Encouraging challenges to the status quo, leaders of organizations in the new century will need to share knowledge with--and empower-ALL their employees.
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...
Bibliography: For a good overview on strategic vision, refer to John Kotter 's 1990 article, "What Leaders Really Do," Harvard Business Review, 68(3), 103-111, and A. E. Person, "Six Basics for General Managers," Harvard Business Review, 67(4), 94-101. Recent works on the need for strategic perspective in the context of global competition include M. A. Hitt, B.W. Keats, and S. M. DeMarie, "Navigating in the new Competitive Landscape: Building Strategic Flexibility and Competitive Advantage in the 21st Century," Academy of Management Executive, 12(4) 22-42; and Gary Hamel and C.K. Prahalad 's best-selling book, Competing for the Future (Boston: Harvard Business School Press, 1994). Seminal works on the concept of the learning organization include Peter Senge 's 1990 article, "The Leader 's New Work: Building Learning Organizations," Sloan Management Review, 31, 7-23; and his book, The Fifth Discipline: The Art and Practiceof the Learning Organization (New York: Doubleday Currency, 1990). For an insightful perspective on learning organizations on the factory floor, refer to D. Leonard-Barton, "The Factory as a Learning Laboratory," Sloan Management Review, 1992, 34, 23-38. For a discussion of benchmarking refer to Alex Miller 's 1998 book Strategic Management (New York: Irwin McGraw-Hill, pp. 142-143). Our examples are drawn from various sources, including O. Port and G. Smith, "Beg, Borrow-and Benchmark," Business Week, November 30, 1992, 74-75; J. Main, "How to Steal the Best Ideas Around." Fortune, October 19, 1992, 102-106; speech by Frank P. Doyle, (Executive Vice President, Corporate Executive office, General Electric Company) presented at the 63rd Edison Electric Institute Convention, Orlando, Florida, June 5, 1995; and W. C. Taylor, "What Happens
After What Comes Next," Fast Company, December-January 1997, 84-85. For insightful perspectives on escalation refer to Joel Brockner 's 1992 article, "The Escalation of Commitment to a Failing Course of Action," Academy of Management Review, 17(1), 39-61; and Barry Staw 's 1976 article, "Knee-deep in the Big Muddy: A Study of Escalating Commitment to a Chosen Course of Action." Organizational Behaviorand Human Decision Processes, 16, 27--44. The discussion of systemic, behavioral and political barriers draws on P. Lorange and D. Murphy 's 1984 article, "Considerations in Implementing Strategic Control." TheJournal of Business Strategy, 5, 27-35. In a similar vein, Noel M. Tichy has addressed three types of resistance to change in the context of General Electric: technical resistance, political resistance, and cultural resistance (refer to: N. M. Tichy, "Revolutionize Your Company." Fortune, December 13, 1993, 114-118). Examples from business practice of how these barriers can be overcome can be found in B. O 'Reilly, "The Secrets of America 's Most Admired Corporations: New Ideas and New Products," Fortune, March 3,1997, 60--64; D. Sheff, "Levis Changes Everything," Fast Company, June-July, 1996, 65-74; W. Isaacson, "In Search of the Real Bill Gates," Time, January 13,1997, 44 57; E. B. Baatz, "Motorola 's Secret Weapon," Electronic Business, April 1993, 51-53; T. J. Tetenbaum, "Shifting Paradigms: From Newton to Chaos," Organizational Dynamics, 1998,26(4),21-32; and R. Mitchell, "Masters of Innovation," Business Week, April 10,1989, 58--63. The quotations attributed to Percy Barnevik, Kenneth Lay, Chris Turner, and other individuals in this article draw on Gregory G. Dess and Joseph C. Picken, Beyond Productivity (New York: AMACOM, 1999).
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