THE PRACTISE OF TOP MANAGEMENT

PART THREE

TRANSACTIONAL AND NURTURING LEADERSHIP STRATEGIES.

In the previous section, we asserted that there are two essentially different strategies that can be adopted by corporate leaders - to direct the enterprise as though it is essentially made up of assets which can be increased in value by being bought, sold, manipulated and added to; or to treat the enterprise as though its central core is a productive human community, and to act on the business through close involvement with the organisation.

In making this distinction, we realise that some will feel that we are being too simplistic, but we believe that it is a distinction well worth making, because it highlights fundamentally different philosophies of doing business - one of which is currently dominant in the financial markets, press and business academe.

Transactional Strategies.

Underpinning a transactional philosophy of management are a number of fundamental assumptions:

Managers who fit the profile above are likely to engage in the following activities as their primary means of getting things done:

Nurturing Strategies.

Practitioners of this philosophy do not often capture the headlines - in fact, they tend to be categorised as 'boring' in some quarters. Because the essential focus of such managers will tend to be on the organisations that they lead, and the customers that those organisations serve, most of their work will be invisible to external observers and the signs of their success or failures difficult for such observers to directly measure, especially as results come as a consequence of the efforts and quality of the whole organisation, rather than a few high profile actors. Also, there will usually be a time delay between the actions of such managers and the results achieved.

Some examples of the practise of this philosophy might help understanding.
Henry Mintzberg of Mc Gill University described the behaviour of John Cleghorn, CEO of the Royal Bank of Canada as follows:

"John Cleghorn's style of management is unusual for someone in his position; he is very involved in the operational details of the bank. He's been known to call from the airport to report that an automatic teller machine is not working. He sold the corporate jet - he says that he was uncomfortable with it - as well as the chauffeured limousines. All senior executives, Cleghorn included, are expected to spend at least 25 per cent of their time with customers and front line employees."

"In his meetings with employees, Cleghorn aimed to gather information, but also to send signals about the organisation, whether by encouraging long-term employees, congratulating people for their presentations, infusing his energy into the organisation, or constantly describing the values that he finds important. Rarely did he exercise the CEO's prerogative to control on this particular day. Rather, his role was to encourage and enable, with the individual (motivating and coaching), the unit (team building), and the organisation at large (culture building)."

"His strategy approach appeared to be one of crafting: to foster a flexible structure and open culture, to see the strategic implications of initiatives, and to integrate them with the overall vision. That requires his detailed, nuanced knowledge of the organisation.

"Of course, this approach, based on rich, grounded information, does not make someone a strategist: that depends on one's capacity for creative synthesis. But, I believe that such a style of managing is a prerequisite for developing strategic insights. It is the ability to move between the concrete and the conceptual - not only to understand the specifics but also to be able to generalise creatively about them - that makes a great strategist".

Mintzberg concludes, "Such is the practise of management as a craft - low key, involved, warm, focused.......It may not make the headlines, but it seems to work."

Are Mintzberg's insights invalidated by the fact that they seem to be very much at odds with the popular conception of the practise of top management as put about by those who dominate the channels of communication to the public and who make the most noise?

Well, it seems that serious researchers who have tried to find out what the managements of the most successful long-term performers really do come to just about exactly the same conclusions.

John Kotter, in his famous study of senior leaders that resulted in "The General Managers' concluded that what he saw in the behaviour of the most successful was:

Porras and Collins in their book, "Built to Last", describe the same range of behaviours in the best and most durable companies - commenting additionally that, in general, the best corporate managers are not charismatic superheroes, travelling from one challenge to the next, but dedicated corporate careerists who are closely bonded with the organisations that they lead and know so well. They even observe that Jack Welsh, the much-feted CEO of GE, was only one in a long line of extremely capable leaders of that company, and possibly not even the best!

Closer to home, 'Management To-day recently interviewed Sir Terry Leahy, the CEO of Tesco, one of Britain's diminishing group of great big companies, observing exactly the same patterns of behaviour, to wit:

In fact, commented the interviewer, Mr. Leahy seemed to be a rather serious, ordinary sort of fellow with a great determination that Tesco should do well - not at all in the heroic mould, even a mite 'boring'!

Last, we had the privilege of working closely with Jim Fifield, who led EMI Music from being a sorry industry loser to an industry leadership position.
Again, Fifield demonstrated many of the characteristics described in others, to wit:

One of his maxims was that a good subordinate would know what he, Fifield, valued, and act autonomously in line with this understanding - with the proviso that the subordinate would also call him when it mattered because they both knew the few critical matters which they needed to discuss before acting.
A second was that he valued "Words, not numbers - and the most important words were verbs." He wanted to know what people were doing, because if they did the right things, the numbers would follow.

Contrasts between Transactional and Nurturing Strategies.

We hope that readers will recognise fundamental differences between the two philosophies that we have described. As a postscript, we would observe that it is almost impossible to move successfully from a predominantly transactional strategy to a nurturing one, whereas it is quite possible to weave transactional threads into a predominantly nurturing approach.

Next, we will examine the consequences of adopting the different philosophies on the performance and survival of enterprises.


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