Leadership and Innovation - Assignment Example

of Xxxxx Business Department Leadership and innovation in W.L. Gore & Associates Undergraduate Department of Business London United Kingdom YourEmail@xxx.uk May 25, 2006 Case Study Solution To be presented on .., 2006 In the subject of XXXXX Directed by: XXXXX, (Ph D. or M.S or anything) Table of contents Introduction 4 Leadership in WL Gore & Associates, Inc. 5 Transactional and transformational leadership 5 Distributed and dispersed leadership 7 Leadership style and influencing skills 8 The ethical role of leadership 9 The leadership and organizational context 10 5.1. Leadership team work and team building 10 5.2. Group processes and creativity 10 Change in WL Gore & Associates, Inc. 12 Change Management 12 Planning change and Change strategies 13 Resistance to change 15 People organisation and technology 16 Innovation in WL Gore & Associates, Inc. 20 The organizational environment for innovation 20 Innovation Management 21 Innovation issues with new products and services 22 Building innovative teams 22 Building the innovative organisation 23 5.1. Innovation in service settings 25 5.2. The Experience economy 25 References 27 Introduction Traditional organizational forms reflect the concepts of differentiation, rationalization, and specialization and are characterized by hierarchy, division of labour, and managerial control. These structures promote clear boundaries for individual and group identities, which allow social environments to be easily controlled through departmentalization and the rational acceptance of who governs and who obeys. In short, these structures help people to understand who they are and how they are "supposed" to relate in organizational settings. In contrast, new organizational forms, emerging in response to the fast-changing nature of today's business environments, are defined as having organically orientated structures and operations designed to facilitate a more fluid relationship between the organization and its environment. This in turn is supposed to improve the organization's operational flexibility and thus the ability to deal with change. For the study of leadership, the above mentioned changes have led to the widespread adoption of empowerment strategies. Such an adoption is understandable: if one flattens an organization's structure, there is little choice but to empower the organisations lower-level workers with broader decision-making responsibilities. As a result, the traditional "limits to power" once designated by boundaries of hierarchy and rational authority are blurring (Gordon 2002). This paper deals with the questions of leadership and its intrinsic relation with organisational change and innovation within the framework of a case study - the experience of WL Gore & Associates, Inc. The paper consists of three major parts, related respectively to leadership, change and innovation, each chapter discussing both theoretical concepts and their practical implementation at Gore & Associates. Leadership in WL Gore & Associates, Inc. Transactional and transformational leadership The New Leadership paradigm incorporated three main categories of theory - transactional leadership, transformational leadership, and culture-based leadership. The transactional leadership theorists, including those theorists who explored the concept of leadership through the eyes of followers, explained leadership as contingent on a condition of transaction or exchange between leaders and followers. Alternatively, transformational leadership theory argues that "good" leadership is achieved through more than just tangible inducements. It suggested that leadership can be conceptually organized along a number of charismatic and situationally correlated dimensions: charismatic leadership, inspirational leadership, intellectual stimulation, and individual consideration. The culture-based theorists viewed leadership as being culturally specific, where "good" leadership, among other things, primarily depends on whether or not a leader's style is in synchronization with his or her organization's culture (Gordon 2002). The transformational leader has been characterized as one who articulates a vision of the future that can be shared with peers and subordinates, intellectually stimulates subordinates, and pays high attention to individual differences among people. This transformational leader was posited as a contrast to the transactional leader who exchanges rewards contingent upon a display of desired behaviours (Burns 1978). Burns considered the transformational leader to be distinct from the transactional leader, where the latter is viewed as a leader who initiates contact with subordinates in an effort to exchange something of value, such as rewards for performance, mutual support, or bilateral disclosure. At the other pole of the leadership style dimension, Burns viewed the transformational leader as one who engages with others in such a way that the leader and the follower raise one another to a higher level of motivation and morality. Higher aspirations or goals of the collective group are expected to transcend the individual and result in the achievement of significant change in work unit effectiveness. Burns believed that all managers could be classified by leadership style according to their propensity for transactions with versus transformation of subordinates. Bass (1985) characterized the transactional leader as one who operates within the existing system or culture, has a preference for risk avoidance, pays attention to time constraints and efficiency, and generally prefers process over substance as a means for maintaining control. The skilful transactional leader is likely to be effective in stable, predictable environments where charting activity against prior performance is the most successful strategy. Transformational leaders seek new ways of working, seek opportunities in the face of risk, prefer effective answers to efficient answers, and are less likely to support the status quo. Transformational leaders do not merely react to environmental circumstances--they attempt to shape and create them. (Lowe and Galen Kroeck 1996). Over the history of W.L. Gore & Associates, transformational leadership has emerged as one of the most popular approaches to gain leader effectiveness. Transformational leadership in Gore rests on the assertion that certain leader behaviours can arouse followers to a higher level of thinking (Bass, 1985; Burns, 1978). By appealing to followers' ideals and values, transformational leaders enhance commitment to a well-articulated vision and inspire followers to develop new ways of thinking about problems. In Gore, the main task leader is to align the members of the team to the business goal. This is not a democratic process, leaders are not voted for, rather they emerge through a consensus of followeship. This process of relationship, the Followership, is somewhat mystical and subtle, and is quite difficult to understand from outside of the organization. It is a function of the growth of the individual concerned, this person's passion for the opportunity or task at hand, a past history of successfully resolving difficult issues, strength of interpersonal relationships with other associates, personal style and the satisfaction of team members. According to Bill Gore, the number of people that must integrate a group to be efficient and effective is no more than 150. Distributed and dispersed leadership Dispersed leadership includes theories that represent the decentralization of leadership skills and responsibilities in an organization. Dispersed leadership theories have emerged in response to the shifting limits to power in organizations today. They promote empowerment through the transfer of leadership skills and responsibilities to lower-level workers. The two generic forms of dispersed leadership are self-leadership and the leadership of autonomous work teams. Self-leadership, as applied in Gore & Associates, is where employees are taught to lead themselves, taking responsibility for their own direction and control. The nature of team leadership is viewed where an organization is restructured into autonomous work teams, each of which is controlled by its own leader. It espouses a sharing of power between leaders and followers. Besides, distributed leadership is not the same as dividing task responsibilities among individuals who perform defined and separate organizational roles, but rather it comprises dynamic interactions between multiple leaders and followers (Timperley 2005). Likewise, in Gore exists one principle which guide the control and boundaries of leader/follower decision and contribution to firm, that is the principle of waterline. It is based on the analogy that the organization is like a ship that all the associates are on together. The longer associates are with the organization, the clearer they are about where the waterline is - and indeed, over time, where the waterline is will be different for different associates with different levels of skill, experience and knowledge. When leadership skills and responsibilities are dispersed or shared throughout an organization, an emphasis is placed upon the process of leadership and not upon the attributes or style of a person-"the leader". Dispersed leadership theories imply that leadership is not necessarily something that an extraordinary individual does. Rather, it is something that many people can do. Furthermore, viewing leadership as a process suggests that the leader/follower relationship is no longer of central importance to the study of leadership. On the contrary, such a view suggests that the boundaries, which once differentiated "the leader" from "the follower", are now very gray (Gordon 2002). Leadership style and influencing skills There are a number of different approaches, or "styles" to leadership and management that are based on different assumptions and theories. The style that individuals use will be based on a combination of their beliefs, values and preferences, as well as the organizational culture and norms which will encourage some styles and discourage others. Participative leadership style, which is applied and put into action in Gore & Associates, is defined as joint decision making, or at least shared influence in decision making, by a superior and his or her employees. A Participative Leader in Gore, rather than taking autocratic decisions, seeks to involve other people in the process, possibly including subordinates, peers, superiors and other stakeholders. Contrary, directive leadership, which is not applied in essence at Gore, is defined as providing the team members with a framework for decision making and action in alignment with the superior's vision (Johnson 2005). The ethical role of leadership Fundamentally, ethical leadership involves leading in a manner that respects the rights and dignity of others (Johnson, 2005). As leaders in Gore & Associates are by nature in a position of social power, ethical leadership focuses on how leaders use their social power in the decisions they make, actions they engage in, and ways they influence others. Gore manages some key attributes to achieve an ethical leadership, it means, character and integrity of leaders, ethical awareness, community/people-orientation, motivating, encouraging and empowering, and managing ethical accountability. As the leader emerges through a consensus of followership, Gore assures to achieve an ethical perspective of leaders. The leadership and organizational context 5.1. Leadership team work and team building As defined by Bill Gore, Leadership is a verb, not a noun. It is defined by what people do, not who they are. Likewise, leadership at Gore is defined by followership, and evolves naturally in the lattice organization. At leader emerges as his or her contributions and abilities are recognized by other associates. Leaders are rarely appointed and do not hold rank or title. Leadership can be quite fluid at Gore. The associate with the spark of an idea for a new waste reduction project may initially lead that project and gain followers who make a commitment to work on it. That is the way leadership team work and team building function at Gore. As this team-building and visioning phase concludes and the detailed work of the project team commences, a different set of skills and experience may be required from the leader. It is no longer necessary to sell the project and convince others to join, for what is required now is a detailed focus on process re-engineering and resource allocation. A different leader may well emerge to see the team through this new stage. The leader who established the project may stay involved or may have moved on to other commitments. Consequently, the make-up of the team and its leadership continually evolve. 5.2. Group processes and creativity The relationship between associates and leaders is very important at Gore and it is one of the antecedents of team building. In addition, sponsorship is another very important relationship at the heart of Gore & Associates. Sponsorship is a relationship between two individuals - the sponsor and sponsored. In Gore, sponsor accepts a responsibility to help another associate improve his or her contribution to the success of the firm and to assure that the person being sponsored is treated fairly. This kind of helpness generates the positive fluid inside the group processes and impulse the creativity. Besides, the success of Gore's team based and creativity relies fundamentally on the interpersonal communication skills of the associates, and Gore makes significant investment in development program to support this. Each year, most associates participate in a 'people' skills development program, which represents a significant investment of time and resources. This influences the group process effectiveness and impulse creativity as well. The leadership practices employed at Gore are summarized and presented in Figure 1 below. 1Figure 1: Dimensions of leadership at Gore & Associates Source: Self-devised Change in WL Gore & Associates, Inc. Change Management The rapidity of change affecting modern organizations makes change an inevitable feature of organizational life. Organization development is directed at bringing about planned change to increase an organization's effectiveness. It is generally initiated and implemented by managers, often with the help of a consultant either from inside or outside of the organization. Organizations can use planned change to more readily solve problems, to learn from experience, to adapt to change, and to influence future changes (Cummings 2005). Change can vary in complexity from introducing relatively simple changes into a small work group to transforming most features of the total organization. Change Management is the process, tools and techniques to manage the people-side of change processes, to achieve the required outcomes, and to realize the change effectively within the individual change agent, the inner team, and the wider system. Importantly, one cannot impose change - people and teams need to be empowered to find their own solutions and responses, with facilitation and support from managers, leaders and executives, something in which Gore &Associates has managed to find its unique recipe that drives the continuous success of the organization. Moreover, the importance of leadership to the change management process is underscored by the fact that change, by definition, requires creating a new system and then institutionalizing the new approaches. Therefore, change management depends on leadership to be enacted. Among the most important practices leading to success in Gore &Associates is the ability to flexibly adapt individual practices to meet changing organizational circumstances. Change has been converted in a "capacity" at Gore &Associates, as it is a natural process that follows the employed leadership pattern. As part of the company's culture, the empowerment has led to accepting change as a necessary and advantageous strategy in the organization. Planning change and Change strategies The action research planning model focuses on planned change as a cyclical process in which initial research about the organization provides information to guide subsequent action. Then, the results of the action are assessed to provide further information to guide further action, and so on. This iterative cycle of research and action involves considerable collaboration between organizational members and practitioners. It places heavy emphasis on data gathering and diagnosis prior to action planning and implementation, as well as careful evaluation of results after action is taken (Cummings 2005). Gore &Associates is a lattice organization, without formal hierarchy and this allows more readily introduction of changes. Moreover, the four core principles of the company - fairness, freedom, commitment and waterline - contribute to the change climate within the organization. These principles are not black-and-white statements that tell people what to do. They encourage interpretation, experimentation and evolution. The principles promote continuous communication and learning, creativeness and innovation. - Change strategies Strategic change generally occurs when organizations shift strategic direction to better meet changing environmental demands. The new strategy usually requires significant alterations in the firm's design features to channel behaviours in the desired direction. There are two types of change strategy - incremental and transformational. Incremental change doesn't challenge existing assumptions and culture. It doesn't modify the existing organization. It uses existing structures and processes; it causes little disruption; it is relatively low risk; it is slow and it may not produce enough change. On the other hand, transformational change changes existing structures, the existing organization and the existing culture. It is relatively high risk. It is fast and focuses on major breakthroughs. Throughout its years of creation and development Gore &Associates has placed major emphasis on change strategies. This has enabled the continuous introduction of new products and services, the international expansion and the gaining of reputation of innovative organization that dares to take the risk and to manage change. Resistance to change - Creating readiness for change Organizational change involves moving from the known to the unknown. Because the future is uncertain and may adversely affect people's competences, worth, and coping abilities organizational members generally do not support change unless compelling reasons convince them to do so. Similarly, organizations tend to be heavily invested in the status quo, and they resist changing it in the face of uncertain future benefits. One of the more fundamental actions about people's readiness for change depends on creating a felt need for change. This involves making people so dissatisfied with the status quo that they are motivated to try new things and ways of behaving. Generally, people and organizations need to experience deep levels of hurt before they will seriously undertake meaningful change. There are three methods that can help to generate enough dissatisfaction to produce change: sensitize organizations to pressures for change; reveal discrepancies between current and desired states; and convey credible positive expectations for the change (Cummings 2005). - Overcoming resistance to change Change can generate deep resistance in people and in organizations making it difficult if not impossible to implement organizational improvement. At a personal level, change can arouse considerable anxiety about letting go of the known and moving to an uncertain future. Individuals may be unsure as to whether their existing skills and contributions will be valued in the future. They may have significant questions about whether they can learn to function effectively and to achieve benefits in the new situation. At the organizational level, resistance to change can arise from the habit of following common procedures and the sunk cost of resources invested in the status quo. Organizational changes may also be threatening to powerful stakeholders, such as top executive or staff personnel, and may call to question the past decisions of leaders. Moreover, the organization's culture may reinforce the status quo, promoting conformity to existing values, norms, and assumptions about how things should operate. The methods for dealing with resistance to change include at least three major strategies: empathy and support; communication; and participation and involvement (Cummings 2005). Those three are exactly the methods applied by Gore &Associates. The constant support from the leaders and the institution of sponsorship have developed the team spirit of cooperation thus lessening the possibilities for change resistance. In addition, open communication is a major feature of the organizational culture. This, along with the climate of participation and involvement of the associates in various projects contributes greatly to the overcoming the resistance to change. People organisation and technology Work design involves designing jobs and work groups for high levels of employee satisfaction and productivity. Such results depend on designing work to match specific factors operating in the work setting. These factors have to do with the technology for producing goods and services and the personal needs of employees. When work is designed to fit or match these factors work is most likely to be productive and humanly satisfied and this is the view supported by Gore &Associates. There are four strategies to bring technology and people more into line with each other (see Figure 2). Traditional jobs tend to be simplified over time and made more routine and repetitive. Traditional work groups are composed of members performing relatively routine yet related tasks. The overall group task is typically broken into simpler, discrete parts. Enriched jobs provide people with opportunities for autonomy, responsibility, closure, and feedback about performance. Such jobs are likely to be effective in situations where technical interdependence is low and uncertainty high and where people have low social needs yet high growth needs. Self-regulating work groups - alternatively referred to as autonomous or self-managing work groups - include members performing interrelated tasks. Such groups can control members' task behaviours. They have responsibility for a whole product or service and can make decisions about task assignments and work methods. In many cases, the group sets its own production goals, within broader corporate limits, and may be responsible for support services such as maintenance, purchasing, and quality control. Team members are generally expected to learn all of the jobs within the control of the group and frequently are paid on the basis of knowledge and skills rather than seniority. Self-regulating groups are best suited to situations in which technical interdependence and uncertainty are both high and in which people have high social and growth needs (Cummings 2005). Figure 2: Strategies to bring technology and people more into line with each other 1 Traditional jobs 2 Traditional work groups 3 Enriched jobs 4 Self-regulating work groups Source: Cummings 2005 Gore &Associates is positioned in the fourth quadrant. The organizational climate requires responsibility and decision making; the group has its own goals, but also the EVA as a corporate performance indicator. This is the strategy that is best suited in high uncertainty environment and high social and growth needs. The change management practices employed at Gore are summarized and presented in Figure 3 below. Figure 3: Dimensions of Change Management at Gore & Associates Source: Self-devised Innovation in WL Gore & Associates, Inc. The organizational environment for innovation Innovation has always been a primary challenge of leadership. Today we live in an era of such rapid change and evolution that leaders must work constantly to develop the capacity for continuous change and frequent adaptation, while ensuring that identity and values remain constant. They must recognize people's innate capacity to adapt and create - to innovate. In Gore & Associates, innovation is managed controlling both environment and architecture. Environment fosters the continual growth of new ideas, and architecture ensures ideas are captured and handled for the benefit of the organization. One of the additional aspects that Gore manage to maintain the innovative culture is the recruitment and selection process. Some people are likely to find the unstructured Gore culture a poor fit for their style and work preferences. However, the firm prides on itself on its ability to select people for their suitability for the culture of innovation, and has developed interviewing processes over time to achieve this. The search for a new associate begins with the commitment of a starting sponsor to work with the new person immediately upon arrival. Clear starting commitments will also have been defined for the new associate. In addition, at Gore, the work environment consists of attitudes towards experimentation, acceptance of failure, unspoken guidelines, tolerance of innovation spikes, and support for innovators. It is an ecology that permits the growth and expression of new ideas. That is the reason for the intensive orientation process that new associate affronts. The focus of orientation is very heavily on helping new associates gain the cultural familiarity to become successful quickly. The intent of the orientation program is to create a cohort of cultural champions who are imbued with the corporate philosophy and way of doing things from day one. According to Ekvall (1996) the dimensions that the firm has to control to increase the degree of innovativeness and creativity are: challenge, freedom, idea-support, trust, dynamism, playfulness, debate, conflict, risk taking and idea time. Obviously, all of the factors mentioned and proposed by Ekwall, are not only taken into account for Gore but also put in practice. On the other hand, another strategic factor that Gore & Associates is considering and adapting is the knowledge management (KM). The KM can be defined very broadly, encompassing any processes and practices concerned with the creation, acquisition, capture, sharing and use of knowledge, skills and expertise. KM, then, is about harnessing the intellectual and social capital of individuals in order to improve organizational learning capabilities, recognising that knowledge, and not simply information, is the primary source of an organization's innovative potential. The belief of Gore about spawned 'clusters' of plants around the firm, where few individual buildings house have among 150-200 people, but many plants are located near each other so that expensive resources can be shared and functional groups of people can come together easily to share knowledge, expertise and experience between plants. Innovation Management Innovation must be a management process and be managed well. Gore & Associates prioritises and takes a strategic approach to innovation management, as well as to the importance of establishing links and networks, internal and external, the need to leverage resources and capabilities, the importance of learning and collaboration and how to do it, how to build effective implementation mechanisms, and how to continuously assess and improve innovation management performance (Tidd et al. 2001) Innovation issues with new products and services Innovation strategies are implemented with the idea of bringing competitive advantage (Bessant 2003). Having competitive advantages allows Gore & Associates to compete in an active way in the markets, even more when the firm interacts in different foreign markets. In this context, the technology represents one of the most important factors in increasing the national and international competitiveness of Gore. Technology allows Gore, on the one hand, to obtain products, through product innovations, with superior characteristics as the ones offered by the competition and, on he other hand, reduces the costs of production and, consequently the prices, through process innovation. In this way, Gore & Associates obtains some competitive advantages that give them the possibility to compete in an active way in different markets. Building innovative teams A team climate characterized by processes such as clarifying team objectives, high levels of participation, emphasis on quality and support for innovation has been found to be related to an innovative outcome of teamwork (Bessant 2003; Tidd et al. 2001). One of the main reasons for organizing work in teams, at Gore, is the anticipation that this will bring continuous improvements through initiative and innovation. In addition to that, Gore & Associates assures that a participative and collaborative leadership is likely to encourage innovation. When self-directed teams are organized, the roles of the leaders have to change away from control and towards coaching, facilitating and supporting (Bessant 2003). The Gore organization lacks a traditional hierarchy. Instead, the highly team-based environment encourages direct, person-to-person communication among all 'associates'. Building the innovative organisation Innovation, as it appears defined in the paper of Acs, Morck and Yeung (2001), is the effort to create purposeful, focused change in an enterprise's economic or social potential. Traditionally, those firms involved in R&D activities through laboratories or through specific units dedicated to the investigation and development of new processes and products, have been considered technological innovative firms. However, the new view of innovative organization suggests different settings that encompass the whole organization. One of the dimensions that is managed in Gore is related to the control of underlying strategy elements such as time-based strategy (faster, more efficient product development), development focus on quality, emphasis on corporate flexibility and responsiveness, customer focus at the forefront of strategy, strategic integration with primary suppliers, strategies for horizontal technological collaboration, electronic data-processing strategies and policy of total quality control (Tidd et al. 2001). The other dimension is associated with the control of primary enabling features such as greater overall organization and systems integration (i.e. parallel and integrated development process, early supplier involvement in product development, involvement of leading-edge users in product development), more flexible organizational structures for rapid and effective decision making (i.e. greater empowerment of managers at lower levels), fully developed internal databases (i.e. effective data-sharing systems), and effective external data link (i.e. use of CAD at the supplier and customer interface, effective data links with R&D collaborators). These dimensions, controlled in Gore, are essentially to build its innovative organization. The innovation practices employed at Gore are summarized and presented in Figure 4 below. Figure 4: Dimensions of Innovation at Gore & Associates Source: Self-devised 5.1. Innovation in service settings The production line approach suggests that service operations can be more efficient by applying manufacturing logics and tactics. Manufacturing thinks technocratically, and that explains its success. By contrast, service looks for solutions in the performance of the tasks. The solution to improve service is viewed as being dependent on improvement in the skills and attitudes of the performers (Levitt 1976). Therefore, the strategies to innovate in services are: simplification of tasks, clear division of labour, substitution of equipment and systems for employees, and little decision making discretion afforded to employees. In contrast, the empowerment approach means encouraging and rewarding employees to exercise initiative and imagination. Based on this approach, it is necessary to eliminate the policies and procedures of the organization that demean and belittle human dignity. Gore, to put in practice the empowerment, was inspired by Douglas McGregor's book where it states about Theory Y. it postulates a management approach involving high empowerment of employees, and this is certainly reinforced by Bill Gore own thinking. 5.2. The Experience economy In the emerging Experience Economy, companies must realize that they make memories, not goods, and create the stage for generating greater economic value, not deliver services. It is time to get your act together, for goods and services are no longer enough. Customers now want experiences, and they are willing to pay admission for them. There is new work to do, and only those who perform that work so as to truly engage their guests will succeed in the new economy. At Gore &Associates the notion of experience economy is now part of the culture. The associates take the reputation for product leadership seriously, continually delivering new products and better solutions to the marketplaces of the world. Gore &Associates work for maximizing individual potential, maintaining an emphasis on product integrity, and cultivating an environment where creativity can flourish. A fundamental belief in the people and their abilities is the key to Gore's success. References Main references Bessant, J. (2003). High Involvement innovation. Wiley. Cummings, Thomas G. (2005). Organization development and change. (8th ed.). Mason, O.H.: South-Western. Johnson, Gerry. (2005). Exploring corporate strategy. (7th ed.). Harlow : Financial Times Prentice Hall. Tidd, J., Bessant, J., & Pavitt, K. (2001). Managing Innovation: Integrating Technological, Market and Organizational Change (2nd edition ed.). Chichester, UK: Wiley. Additional references Acs, Z., R. Morck and B. Yeung. (2001). Entrepreneurship, Globalization and Public Policy. Journal of International Management, 7, 235-251. Bass, B.M. (1985). Leadership and performance beyond expectations. New York: The Free Press. Burns, J.M. (1978). Leadership. 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