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Interviews with two of the world's most respected executives show how they have combined charismatic leadership with architectural skill to build high-energy corporations.
Change has become a mantra for corporate success. The word leaps out of the pages of the business press: We have to do it and do it fast to get the rewards we want.
Balanced against this urgency is a weighty body of literature affirming that as individuals people are profoundly resistant to change. Psychologically and socially, we are more comfortable with the status quo. Change is anxiety-provoking. We avoid it, and avoidance behavior can become deeply ingrained. What's more, "repetition compulsion" - repeating past behavior despite the suffering attached to it - is a well-observed human tendency. We are often more comfortable with the dysfunctional devils we know than with the more sanguine spirits we don't, and we deploy complicated patterns of resistance to avoid rocking the emotional and psychological boat.
Given all this, how does the process of change ever get under way? How is our resistance to change weakened? After all, people can and do change, in both major and relatively insignificant ways.
As a collection of individuals, people in an organization have to be mentally prepared for the fact that change is inevitable. This is self-evident, but easier said than done. Managing employee resistance - and there will be a lot of resistance - is the first challenge for those leading the change process. If they fail at this, the whole exercise will fail.
Awareness of the need for change is at its sharpest when the organization is under stress from both internal and external pressures. Outside pressures may come from competitors, declining profits, decreasing market share, scarcity of resources, deregulation, technological development, and problems with suppliers and customers. If these are coupled with internal pressures - ineffective leadership, poor morale, high turnover, labor problems, highly politicized behavior - the growing malaise will reach an unendurable point. Daily frustrations increase; dissatisfaction spreads from person to person, gradually awakening a universal recognition that something needs to be done.
It is at this point, however, that the danger of stalling in the change process is most acute; employees' defensive routines and resistance strengthen in proportion to the threats they face. What the organization needs now is the intervention of an effective change agent - and this should ideally be the CEO, somebody with established power and authority who is in a position to drive the process through the organization.
THE ORGANIZATIONAL ARCHITECT
What sort of person does the leader need to be to act as an effective agent of change? The answer appears to be someone who can combine the characteristics of a charismatic with an architectural role - a visionary who can build a solid construction on his or her vision.
Charismatic leaders are by definition agents of change. A wealth of literature exists to describe the special characteristics that earn them the label of charismatic and equip them with this ability. To summarize: They display dissatisfaction with the status quo; they are restless and energetic; they are action oriented; their discontent pushes them into searching for new opportunities; they are entrepreneurial, impatient, and gifted at articulating a strategic vision, making the big picture seem within reach of their followers. They are also very gifted at building alliances and making people feel special.
Leaders like this stand out like beacons in the business world (as they do in the worlds of politics, art, and sport) as much for their rarity as for their brilliance. Because of this, they attract a great deal of attention. Of course, we cannot all become charismatic leaders. If it is not in our disposition, no amount of emulation will transform us. But we can draw on our observation of their skills and actions and learn something about how to identify challenges, formulate a strategic vision, align others behind it, and otherwise improve our leadership abilities. It is in the interests of organizational change - which requires exceptional performance and commitment from everybody involved in the process - to do so.
In order to move the change process forward, such leaders know that every individual should be empowered to consider him- or herself as a crucial player. If employees are inspired, empowered, and free to act, they will stretch themselves to make exceptional efforts, demonstrate a high degree of commitment, and be willing to take risks. Performing in this way will simultaneously drive the change process and reinforce the new basis of the organization. The blueprint for the change process is drawn from the leader's ideals and a shared vision. The bricks and mortar are communications, trust, and reward.
Let's look more closely at two people who are rarely out of the public eye and whose reputations have been built on their ability to sustain change and innovation in their organizations - Richard Branson of Virgin and Percy Barnevik, until recently, CEO of ABB, now head of Investor, a holding company that has ABB in its portfolio. (Barnevik has remained in the Chairman's position at ABB.) Nearly every press report and personal commentary attaches the adjective "charismatic" to their names and both are widely acknowledged as brilliant organizational architects.
Following are background notes on both individuals along with exerpts from interviews with them.
RICHARD BRANSON AND VIRGIN
In the summer of 1967, the headmaster of Stowe, an exclusive private boys' school, confronted a student who had decided to drop out of the institution to pursue nonacademic interests. "Richard," the headmaster said, "you will end up either in prison or a millionaire!"
Both prophecies proved correct. Early in his career, Richard Branson spent one night in jail after being caught in a tax evasion scheme, an incident that embarrassed him greatly - and yet now, according to Forbes, he is one of the richest people in the world. His company, Virgin, has become a household name.
Not only are the Virgin Group's products and services trendy and highly visible, Branson is also a genius at promoting his company through his daring personal exploits. He is a master of the media. Rarely a week goes by without finding mention in the press of Virgin or its flamboyant chairman. Branson is regularly cited as a role model by young people who wish to seek successful business careers without compromising their personal ethics. He is a unique combination of energy, originality, shrewdness, and last but not least, luck. Against many odds, through sheer perseverance, he has been extremely successful in his business ventures. And at the same time, he seems to be a truly happy man.
Branson's personal philosophy is, "Life is short, one has to make the most of it. Do things that you like. If your work and your hobby are the same, you will work long hours because you are motivated." Much of this philosophy is reflected in the way he sees his role as an organizational architect. Although he never had a traditional management education, his philosophy of management has proved highly effective: His sprawling business empire is an impressive achievement.
He is still motivated by a good challenge. Having built his empire, Branson continues to lead the Virgin Group in a daring drive for expansion, taking on one established industry after the other. He loves to shake up what he calls "fat and complacent business sectors."
The Virgin Group's core businesses include retail operations (a chain of megastores in Australia, Britain and Ireland, continental Europe, Hong Kong, Japan, North America, and South Korea), hotels, …