"All forms of organization are essentially ecosystems,"
writes Dr. Marc van der Erve in A New
Leadership Ethos: The Ability to Predict. Businesses respond to their
environments and obey both "basic laws of energy" and "Darwinian notions".
Organizations also develop in "four distinct stages", each of which requires a
different type of leader. According to van der Erve, these considerations
determine whether a business needs a transformer, builder, grower or
confronter-type leader.
Part 1 of this book review examined the history of Apple
Computer. Apple's example is easy to follow, but the stages of leadership
aren't always discrete – nor are all its endings happy.
Digital Equipment
Corporation
Digital Equipment Corporation (DEC) endured a flawed
beginning, at least according to Marc van der Erve's model. Ken Olsen, the
company's founder, was a grower instead of a builder. Although Olsen grew the
company's annual revenues to $13 billion (USD), he put all of DEC's proverbial
eggs into one basket: mini-computers. Blind to the possibility of personal
computers (PCs), he asserted that "There is no reason for any individual to
have a computer in his home".
Gordon Bell, a builder-type leader, was recruited by DEC from
MIT. A talented inventor, Bell
battled Olsen in a series of "dog fights" that the company's founder ultimately
won. DEC, however, lost its chance to build and then grow. Resting on a flawed
foundation, its last leader plowed ahead to confrontation. Bob Palmer, a
confronter-type president, oversaw DEC's sale to rival Compaq. There would be
no transformer-type leader for the now-defunct Digital Equipment
Corporation.
General Electric
Unlike DEC's Ken Olsen, GE's Jack Welch was both a builder
and a grower. He was a confronter and a transformer, too, as the environment required.
After becoming General Electric's CEO in 1981, Welch slashed the company's
workforce by 100,000 employees. The confronter wasn't content with
cost-cutting, however, and soon became "the driving force behind the
improvement of people and processes." Now a transformer, Jack Welch initiated
the largest total-quality program in corporate America. In a "ruthless process of
natural selection", he also ordered his subordinates to axe underperformers. With
a leaner, meaner team in place, Welch invested heavily in the organization's future
leaders.
Although most CEOs are content to remain in their comfort
zone, Jack Welch was more than a confronter – or even a transformer. When the
business environment required a builder, he bought "a record number of
companies" with both a "proven track record" and the potential for growth.
During the last stage of his GE career, Welch served as a grower-type leader who
reaped the reward of what he had sown. In 1981, when Welch became CEO, GE's
revenues were $12 billion (USD). In 2001, when he retired, they were $280
billion.
Jack Welch's successor, Jeffrey Immelt, was forced to become
a confronter-type leader as economic conditions worsened and GE's growth
declined. As Marc van der Erve notes, the "Immelt Revolution" broke with GE's
promote-from-within policies. The company's new outward focus included the sale
of GE Plastics to SABIC. Whether Jeffery Immelt can rise to the environment's
eventual demand for a transformer-type leader remains to be seen.
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