Is it something different or simply another term to displace the old jargon? By Mark James
We have heard it all before: “information technology is transforming the way we do business”, “the world is changing at an increasingly fast pace”, “we live in a global marketplace”. But what does it all mean for how we manage our organisations?
D. Quinn Mills: four pillars of e-leadership
1. The business array – a new form of strategic analysis
2. The organisational lattice – a formal, but flexible business network
3. The global mindset – the cornerstone of organisational culture
4. Strategic speed – rapid planning to obtain competitive advantage
Professor D. Quinn Mills of Harvard University practices what he preaches: he
publishes his books so they can be read online for free, downloaded electronically and even bought over the counter at the bookshop.
D. Quinn Mills, professor of business administration at Harvard University, believes he has the answer. In his book, E-leadership: Guiding Business to Success in the New Economy, he uses the term “e-leadership” to describe a new and radical management style that is flexible enough to adapt to the challenges presented by modern business conditions.
Management sets objectives and strategies using an externally imposed bureaucratic structure, while leadership provides a vision to motivate those who follow. But management experience does not necessarily bestow leadership ability. It is the product of temperament, knowledge and experience.
Lyn Mason-Norman, chairwoman of Innovation at Work, specialists in e-business issues, says: “Excellent managers are not always great leaders, and great leaders are not necessarily the most structured people in their organisation, but they can build a balanced team and continue to inspire them.” She believes that leadership is a learned skill that takes courage, a spirit of discovery and strong personal and business ethics.
What is e-leadership?
Since the popular acceptance of the term e-mail, it sometimes seems that putting the letter “e” in front of anything to do with information technology is all that is required for claiming relevance in the wired world. There is e-commerce to describe electronic business, and we have e-learning for on line education. So what is e-leadership?
Sean Linkson, joint managing director of A.T. Kearney Executive Search, describes an e-leader as a different type of leader; someone with substantial influence over a Web-based business, someone who can work well with peers and marshal resources effectively. He says it is a matter of looking deeply at a business and its strategy and analysing the part that technology will play in the future, in terms of investors, customers and business partners.
Greg Trainer, managing director of the e-business consultancy Cambridge Technology Partners, says: “E-leaders are people who are motivated to succeed. They are ambitious and achievement oriented, they seek interesting, challenging and financially rewarding work.” He sees the difference as being between how such people apply their leadership abilities and experiences. E-business is not based on a hierarchy, it is usually built around a champion given responsibility for e-business.
E-leadership is also dependent on how information is transferred and where knowledge and skills are applied. Ray Moon, an IT and multimedia specialist with BBL Funds Management, says e-business infrastructure must be heavily IT based, which requires managers with a better understanding of technology.
As well as technical skills, flexibility and adaptability, Mason-Norman considers that e-leadership requires highly developed interpersonal skills to align divergent teams in different locations and with different cultures. “The paradigm changes so rapidly that the vision has to be constantly changed.”
E-leadership is about striking a balance: combining decisiveness with delegation; encouraging innovation without dislocating business units; combining technical skills with people skills; and promoting participation and empowerment, while maintaining sufficient hierarchical structures to maintain control. For example, when workers are surfing the internet, are they seeking new business opportunities or engaging in recreation, and how do you tell the difference? Linkson says that as well as performance measures, it is about putting in place protocols to control people, then relying on good faith.
Mills describes the array as “the marketplace neighborhood of a firm”. Not based on conventional legal structures, supply chains or industry groupings, it is a framework of formal and informal relationships and alliances that improve business performance. Similar and related businesses work in parallel to pursue a common purpose, with customer satisfaction as the only constant.
He believes this strategy is especially important when operating in the virtual world of the internet. With so many computer terminals and so many Web pages, the problem for many potential customers is that there is simply too much information. By creating an array, organisations with complementary goals can work in quasi-competition to get themselves noticed in the market and create value.
This type of electronically connected business arrangement is increasingly common. The online retailer Wishlist has recently created a “co-branded online store” with the conventional retailer Sanity Music. Wishlist chief executive Huy Truong says: “This alliance combines the strengths of both businesses: Sanity’s music expertise and purchasing power and Wishlist’s e-commerce expertise.”
However, there is little point in developing new products if they are not compatible with supporting systems. When working for Sausage Software, Moon saw first-hand how the intransigence of Australian and international banks prevented the establishment of a potentially profitable business enterprise. He says: “Banks are stopping e-commerce proceeding by not providing a standard for the trust model.” The connectivity of business means that every player in a business network has to share the vision.
Today, even multinational corporations are being replaced by integrated business networks that are too large to be managed by a single chief executive or board of management. Larry Cromwell, director of Scott-Cromwell, a consultancy firm specialising in global enterprises, says: “The fluid movement of business across sectors is the most profound but least recognised effect of globalisation. It means that it is possible to apply decisions from one sector to another.” In this context, knowledge sharing and co-operation become crucial.
Mills of Harvard calls this new concept in organisational design the “lattice”. A combination of outsourcing and matrix management, it offers more certainty and control than the conventional network. “Firms link themselves in a flexible structure to pursue a business opportunity, while spreading the risk amongst themselves,” he says.
All that a lattice requires is a hub to combine its disparate resources and take responsibility for business outcomes. Linkson says: “Technology has freed out lines of management, creating horizontal organisations.” This absence of hierarchical levels means that chief executives can exercise more direct control in a lattice than is possible in a conventional structure.
The question is whether the Mills lattice of “strong informal connections” is an oxymoron. Strategic alliances, joint ventures and licensing agreements already exist and, according to Mason-Norman, a flattened hierarchy can mean that “the knowledge base” is walking out the door and being outsourced back to the company at a higher rate of pay.
Leanne Fry, group executive responsible for communications with Lend Lease Corporation, says: “We have always had a flat hierarchy; we could not have expanded globally with a rigid one.” Responsibilities are now spread out across the organisation into a distributed management system that is “seeded” at specific business levels and knitted back in to the organisation.
Lend Lease has complemented this structure with a “global knowledge network”. Fry says: “We have a number of online knowledge systems to collate and collect any kind of information that constitutes a base for knowledge in the organisation.” These include an intranet service with a uniform home page and Project Web, an example of what Mills calls the “extranet”: an extension of an intranet that includes those in the lattice but excludes the rest of the internet. Trainer of Cambridge Technology Partners says these electronic systems collect all networked businesses under one umbrella, allowing businesses to focus on different segments – B2C, B2B, B2E – and leverage each of them into a consistent approach.
Lend Lease also has a global alliance relationship with Amoco that Fry says is more like a marriage than a joint venture. “After a process of working out how you can work together and ensuring that your interests are fully aligned, people from both organisations come together into a third entity that is predicated on continuing performance and success.”
Trainer says these parallel organisations take each of the conventional businesses into a new arena, locally and globally.
Marina Rockett, of the e-business division of Mincom, a leading global IT solutions provider for capital-intensive industries, cites the example of an energy company that shares anticipated coal-usage forecasts in real time with its coal supplier, allowing it to plan and forecast production outputs for ensuing contract periods. She says the mining company is enabled to communicate electronically adjusted delivery schedules and update resource delivery requirements with the local rail and ports authority, the shipping company and the land transport contractors.
Cromwell says: “Co-operation is tied to productivity. Organisations based on co-operation rather than supervision will flourish. Confirmation of trust, traditionally applied to the board of directors, is now being applied further down the hierarchy.
“It is the old face-to-face private networking on a global scale. It is not who you know, it is do you know anyone who knows them and do they trust them? Risk management and safety records now determine contract agreements more than money.” Cromwell is particularly concerned with corporate governance. “We can’t afford certain kinds of mistakes. Collapses like HIH have an impact around the globe.”
The global mindset
Branch offices in different countries will not, of themselves, overcome political, geographic and cultural barriers. Indeed, with the internet allowing companies to be international without having a physical presence, the global mindset need only exist in the decisions, language, attitudes and behavior of personnel. It is essential that organisational culture be both global and parochial. Trainer argues for a regional approach, adapted to different countries, different demographics and different businesses. Truly global enterprises must be at home everywhere and adapt their business practices accordingly.
Effective delegation is essential for organisations operating in multiple time zones. But, without co-operation, a global company will simply splinter into regions or factions. Mills proposes a code of behavior in which peer discipline substitutes for direct supervision. At Lend Lease, Fry says: “Leadership had to change when we changed from an Australian company to a global company.”
Mills states that the values of a company have to be broad enough to be applicable around the globe, with culture and values coming from individuals, not mission statements. Mason-Norman agrees: “When building virtual teams, don’t impose something that people are not committed to.” They require a shared code of practice developed by profound consultation and based on the core values of the group.
Moon of BBL Funds Management describes the present business climate as one of explosive speed and flexibility. In the new economy, the management skills are the same, but the speed is different. Strategic speed depends on a good management information system. Communication becomes paramount.
Trainer agrees, saying that new technology allows e-leaders to “cut to an automated solution” for building business relationships with less documentation.
E-leaders must be prepared to adapt quickly and constantly reassess their market. Once opportunities are recognised, they must be exploited. Linkson says: “The faster things are done, the more it exposes organisations to risk, so they must have an appetite for risk and failure. Moving rapidly means you have to expect failure.” Mills says accelerated decision-making can be achieved by combining strategy with execution.
Mason-Norman sees no contradiction between the need for careful consideration and rapid decision-making: “The conundrum is that you need to be more considered in the planning process while responding to rapid change. Information technology provides very good tools to promote discussion and achieve rapid outcomes in real time”. E-leaders can maintain control through monitoring of the methods, strategy and results of business unit operations.
In their book, It’s not the Big that Eat the Small: It’s the Fast that Eat the Slow, Jason Jennings and Laurence Haughton give examples of companies that have been successful by being the first to take advantage of new opportunities. They include the financial services company Charles Schwab, which achieved huge growth in its business by pioneering online share trading. Mills says of Microsoft that it introduces products before they are fully “debugged”; being first to market offsets the loss of early customers.
However, Jennings and Haughton say that speed of itself is not enough. Success is also dependent on realistic risk assessment. Mason-Norman says: “Leaders must be prepared to pull back from ventures early enough not to damage the health of their organisations.”
Attracting & keeping e-leaders
A survey of senior executives of global organisations by A.T. Kearney Executive Search found that 75% of respondents believed that e-businesses required stronger leadership skills than conventional businesses, but there was a shortage of e-leaders and this was hampering development. E-leaders do not come cheap, yet the survey found that they are more likely to be attracted by a flexible workplace and the quality of senior management than the extent of the remuneration. The survey concluded that, in many cases, it would be necessary to customise the job to suit the applicant.
Because of this shortage of e-leaders, many organisations will have to provide executive coaching for existing staff. Wade Lillington, managing director of the internet-based business e-Mentor, says: “The internet has now enabled the business world to alter the traditional method of mentoring.” Without leaving the office, staff can gain access to a business leader with extensive experience and specialised industry knowledge.
Without giving supporting evidence, Mills argues that knowledge workers egos mean that they do not work well as a team unless they are physically separate. It raises the question of whether e-leadership is about drawing together diverse and disparate elements or deliberately constructing a dislocated organisation.
Fry says: “The online world makes communications easier, but that has to then be taken up.” Lend Lease encourages a mobile workforce so that people meet face to face. Personal relationships are important in pointing out common experiences and core values.
In future, management of e-leaders could apply a technique used in the United States military whereby the chief executive position is rotated, creating a group of senior personnel capable of taking over the leadership role. This would allow senior staff to take sabbaticals or pursue other business interests. Linkson says: “E-leaders are a new breed of managers that have a lot of different influences. They need a chance to explore the various aspects of their lives.”
Every time there is a new development in technology, political structures or business conditions, someone claims that it will lead to a fundamental change in the human condition. But people still eat, sleep, walk and reproduce in pretty much the same way. The only difference is what they talk about. So is e-leadership nothing more than a new set of terms for the same old management theories?
Moon believes that e-leadership is fundamentally about conventional business issues. “Most businesses are undercapitalised, so you need someone out front.” Using the example of Jodee Rich, founder of the now bankrupt telecommunications company One.Tel, Moon says: “The big players have not yet committed themselves to e-commerce, so you have to rely on flash and brilliance.”
When running seminars on customer relationship management, Trainer puts up a bricks-and-mortar management model then superimposes an e-business model on it. He suggests that information technology is just one new application that is as important as existing access channels.
Rockett concurs: “Remember, it is about business, not technology. Define exactly what business problem you are trying to solve and what you expect to get out of the new technology.”
E-leadership may be about reacting quickly, thinking globally and developing new business arrangements. But Mason-Norman says: “Above all, e-leaders must retain their passionate grasp on the core values of the organisation. Otherwise, leaders and organisations can be seduced into behaving in unethical ways, and thousands of employees and shareholders get hurt.”
Cromwell says: “Leadership is the only factor making firms like Hewlett Packard and Intel successful. They attract people who make good decisions. You need to be able to trust leaders not to lead you astray.”