77

Beyond the Charismatic Leader:

Leadership and
Organizational Change

David A. Nadler Michael L. Tushman

ike never before, discontinuous organization change is an important determinant of organization adaptation. Responding
to regulatory, economic, competitive and/or technological
shifts through more efficiently pushing the same organization
systems and processes just does not work.^ Rather, organizations
may need to manage through periods of both incremental as well as revolutionary change.^ Further, given the intensity of global competition in more
and more industries, these organizational transformations need to be initiated
and implemented rapidly. Speed seems to count.^ These trends put a premium on executive leadership and the management of system-wide
organization change.
There is a growing knowledge base about large-scale organization
change." This literature is quite consistent on at least one aspect of effective
system-wide changenamely, executive leadership matters. The executive
is a critical actor in the drama of organization change.^ Consider the following examples:
At Fuji-Xerox, Yotaro Kobayashi's response to declining market share, lack of new
products, and increasing customer complaints was to initiate widespread organization
change. Most fundamentally, Kobayashi's vision was to change the way Fuji-Xerox
conducted its business. Kobayashi and his team initiated the "New Xerox Movement"
through Total Quality Control. The core values of quality, problem solving, teamwork, and customer emphasis were espoused and acted upon by Kobayashi and his
Don Hambrick and Charles O'Reilly made valuable suggestions on earlier versions of this
article. The article is partially based on research conducted under the sponsorship of
Columbia University's Innovation and Entrepreneurship Research Center and its Executive
Leadership Research Center. A version of this article appeared in M. Tushman, C. O'Reilly,
and D. Nadler, eds.. The Management of Organizations: Strategy, Tactics, and Analyses
(New York, NY: Harper & Row, 1989).

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team. Further, the executive team at Fuji instituted a dense infrastructure of objectives, measures, rewards, tools, education and slogans all in service of TQC and the
"New Xerox." New heroes were created. Individuals and teams were publicly celebrated to reinforce to the system those behaviors that reflected the best of the new
Fuji-Xerox. Kobayashi continually reinforced, celebrated, and communicated his
TQC vision. Between 1976-1980, Fuji-Xerox gained back its market share, developed
an impressive set of new products, and won the Demming prize.*
Much of this Fuji-Xerox learning was transferred to corporate Xerox and further
enhanced by Dave Keams and his executive team. Beginning in 1983, Keams clearly
expressed his "Leadership Through Quality" vision for the corporation. Keams established a Quality Task Force and Quality Office with respected Xerox executives. This
broad executive base developed the architecture of Leadership Through Quality. This
effort included quality principles, tools, education, required leadership actions, rewards, and feedback mechanisms. This attempt to transform the entire corporation
was initiated at the top and diffused throughout the firm through overlapping teams.
These teams were pushed by Keams and his team to achieve extraordinary gains.
While not completed, this transformation has helped Xerox regain lost market share
and improve product development efforts.'
At General Electric, Jack Welch's vision of a lean, aggressive organization with all
the benefits of size but the agility of small firms is being driven by a set of interrelated
actions. For example, the "work-out" effort is a corporate-wide endeavor,
spearheaded by Welch, to get the bureaucracy out of a large-old organization and, in
tum, to liberate GE employees to be their best. This effort is more than Welch.
Welch's vision is being implemented by a senior task force which has initiated workout efforts in Welch's own top team as well as in each GE business area. These efforts
consist of training, problem solving, measures, rewards, feedback procedures, and
outside expertise. Similarly, sweeping changes at SAS under Carlzon, at ICI under
Harvey-Jones, by Anderson at NCR, and at Honda each emphasize the importance of
visionary leadership along with executive teams, systems, structures and proceses to
transfer an individual's vision of the future into organizational reality.'
On the other hand, there are many examples of visionary executives who are unable
to translate their vision into organization action. For example, Don Burr's vision at
People Express not only to "make a better world" but also to grow rapidly and expand
to capture the business traveller was not coupled with requisite changes in organization infrastructure, procedures, and/or roles. Further, Burr was unable to build a
cohesive senior team to help execute his compelling vision. This switch in vision,
without a committed senior team and associated structure and systems, led to the
rapid demise of People Express.

Vision and/or charisma is not enough to sustain large-system change.

While a necessary condition in the management of discontinuous change,
we must build a model of leadership that goes beyond the inspired individual; a model that takes into account the complexities of system-wide
change in large, diverse, geographically complex organizations. We attempt
to develop a framework for the extension of charismatic leadership by building on the growing leadership literature,^ the literature on organization
evolution,'" and our intensive consulting work with executives attempting
major organization change."

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Organizational Change and Re-organization

Organizations go through change all the time. However, the nature, scope,
and intensity of organizational changes vary considerably. Different kinds
of organizational changes will require very different kinds of leadership
behavior in initiating, energizing, and implementing the change. Organization changes vary along the following dimensions:
Strategic and Incremental ChangesSome changes in organizations,
while significant, only affect selected components of the organization.
The fundamental aim of such change is to enhance the effectiveness of
the organization, but within the general framework of the strategy, mode
of organizing, and values that already are in place. Such changes are
called incremental changes. Incremental changes happen all the time in
organizations, and they need not be small. Such things as changes in
organization stmcture, the introduction of new technology, and significant modifications of personnel practices are all large and significant
changes, but ones which usually occur within the existing definition and
frame of reference of the organization. Other changes have an impact on
the whole system of the organization and fundamentally redefine what
the organization is or change its basic framework, including strategy,
stmcture, people, processes, and (in some cases) core values. These
changes are called strategic organizational changes. The Fuji-Xerox,
People Express, ICI, and SAS cases are examples of system-wide organization change.
Reactive and Anticipatory ChangesMany organizational changes are
made in direct response to some extemal event. These changes, which
are forced upon the organization, are called reactive. The Xerox, SAS
and ICI transformations were all initiated in response to organization
performance crisis. At other times, strategic organizational change is
initiated not because of the need to respond to a contemporaneous event,
but rather because senior management believes that change in anticipation of events still to come will provide competitive advantage. These
changes are called anticipatory. The GE and People Express cases as
well as more recent system-wide changes at ALCOA and Cray Research
are examples of system-wide change initiated in anticipation of environmental change.
If these two dimensions are combined, a basic typology of different
changes can be described (see Figure 1).
Change which is incremental and anticipatory is called tuning. These
changes are not system-wide redefinitions, but rather modifications of specific components, and they are initiated in anticipation of future events.
Incremental change which is initiated reactively is called adaptation. Strategic

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Figure 1. Types of Organizational Changes

Anticipatory

Reactive

Incremental

Strategic

Tuning

Re-orientation

Adaptation

Re-creation

change initiated in anticipation of future events is called re-orientation, and

change which is prompted by immediate demands is called re-creation.^^
Research on patterns of organizational life and death across several
industries has provided insight into the patterns of strategic organizational
change.'^ Some of the key findings are as follows:
Strategic organization changes are necessary. These changes appear to
be environmentally driven. Various factorsbe they competitive, technological, or regulatorydrive the organization (either reactively or in
anticipation) to make system-wide changes. While strategic organization
change does not guarantee success, those organizations that fail to
change, generally fail to survive. Discontinuous environmental change
seems to require discontinuous organization change.
Re-creations are riskier. Re-creations are riskier endeavors than reorientations if only because they are initiated under crisis conditions and under
sharp time constraints. Further, re-creations almost always involve a
change in core values. As core values are most resistant to change, recreations always trigger substantial individual resistance to change and
heightened political behavior. Re-creations that do succeed usually involve changes in the senior leadership of the firm, frequently involving
replacement from the outside. For example, the reactive system-wide
changes at U.S. Steel, Chrysler, and Singer were all initiated by new
senior teams.
Re-orientations are associated more with success. Re-orientations have
the luxury of time to shape the change, build coalitions, and empower
individuals to be effective in the new organization. Further, re-orientations
give senior managers time to prune and shape core values in service of
the revised strategy, structure, and processes. For example, the proactive
strategic changes at Cray Research, ALCOA, and GE each involved
system-wide change as well as the shaping of core values ahead of the
competition and from a position of strength.
Re-orientations are, however, risky. When sweeping changes are initiated in advance of precipitating external events, success is contingent
on making appropriate strategic bets. As re-orientations are initiated
ahead of the competition and in advance of environmental shifts, they

Beyond the Charismatic Leader

81

require visionary executives. Unfortunately, in real time, it is unclear

who will be known as visionary executives (e.g., Welch, Iacocca, Rollwagen at Cray Research) and who will be known as failures (e.g., Don
Burr at People Express, or Larry Goshom at General Automation). In
turbulent environments, not to make strategic bets in associated with
failure. Not all bets will pay off, however. The advantages of re-orientations
derive from the extra implementation time and from the opportunity to
learn from and adapt to mistakes."*
As with re-creations, executive leadership is crucial in initiating and
implementing strategic re-orientations. The majority of successful reorientations involve change in the CEO and substantial executive team
change. Those most successful firms, however, have executive teams
that are relatively stable yet are still capable of initiating several re-orientations (e.g., Ken Olsen at DEC and An Wang at Wang).
There are, then, quite fundamentally different kinds of organizational
changes. The role of executive leadership varies considerably for these different types of organizational changes. Incremental change typically can be
managed by the existing management structures and processes of the organization, sometimes in conjunction with special transition structures.'^ In
these situations, a variety of leadership styles may be appropriate, depending
upon how the organization is normally managed and led. In strategic
changes, however, the management process and structure itself is the subject of change; therefore, it cannot be relied upon to manage the change. In
addition, the organization's definition of effective leadership may also be
changing as a consequence of the re-orientation or re-creation. In these
situations, leadership becomes a very critical element of change management.
This article focuses on the role of executive leadership in strategic organization change, and in particular, the role of leadership in re-orientations.
Given organization and individual inertia, re-orientations can not be initiated or implemented without sustained action by the organization's
leadership. Indeed, re-orientations are frequently driven by new leadership,
often brought in from outside the organization.'^ A key challenge for executives facing turbulent environments, then, is to learn how to effectively
initiate, lead, and manage re-orientations. Leadership of strategic reorientations requires not only charisma, but also substantial instrumental
skills in building executive teams, roles, and systems in support of the
change, as well as institutional skills in diffusing leadership throughout the
organization.

The Charismatic Leader

While the subject of leadership has received much attention over the years,
the more specific issue of leadership during periods of change has only
recently attracted serious attention." What emerges from various discus-

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sions of leadership and organizational change is a picture of the special

kind of leadership that appears to be critical during times of strategic organizational change. While various words have been used to portray this type
of leadership, we prefer the label "charismatic" leader. It refers to a special
quality that enables the leader to mobilize and sustain activity within an
organization through specific personal actions combined with perceived
personal characteristics.
The concept of the charismatic leader is not the popular version of the
great speech maker or television personality. Rather, a model has emerged
from recent work aimed at identifying the nature and determinants of a particular type of leadership that successfully brings about changes in an individual's values, goals, needs, or aspirations. Research on charismatic
leadership has identified this type of leadership as observable, definable,
and having clear behavioral characteristics.'* We have attempted to develop
a first cut description of the leader in terms of pattems of behavior that he/
she seems to exhibit. The resulting approach is outlined in Figure 2, which
lists three major types of behavior that characterize these leaders and some
illustrative kinds of actions.
Figure 2. The Charismatic Leader
Envisioning
articulating a compelling vision
setting high expectations
modeling consistent behaviors
Energizing

Enabling

demonstrating personal
excitement
expressing personal confidence
seeking, finding, & using
success

expressing personal
support
empathizing
expressing confidence
in people

The first component of charismatic leadership is envisioning. This involves the creation of a picture of the future, or of a desired future state
with which people can identify and which can generate excitement. By
creating vision, the leader provides a vehicle for people to develop commitment, a common goal around which people can rally, and a way for people
to feel successful. Envisioning is accomplished through a range of different
actions. Clearly, the simplest form is through articulation of a compelling
vision in clear and dramatic terms. The vision needs to be challenging,
meaningful, and worthy of pursuit, but it also needs to be credible. People
must believe that it is possible to succeed in the pursuit of the vision. Vision

Beyond the Charismatic Leader

83

is also communicated in other ways, such as through expectations that the

leader expresses and through the leader personally demonstrating behaviors
and activities that symbolize and further that vision.
The second component is energizing. Here the role of the leader is the
direct generation of energymotivation to actamong members of the
organization. How is this done? Different leaders engage in energizing in
different ways, but some of the most common include demonstration of
their own personal excitement and energy, combined with leveraging that
excitement through direct personal contact with large numbers of people in
the organization. They express confidence in their own ability to succeed.
They find, and use, successes to celebrate progress towards the vision.
The third component is enabling. The leader psychologically helps people
act or perform in the face of challenging goals. Assuming that individuals
are directed through a vision and motivated by the creation of energy, they
then may need emotional assistance in accomplishing their tasks. This
enabling is achieved in several ways. Charismatic leaders demonstrate
empathythe ability to listen, understand, and share the feelings of those
in the organization. They express support for individuals. Perhaps most
importantly, the charismatic leader tends to express his/her confidence in
people's ability to perform effectively and to meet challenges.
Yotaro Kobayashi at Fuji-Xerox and Paul O'Neil at ALCOA each exhibit
the characteristics of charismatic leaders. In Kobayashi's transformation at
Fuji, he was constantly espousing his New Xerox Movement vision for
Fuji. Kobayashi set high standards for his firm (e.g., the 3500 model and
the Demming Prize), for himself, and for his team. Beyond espousing this
vision for Fuji, Kobayashi provided resources, training, and personal
coaching to support his colleagues' efforts in the transformation at Fuji.
Similarly, Paul O'Neil has espoused a clear vision for ALCOA anchored on
quality, safety, and innovation. O'Neil has made his vision compelling and
central to the firm, has set high expectations for his top team and for individuals throughout ALCOA and provides continuous support and energy
for his vision through meetings, task forces, video tapes, and extensive
personal contact.
Assuming that leaders act in these ways, what functions are they performing that help bring about change? First, they provide a psychological
focal point for the energies, hopes, and aspirations of people in the organization. Second, they serve as powerful role models whose behaviors,
actions and personal energy demonstrate the desired behaviors expected
throughout the firm. The behaviors of charismatic leaders provide a standard to which others can aspire. Through their personal effectiveness and
attractiveness they build a very personal and intimate bond between themselves and the organization. Thus, they can become a source of sustained
energy; a figure whose high standards others can identify with and emulate.

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Limitations of the Charismatic LeaderEven if one were able to do all

of the things involved in being a charismatic leader, it might still not be
enough. In fact, our observations suggest that there are a number of inherent limitations to the effectiveness of charismatic leaders, many stemming
from risks associated with leadership which revolves around a single individual. Some of the key potential problems are:
Unrealistic ExpectationsIn creating a vision and getting people energized, the leader may create expectations that are unrealistic or unattainable. These can backfire if the leader cannot live up to the expectations
that are created.
Dependency and CounterdependencyA strong, visible, and energetic
leader may spur different psychological response. Some individuals may
become overly dependent upon the leader, and in some cases whole organizations become dependent. Everyone else stops initiating actions
and waits for the leader to provide direction; individuals may become
passive or reactive. On the other extreme, others may be uncomfortable
with strong personal presence and spend time and energy demonstrating
how the leader is wronghow the emperor has no clothes.
Reluctance to Disagree with the LeaderThe charismatic leader's
approval or disapproval becomes an important commodity. In the presence
of a strong leader, people may become hesitant to disagree or come into
conflict with the leader. This may, in tum, lead to stifling conformity.
Need for Continuing MagicThe charismatic leader may become
trapped by the expectation that the magic often associated with charisma
will continue unabated. This may cause the leader to act in ways that are
not functional, or (if the magic is not produced) it may cause a crisis of
leadership credibility.
Potential Feelings of BetrayalWhen and if things do not work out as
the leader has envisioned, the potential exists for individuals to feel betrayed
by their leader. They may become frustrated and angry, with some of
that anger directed at the individual who created the expectations that
have been betrayed.
Disenfranchisement of Next Levels of ManagementA consequence of
the strong charismatic leader is that the next levels of management can
easily become disenfranchised. They lose their ability to lead because no
direction, vision, exhortation, reward, or punishment is meaningful unless it comes directly from the leader. The charismatic leader thus may
end up underleveraging his or her management and/or creating passive/
dependent direct reports.
Limitations of Range of the Individual LeaderWhen the leadership
process is built around an individual, management's ability to deal with
various issues is limited by the time, energy, expertise, and interest of
that individual. This is particularly problematic during periods of change

Beyond the Charismatic Leader

85

when different types of issues demand different types of competencies

(e.g., markets, technologies, products, finance) which a single individual
may not possess. Different types of strategic changes make different
managerial demands and call for different personal characteristics. There
may be limits to the number of strategic changes that one individual can
lead over the life of an organization.
In light of these risks, it appears that the charismatic leader is a necessary
componentbut not a sufficient componentof the organizational leadership required for effective organizational re-organization. There is a need
to move beyond the charismatic leader.

Instrumental Leadership
Effective leaders of change need to be more than just charismatic. Effective
re-orientations seem to be characterized by the presence of another type of
leadership behavior which focuses not on the excitement of individuals and
changing their goals, needs or aspirations, but on making sure that individuals
in the senior team and throughout the organization behave in ways needed
for change to occur. An important leadership role is to build competent
teams, clarify required behaviors, built in measurement, and administer
rewards and punishments so that individuals perceive that behavior consistent with the change is central for them in achieving their own goals.'^ We
will call this type of leadership instrumental leadership, since it focuses on
the management of teams, structures, and managerial processes to create
individual instrumentalities. The basis of this approach is in expectancy
theories of motivation, which propose that individuals will perform those
behaviors that they perceive as instrumental for acquiring valued outcomes. ^ Leadership, in this context, involves managing environments to
create conditions that motivate desired behavior.^'
In practice, instrumental leadership of change involves three elements of
behavior (see Figure 3). The first is structuring. The leader invests time in
building teams that have the required competence to execute and implement
the re-orientation^^ and in creating structures that make it clear what types
of behavior are required throughout the organization. This may involve
setting goals, establishing standards, and defining roles and responsibilities.
Re-orientations seem to require detailed planning about what people will
need to do and how they will be required to act during different phases of
the change. The second element of instrumental leadership is controlling.
This involves the creation of systems and processes to measure, monitor,
and assess both behavior and results and to administer corrective action."
The third element is rewarding, which includes the administration of both
rewards and punishments contingent upon the degree to which behavior is
consistent with the requirements of the change.

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Figure 3.
Instrumental Leadership

Charismatic Leadership
Structuring

Envisioning
Energizing

Controlling

Enabling

Rewarding

Instrumental leadership focuses on the challenge of shaping consistent

behaviors in support of the re-orientation. The charismatic leader excites
individuals, shapes their aspirations, and directs their energy. In practice,
however, this is not enough to sustain pattems of desired behavior. Subordinates and colleagues may be committed to the vision, but over time other
forces may infiuence their behavior, particularly when they are not in direct
personal contact with the leader. This is particularly relevant during periods
of change when the formal organization and the informal social system may
lag behind the leader and communicate outdated messages or reward traditional behavior. Instrumental leadership is needed to ensure compliance over
time consistent with the commitment generated by charismatic leadership.
At Xerox, for example, David Keams used instrumental leadership to
further enliven his Leadership Through Quality efforts.^'' Beyond his own
sustained behaviors in support of the Leadership Through Quality effort,
Keams and his Quality Office developed a comprehensive set of roles,
processes, teams, and feedback and audit mechanisms for getting customer
input and continuous improvement into everyday problem solving throughout Xerox. Individuals and teams across the corporation were evaluated on
their ability to continuously meet customer requirements. These data were
used in making pay, promotion, and career decisions.
The Role of Mundane BehaviorsTypical descriptions of both charismatic and instmmental leaders tend to focus on significant events, critical
incidents, and grand gestures. Our vision of the change manager is frequently exemplified by the key speech or public event that is a potential
watershed event. While these are important arenas for leadership, leading
large-system change also requires sustained attention to the myriad of details that make up organizational life. The accumulation of less dramatic.

Beyond the Charismatic Leader

87

day-to-day activities and mundane behaviors serves as a powerful determinant of behavior." Through relatively unobtmsive acts, through sustained
attention to detail, managers can directly shape perceptions and culture in
support of the change effort. Examples of mundane behavior that when
taken together can have a great impact include:
allocation of time; calendar management
asking questions, following up
shaping of physical settings
public statements
setting agendas of events or meetings
use of events such as lunches, meetings, to push the change effort
summarizationpost hoc interpretation of what occurred
creating heroes
use of humor, stories, and myths
small symbolic actions, including rewards and punishments
In each of these ways, leaders can use daily activities to emphasize important issues, identify desirable behavior, and help create pattems and meaning out of the various transactions that make up organizational life.
The Complementarity of Leadership ApproachesIt appears that effective organizational re-orientation requires both charismatic and instmmental
leadership. Charismatic leadership is needed to generate energy, create
commitment, and direct individuals towards new objectives, values or
aspirations. Instmmental leadership is required to ensure that people really
do act in a manner consistent with their new goals. Either one alone is insufficient for the achievement of change.
The complementarity of leadership approaches and the necessity for both
creates a dilemma.^* Success in implementing these dual approaches is associated with the personal style, characteristics, needs, and skills of the
executive. An individual who is adept at one approach may have difficulty
executing the other. For example, charismatic leaders may have problems
with tasks involved in achieving control. Many charismatic leaders are
motivated by a strong desire to receive positive feedback from those around
them." They may therefore have problems delivering unpleasant messages,
dealing with performance problems, or creating situations that could attract
negative feelings.^^
Only exceptional individuals can handle the behavioral requirements of
both charismatic and instmmental leadership styles. While such individuals
exist, and altemative may be to involve others in leadership roles, thus complementing the strengths and weaknesses of one individual leader." For
example, in the early days at Honda, it took the steadying, systems-oriented
hand of Takeo Fujisawa to balance the fanatic, impatient, visionary energy
of Soichiro Honda. Similarly, at Data General, it took Alsing and Rasala's

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social, team, and organization skills to balance and make more humane
Tom West's vision and standards for the Eclipse team.^ Without these complementary organization and systems skills, Don Burr was unable to execute
his proactive system-wide changes at People Express.
The limitations of the individual leader pose a significant challenge.
Charismatic leadership has a broad reach. It can influence many people,
but is limited by the frequency and intensity of contact with the individual
leader. Instrumental leadership is also limited by the degree to which the
individual leader can structure, observe, measure and reward behavior.
These limitations present significant problems for achieving re-orientations.
One implication is that structural extensions of leadership should be created
in the process of managing re-orientations.^' A second implication is that
human extensions of leadership need to be created to broaden the scope
and impact of leader actions. This leads to a third aspect of leadership and
changethe extension of leadership beyond the individual leader, or the
creation of institutionalized leadership throughout the organization.

Institutionalizing the Leadership of Change

Given the limitations of the individual charismatic leader, the challenge is
to broaden the range of individuals who can perform the critical leadership
functions during periods of significant organizational change. There are
three potential leverage points for the extension of leadershipthe senior
team, broader senior management, and the development of leadership
throughout the organization (see Figure 4).
Figure 4.
Institutionalizing the Leadership of Change

Instrumental Leadership
Charismatic Leadership
Leveraging
the Senior
Team

Envisioning
Structuring

Controlling
Energizing

Enabling

Rewarding
Developing Leadership
In the Organization

Broadening
Senior
Management

Beyond the Charismatic Leader

89

Leveraging the Senior TeamThe group of individuals who report

directly to the individual leaderthe executive or senior teamis the first
logical place to look for opportunities to extend and institutionalize leadership. Development of an effective, visible, and dynamic senior team can be
a major step in getting around the problems and limitations of the individual
leader. ^^ Examples of such executive teams include the Management Committee established at Coming by Jamie Houghton or Bob Allen's Executive
Committee at AT&T. Several actions appear to be important in enhancing
the effectiveness of the senior team.
Visible Empowerment of the TeamA first step is the visible empowerment of he team, or "anointing" the team as extensions of the individual
leader. There are two different aspects to this empowerment: objective
and symbolic. Objective empowerment involves providing team members
with the autonomy and resources to serve effectively. Symbolic empowerment involves communicating messages (through information, symbols,
and mundane behaviors) to show the organization that these individuals
are indeed extensions of the leader, and ultimately key components of
the leadership. Symbolic empowerment can be done through the use of
titles, the designation of organizational structures, and the visible presence
of individuals in ceremonial roles.
Individual Development of Team MembersEmpowerment will fail if
the individuals on the team are not capable of executing their revised
leadership roles. A major problem in re-orientations is that the members
of the senior team frequently are the product of the very systems, structures, and values that the re-orientation seeks to change. Participating in
the change, and more importantly, leading it, may require a significant
switching of cognitive gears." Re-orientations demand that senior team
members think very differently about the business and about managing.
This need for personal change at the most senior level has implications
for the selection of senior team members (see below). It also may mean
that part of the individual leader's role is to help coach, guide, and support individuals in developing their own leadership capabilities. Each
individual need not (and should not) be a "clone" of the individual leader;
but each should be able to initiate credible leadership actions in a manner
consistent with their own personal styles. Ultimately, it also puts a demand
on the leader to deal with those who will not or can not make the personal changes required for helping lead the re-orientation.
Composition of the Senior TeamThe need for the senior team to implement change may mean that the composition of that team may have to be
altered. Different skills, capabilities, styles, and value orientations may
be needed to both lead the changes as well as to manage in the reconfigured organization.^"* In fact, most successful re-orientations seem to
involve some significant changes in the make-up of the senior team. This

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may require outplacement of people as well as importing new people,

either from outside the organization, or from outside the coalition that
has traditionally led the organization.^^
The Inducement of Strategic AnticipationA critical issue in executing
re-orientations is strategic anticipation. By definition, a re-orientation is
a strategic organizational change that is initiated in anticipation of significant extemal events. Re-orientation occurs because the organization's
leadership perceives competitive advantage from initiating change earlier
rather than later. The question is, who is responsible for thinking about
and anticipating extemal events, and ultimately deciding that re-orientation
is necessary? In some cases, the individual leader does this, but the task
is enormous. This is where the senior team can be helpful, because as a
group it can scan a larger number of events and potentially be more creative in analyzing the environment and the process of anticipation.
Companies that are successful anticipators create conditions in which
anticipation is more likely to occur. They invest in activities that foster
anticipation, such as environmental scanning, experiments or probes
inside the organization (frequently on the periphery), and frequent contacts with the outside. The senior team has a major role in initiating,
sponsoring, and leveraging these activities.^*
The Senior Team as a Learning SystemFor a senior team to benefit
from its involvement in leading change, it must become an effective
system for leaming about the business, the nature of change, and the
task of managing change. The challenge is to both bond the team together, while avoiding insularity. One of the costs of such team stmctures
is that they become isolated from the rest of the organization, they
develop pattems of dysfunctional conformity, avoid conflict, and over
time develop pattems of leiimed incompetence. These group processes
diminish the team's capacity for effective strategic anticipation, and
decreases the team's ability to provide effective leadership of the reorientation."
There are several ways to enhance a senior team's ability to leam over
time. One approach is to work to keep the team an open system, receptive
to outside ideas and information. This can be accomplished by creating a
constant stream of events that expose people to new ideas and/or situations.
For example, creating simulations, using critical incident techniques,
creating near histories, are all ways of exposing senior teams to novel
situations and sharpening problem-solving skills.^* Similarly, senior
teams can open themselves to new ideas via speakers or visitors brought
in to meet with the team, visits by the team to other organizations,
frequent contact with customers, and planned informal data collection
through personal contact (breakfasts, focus groups, etc.) throughout the
organization. A second approach involves the shaping and management
of the intemal group process of the team itself. This involves working on

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91

effective group leadership, building effective team member skills, creating

meeting management discipline, acquiring group problem-solving and information-processing skills, and ultimately creating norms that promote
effective leaming, innovation, and problem solving.^'
David Keams at Xerox and Paul O'Neil at ALCOA made substantial
use of senior teams in implementing their quality-oriented organization
transformations. Both executives appointed senior quality task forces
composed of highly respected senior executives. These task forces were
charged with developing the corporate-wide architecture of the change
effort. To sharpen their change and quality skills these executives made
trips to Japan and to other experienced organizations, and were involved in
extensive education and problem-solving efforts in their task forces and
within their own divisions. These task forces put substance and enhanced
energy into the CEO's broad vision. These executives were, in tum, role
models and champions of the change efforts in their own sectors.
As a final note, it is important to remember that frequently there are
significant obstacles in developing effective senior teams to lead reorientations. The issues of skills and selection have been mentioned.
Equally important is the question of power and succession. A team is most
successful when there is a perception of common fate. Individuals have to
believe that the success of the team will, in the long run, be more salient to
them than their individual short-run success. In many situations, this can
be accomplished through appropriate stmctures, objectives, and incentives.
But these actions may fail when there are pending (or anticipated) decisions
to be made conceming senior management succession. In these situations,
the quality of collaboration tends to deteriorate significantly, and effective
team leadership of change becomes problematic. The individual leader must
manage the timing and process of succession in relation to the requirements
for team leadership, so that conflicting (and mutually exclusive) incentives
are not created by the situation.'40
Broadening Senior ManagementA second step in moving beyond individual leadership of change is the further extension of the leadership beyond
the executive or senior team to include a broader set of individuals who
make up the senior management of the organization. This would include
individuals one or two levels down from the executive team. At Coming,
the establishment of two groupsthe Corporate Policy Group (approximately the top 35) and the Corporate Management Group (about the top
120)are examples of mechanisms used by Houghton to broaden the definition of senior management. This set of individuals is in fact the senior
operating management of most sizeable organizations and is looked upon
as senior management by the majority of employees. In many cases (and
particularly during times of change) they do not feel like senior management, and thus they are not positioned to lead the change. They feel like

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participants (at best) and victims (at worst). This group can be particularly
problematic since they may be more embedded in the current system of
organizing and managing than some of the senior team. They may be less
prepared to change, they frequently have molded themselves to fit the
current organizational style, and they may feel disenfranchised by the very
act of developing a strong executive team, particularly if that team has been
assembled by bringing in people from outside of the organization.
The task is to make this group feel like senior management, to get them
signed up for the change, and to motivate and enable them to work as an
extension of the senior team. Many of the implications are similar to those
mentioned above in relation to the top team; however, there are special
problems of size and lack of proxinndty to the individual charismatic leader.
Part of the answer is to get the senior team to take responsibility for developing their own teams as leaders of change. Other specific actions may
include:
Rites of PassageCreating symbolic events that help these individuals
to feel more a part of senior management.
Senior GroupsCreating structures (councils, boards, committees, conferences) to maintain contact with this group and reinforce their sense of
participation as members of senior management.
Participation in Planning ChangeInvolving these people in the early
diagnosing of the need to change and the planning of change strategies
associated with the re-orientation. This is particularly useful in getting
them to feel more like owners, rather than victims of the change.
Intensive CommunicationMaintaining a constant stream of open communication to and from this group. It is the lack of information and
perspective that psychologically disenfranchises these individuals.
Developing Leadership in the OrganizationA third arena for enhancing
the leadership of re-organizations is through organizational structures,
systems, and process for leadership development consistent with the reorientation. Frequently leadership development efforts lag behind the reorientation. The management development system of many organizations
often works effectively to create managers who will fit well with the organizational environment that the leadership seeks to abandon. There needs to
be a strategic and anticipatory thinking about the leadership development
process, including the following:
Definition of Managerial CompetenceA first step is determining the
skills, capabilities, and capacities needed to manage and lead effectively
in the re-orientation and post re-orientation period. Factors that have
contributed to managerial success in the past may be the seeds of failure
in the future.

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93

Sourcing Managerial TalentRe-orientations may require that the organization identify significantly different sources for acquiring leaders or
potential leaders. Senior managers should be involved in recruiting the
hiring. Because of the lead time involved, managerial sourcing has to be
approached as a long-term (five to ten years) task.
SocializationAs individuals move into the organization and into positions of leadership, deliberate actions must be taken to teach them how
the organization's social system works. During periods of re-orientation,
the socialization process ought to lead rather than lag behind the change.
Management EducationRe-orientation may require managers and leaders to use or develop new skills, competencies, or knowledge. This
creates a demand for effective management education. Research indicates that the impact of passive internal management education on the
development of effective leaders may be minimal when compared with
more action-oriented educational experiences. The use of educational
events to expose people to external settings or ideas (through out-ofcompany education) and to socialize individuals through action-oriented
executive education may be more useful than attempts to teach people to
be effective leaders and managers."*'
Career ManagementResearch and experience indicate that the most
potent factor in the development of effective leaders is the nature of their
job experiences."*^ The challenge is to ensure that middle and lower level
managers get a wide range of experiences over time. Preparing people to
lead re-orientations may require a greater emphasis on the development
of generalists through cross-functional, divisional, and/or multinational
career experiences."*^ Diverse career experiences help individuals develop
a broad communication network and a range of experiences and competences all of which are vital in managing large-system change. This
approach to careers implies the sharing of the burden of career management between both the organization and the employee as well as the
deliberate strategy of balancing current contribution with investment for
the future when placing people in job assignments.'*^
Seeding TalentDeveloping leadership for change may also require
deliberate leveraging of available talent. This implies thoughtful placement
of individual leaders in different situations and parts of the organization,
the use of transfers, and the strategic placement of high-potential leaders."^
Perhaps the most ambitious and most well-documented effort at developing
leadership throughout the organization is Welch's actions at GE. Welch has
used GE's Management Development Institute at Crotonville as an important
lever in the transformation of GE. Based on Welch's vision of a lean, competitive, agile organization with businesses leading in their respective
markets, Crotonville has been used as a staging area for the revolution at

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GE. With Welch's active involvement, Crotonville's curriculum has moved

from a short-term cognitive orientation towards longer-term problem solving
and organization change. The curriculum has been developed to shape
experiences and sharpen skills over the course of an individual's career in
service of developing leaders to fit into the new GE."**

Summary
In a world characterized by global competition, deregulation, sharp technological change, and political turmoil, discontinuous organization change
seems to be a determinant of organization adaptation. Those firms that can
initiate and implement discontinuous organization change more rapidly
and/or prior to the competition have a competitive advantage. While not all
change will be successful, inertia or incremental change in the face of
altered competitive arenas is a recipe for failure.
Executive leadership is the critical factor in the initiation and implementation of large-system organization change. This article has developed an
approach to the leadership of discontinuous organization change with particular reference to re-orientationsdiscontinuous change initiated in
advance of competitive threat and/or performance crisis. Where incremental
change can be delegated, strategic change must be driven by senior management. Charismatic leadership is a vital aspect of managing large-system
change. Charismatic leaders provide vision, direction, and energy. Thus
the successes of O'Neil at ALCOA, Welch at GE, Keams at Xerox, and
RoUwagen and Cray are partly a function of committed, enthusiastic, and
passionate individual executives.
Charisma is not, however, enough to effect large-system change. Charismatic leadership must be bolstered by instmmental leadership through
attention to detail on roles, responsibilities, stmctures, and rewards. Further, as many organizations are too large and complex for any one executive
and/or senior team to directly manage, responsibility for large-system
change must be institutionalized throughout the management system. The
leadership of strategic organization change must be pushed throughout the
organization to maximize the probability that managers at all levels own
and are involved in executing the change efforts and see the concrete
benefits of making the change effort work. O'Neil, Welch, Keams, and
Rollwagen are important catalysts in their organizations. Their successes to
date are, however, not based simply on strong personalities. Each of these
executives has been able to build teams, systems, and managerial processes
to leverage and add substance to his vision and energy. It is this interaction
of charisma, attention to systems and processes, and widespread involvement at multiple levels that seems to drive large-system change.
Even with inspired leadership, though, no re-orientation can emerge fully
developed and planned. Re-orientations take time to implement. During

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95

this transition period, mistakes are made, environments change and key
people leave. Given the turbulence of competitive conditions, the complexity
of large-system change and individual cognitive limitations, the executive
team must develop its ability to adapt to new conditions and, as importantly,
leam from both its successes and failures. As organizations can not remain
stable in the face of environmental change, so too must the management of
large-system change be flexible. This abihty of executive teams to build-in
leaming and to build-in flexibility into the process of managing large-system
organizational change is a touchstone for proactively managing re-orientations.

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97

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