Leadership in the 21st Century
GREGORY G. DESS JOSEPH C. PICKEN
O nizational leaders face a whole new set of management challenges. The globalization of markets and the rapid diffusion of information and communications technologies have transformed the economies of the developed countries of the world. Citing a recent OECD study, the Economist points out that more than half of the total GDP in the rich economies is now knowledgebased, including industries such as telecommunications, computers, software, pharmaceuticals, education and television. High-tech industries have nearly doubled their share of manufacturing output over the past two decades, to around 25 percent, and knowledge-intensive services are growing even faster. Knowledge worke r s . . , from brain surgeons to journali s t s . . . [now] account for eight out of ten new jobs. In industry after industry, it's no longer just a game of market p o w e r and financial muscle, economies of scale, and breadth of scope. Over the past century, the locus of 18
O R G A N I Z A T I O N A L DYNAMICS
n the threshold of the 21st century, orga-
wealth creation has shifted from capitalintensive industries like steel and automobiles to information-intensive industries like information services, financial services, and logistics. As we stand on the threshold of the knowledge age, the most powerful sources of growth, employment, and wealth creation are found in innovation-driven industrie~ computer software, biotechnology, and the like-where innovation, flexibility, responsiveness, and the creative redefinition of markets and opportunities are the new sources of competitive advantage. As the strategic emphasis shifts from the efficient management of mass markets and tangible assets to innovation and the effective utilization of knowledge and human capital resources, organizations and their leaders must also change. More capable leadership at the top--smarter managers --is not necessarily the answer. Rather, to compete in the information age, firms must increasingly rely on the knowledge, skills, experience, and judgment of all their people. The entire organization, collectively, must create and assimilate new knowledge, encourage innovation, and learn to compete in new ways in an everchanging competitive environment.
The demands of this changing environment present a complex set of challenges-and require a shift in focus and emphasis--for organizational leaders. The traditional tools and techniques of management are designed, in large measure, to ensure organizational stability, operational efficiency, and predictable performance. Formal planning processes, centralized decision making, hierarchical organization structures, standardized procedures, and numbers-oriented control systems are still the rule in most organizations. As important as these structures and processes are to organizational efficiency, they tend to limit flexibility and create impediments to innovation, creativity, and change. To meet the challenge, organizational leaders must "loosen up" the organization--stimulating innovation, creativity and responsiveness, and learn to manage continuous adaptation to change--without losing strategic focus or spinning out of control. To position their organizations to compete and win in the competitive environment of the 21st century, organizational leaders must place less reliance on traditional structures and controls, and focus their efforts on five key priorities: • Using strategic vision to motivate and inspire • Empowering employees at all levels • Accumulating and sharing internal knowledge • Gathering and integrating external information • Challenging the status quo and enabling creativity.
a single individual, or is shared only with a select few at the top, its value is...