing new ways of thinking and acting in the transition from functional leadership to cross-functional leadership and from walled-off units to open networks. Boundary spanners work best at the margin where functions, units, and disciplines intersect. They see limited value in bringing one-dimensional expertise to the table to generate new organizational solutions. Instead, they seek to harness multidimensional expertise at the juncture between groups. Differences in knowledge and experience are seen as wellsprings for fresh ideas to emerge, not as potential sources of conflict to avoid. The result is that boundary spanning leadership is creating the necessary linkages to harness cross-organizational collaboration and move ideas, information, people, and resources where they are needed most.
"We struggle in creating effective customer-vendor relationships," explains an American CEO. "There is a great need for creating common goals, but our objectives are often conflicting." The shifting leadership landscape requires the creation of fundamentally different approaches to collaboration at the interchange between an organization and its external environment. Stakeholder boundaries are the doors and windows of your organization. Are they open or closed to your customers, suppliers, and broader communities? Organizations increasingly are tied up with a dizzying array of stakeholder groups, including but not limited to shareholders, boards of directors, partners, alliances, suppliers, vendors, customers, advocacy groups, governments, nongovernmental agencies, and local and global communities. Recognizable terms within your organization that illustrate stakeholder boundaries may include constituents, networks, walled-off, iron curtain, closed doors, corporate-centric, not our business, insider/outsider, cross-sector, and corporate social responsibility. Stakeholder boundaries have the potential to create divides when organizations seek to maximize their individual interests through the exclusion or at the expense of the interests of their external partners.
Value chains—the processes that determine how organizations receive raw materials as inputs, add internal value to those inputs, and then sell finished products or services to customers—are a primary mechanism for managing the boundary between an organization and its stakeholders. The traditional view of the value chain is that each organization defines its own value chain independently, with little thought given to interdependence with partners along the chain. To clarify mission and strategy, it is important that organizations understand how they create unique value. Yet when carried to an extreme, an "every-organization-for-itself" mentality has the potential to lead to zero-sum gains, inefficiently used resources, wasteful conflict, and lost opportunities for creative and innovative solutions.
The shifting leadership landscape requires organizations to rethink how "value" is created in today's collaborative value chains. As boundaries blur across an ever-widening network of stakeholders, it becomes increasingly difficult to locate the edges between organizations, the employees within them, and the broader communities they serve. For example, consider how at Tata Motors in India, the most inexpensive car in the world—the Nano—has been unveiled. Among the Nano's many innovations, perhaps the most remarkable is the car's modular design. The Nano is sold in kits that are distributed, assembled, and serviced by local entrepreneurs and rural garages throughout the country. By knitting together a vast network of human capital inside and outside the company, Tata Motors is able to put the keys of a new car within the reach of millions of rising Indian consumers. With a $2,500 price tag, the Nano is half the price of its nearest rival, roughly equivalent to the cost of having an optional DVD player installed in a Western luxury car. These competitive realities will only intensify in the future. The convergence of groups inside and outside formal organizational boundaries ignites tremendous new growth opportunities. It also brings new risks and challenges. The bottom line is this: In good times and bad, we're all in it together now.
Boundary spanning leadership seeks to create direction, alignment, and commitment between diverse stakeholder interests. To tap new sources of value, leaders must learn to embrace contemporary models of collaboration that include cross-sector partnerships, customer-centric business practices, open source innovation, and corporate social responsibility (CSR) practices. Boundary spanners thrive by operating at the outer edges of their organizations, seeking new ideas and innovative opportunities. Not constrained by traditional myopic thinking, they seek to maximize collaborative value across the entire value chain. They realize that organizations today must go beyond unilateral interests that are characterized by an "each to his or her own" mindset. Instead, boundary spanning leaders are expanding new frontiers by engaging multilateral interests in ways that are increasingly systemic and sustainable. The result is that boundary spanning leadership generates a confluence of stakeholder interests in which organizations partner with customers, suppliers, vendors, shareholders, and communities to produce new sources of value jointly.
Demographic boundaries are found in the space between diverse groups, including the entire range of human diversity from gender and race to education and ideology. If vertical boundaries are the floors and ceilings, horizontal boundaries are the walls, and stakeholder boundaries are the doors and windows, then demographic boundaries are represented by the diverse groups that work within the workplace. They are the people inside the building. Today's shifting leadership landscape requires the leveraging of different knowledge bases and diverse backgrounds as a potent force for value-creating innovation.
However, CCL research as well as extensive management research on this topic demonstrates that demographic diversity is a double-edged sword. Under certain conditions, diverse teams and organizations are capable of realizing distinct advantages in creativity and innovation processes. Yet when these conditions aren't met, diversity can lead to a net neutral or negative effect. An executive in pharmaceuticals captures these realities: "We are incorporating more and more diversity into our organization from what used to be a very monolithic culture. It brings enormous advantages but also management challenges." Terms that highlight the presence of demographic boundaries within an organization may include heterogeneity, multicultural, mosaic, glass ceilings, generation gaps, intolerance, diversity divides, ideological battles, personality differences, and culture clashes.