1.3 The Leader’s Pursuit of Multiple Objectives
In the fast-paced world that we live in with all its distractions, some might argue that it isn’t possible to pursue multiple objectives. Essentially, this is the logic behind pursuing shareholder value above all else. Indeed, there is some evidence to support this notion as some leaders pursue the stakeholder approach in order to avoid accountability, preserve self-interested behavior, or both. For example, a fascinating recent study found that the firms that were rated highest in corporate social responsibility were also the ones most likely to engage in earnings managementAn organization’s use of crafty or deceptive accounting practices to deceive those outside of the organization.—essentially using accounting tricks to deceive those outside of the firm.Prior, Surroca, & Prior (2008).
However, even “Neutron Jack” (Welch) understood that a myopic focus on shareholder value would threaten the very survival of General Electric. As such, even while he was laying off thousands of workers and shedding dozens of business units, he was working behind the scenes to build GE’s organizational change capacity, which emerged as his official focus in his later years as CEO. Which leads to a very important insight—the public objective or objectives announced to the rest of the organization do not have to be the same as the private objective or objectives pursued by the leaders of the organization.Welch and Welch (2005).
Louis Gerstner, the former CEO and Chairman of IBM who engineered a historic turnaround at that iconic firm, writes that leaders must be focused and they must be superb at executing a strategy.Gerstner (2002). For Gerstner, focus generated short-term results while execution was about building organizational capacity for change—both efforts were required to return IBM to its industry-leading role.
In summary, the leader’s mandate of the 21st century is to “avoid the tyranny of ‘or’ and pursue the genius of the ‘and.’”Collins and Porras (1994). Those who are entrusted with authority within an organization must pursue results and build organizational capacity for change (OCC). This book details just what organizational capacity for change is, and provides guidance as to how that capacity can be developed. I have been studying this capacity for over 10 years now and have developed a reliable and valid inventory for measuring OCC. With that inventory, I have amassed a considerable amount of data that has been helpful to other executive leaders as they seek to develop their firm’s OCC. This book helps to explain exactly what OCC is and to provide insights as to how executive leaders can pursue it.