Leading in the Changing Economic Context

While management is about “Getting things done’, Leadership is about creating and cultivating the larger context – the fertile common ground and soil in which things can happen.

Initially, business leaders embraced a directive approach i.e. command and control. Leaders setting the agenda and objectives designed to mobilize and guide the whole company.

In the complex environment, that doesn’t work too well – How can you command and control when the most important goals, objectives, issues and opportunities are not known up front but tend to emerge over time?

As a response to the above challenge, leaders started to balance setting goals and direction while increasing people participation across the organization.

Now we are in the third phase.

Blank Canvas

This phase is concerned with creating the conditions that inspire people, teams and networks to operate from a ‘different place’. In this era, organizations can achieve peak performance by creating conditions that all them to unleash the power of their people – not leading them, not managing them, but by co-inspiring them.

For high performance organizations to evolve, leaders have to extend their focus of attention from processes to using the “blank canvas” dimensions of leadership.

They must help people access their sources of inspiration, intuition and imagination. Like an artist standing in front of the blank canvas, leaders must develop a capacity to shift their organization so that its members can sense and articulate emerging futures, both individually and collectively.

The Changing  Economic Context
   
Goods Services Innovation
 
Focus of Value Creation Make standardised products Deliver customized services Stage and co-create personalized experiences
       
Customer as Target for Mass Marketing Target for Mass Customization Partner for Co-Creation
       
Economics Economies of Scale Economies of Scope Economies of Presencing
       
Organizational Model Functional,  Divisional, Networked,
  Single Sphere: Mass Production Two Spheres: Production, Customer Interface Three Spheres: Production, Customer Interface, Innovation
       
Location of Entrepreneurial Impulse Centre of one’s own organization (Product Focus) Periphery of one’s own organization (Customer focus) Surrounding sphere of one’s own organization (co-creation focus)
       
Relationship Logic with Customers PUSH ( Product driven) PULL ( Service driven) PRESENCE (Co-creation driven)
       
Managerial Mindset The world is as it is.                      Self = Onlooker The world evolves as people interact. Self = Participant The world arises as we choose to attend. Self = Source of Co-creation

Above table from the book Theory U by MIT Prof. Dr. Otto Scharmer point that, today, most organizations are not one, but three. Three spheres are Production, Customer Interface and Innovation.

And each of their 3 spheres functions according to a different set of principles.

In Production, the primary principle is Economies of Scale.

In Customer Interface, the primary principle is Economies of Scope.

For Innovation, it is Economies of Presencing; that is, the capacity to sense and shape emerging future possibilities.

To see these patterns accurately, one must look beyond a single organization and begin to see larger economic contexts in which companies co-evolve.

As companies evolve into this next stage, they begin to see the increased need to develop their presence based relational skills.

In order to deal with with disruptive stakeholder situations, managers must be able to tap into their inner sources of creativity and operate from the ECO context – not just individually but as part of a larger organizational field.

They must learn to function within emerging complexity.

The above articles in an excerpt from the book Theory U.

We offer organizations workshops and consulting interventions to help them transform their leadership and build organizations ready to thrive in the VUCA world.

Our introductory workshop both online and in-person can kick start the journey for the organizational leadership team.

Check out: http://bit.ly/LFEFCohort12 – information about our batch starting from Feb. 2020. Thanks Manoj:manoj@managementinnovations.co.in