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BEST OF HBR1997

Sometimes an article comes along

and turns the conventional think-

ing on a subject not upside down

but inside out. So it is with this

landmark piece by Ronald Heifetz

and Donald Laurie, published in

January 1997 Notoniy do the au-

thors introduce the breakthrough concept of

adaptive change-the sort of change that occurs when people

and organizations are forced to adjust to a radically altered

environment-they challenge the traditional understanding

ofthe leader-follower relationship.

Leaders are shepherds, goes the conventional thinking,

protecting their flock from harsh surroundings. Not so, say the

authors. Leaders who truly care for their followers expose them

to the painful reality of their condition and demand that they

fashion a response. Instead of giving people false assurance

that their best is good enough, leaders insist that people sur-

pass themselves. And rather than smoothing over conflicts,

leaders force disputes to the surface.

Modeling the candor they encourage leaders to display,

the authors don't disguise adaptive change's emotional costs.

Few people are likely to thank the leader for stirring anxiety

and uncovering conflict But leaders who cultivate emotional

fortitude soon learn what they can achieve when they maxi-

mize their followers'well-being instead of their comfort.

I

The Work ofLeadership

Followers want comfort,

stability, and solutions

from their leaders. But

that's babysitting. Real leaders

ask hard questions and knock

people out of their comfort

zones. Then they manage

the resulting distress.

by Ronald A. Heifetz andDonald L Laurie

T o STAY ALIVE, Jack Pritchardhad to change his life. Triplebypass surgery and medication

could help, the heart surgeon toldhim, but no technical fix could releasePritchard from his own responsibilityfor changing the habits of a lifetime.He had to stop smoking, improve hisdiet, get some exercise, and take timeto relax, remembering to breathe moredeeply each day. Pritchard's doctor couldprovide sustaining technical expertiseand take supportive action, but onlyPritchard could adapt his ingrainedhabits to improve his long-term health.The doctor faced the leadership task ofmobilizing the patient to make criticalbehavioral changes; Jack Pritchard facedthe adaptive work of figuring out whichspecific changes to make and how toincorporate them into his daily life.

Companies today face challenges sim-ilar to the ones that confronted Pritch-ard and his dortor. They face adaptive

BREAKTHROUGH LEADERSHIP DECEMBER 2001

BEST OF HBR • The Work of Leadership

challenges. Changes in societies, mar-kets, customers, competition, and tech-nology around the globe are forcingorganizations to clarify their values,develop new strategies, and learn newways of operating. Often the toughesttask for leaders in effecting change ismobilizing people throughout the or-ganization to do adaptive work.

Adaptive work is required when ourdeeply held beliefs are challenged, whenthe values that made us successful be-come less relevant, and when legitimateyet competing perspectives emerge.We see adaptive challenges every dayat every level of the workplace - whencompanies restructure or reengineer,develop or implement strategy, or mergebusinesses. We see adaptive challengeswhen marketing has difficulty workingwith operations, when cross-functionalteams don't work well, or when seniorexecutives complain,"We don't seem tobe able to execute effectively." Adaptiveproblems are often systemic problemswith no ready answers.

Mobilizing an organization to adaptits behaviors in order to thrive in newbusiness environments is critical. With-out such change, any company todaywould falter. Indeed, getting people todo adaptive work is the mark of leader-ship in a competitive world. Yet for mostsenior executives, providing leadershipand not just authoritative expertise isextremely difficult. Why? We see tworeasons. First, in order to make changehappen, executives have to break a long-standing behavior pattern of their own;providing leadership in the form of so-lutions. This tendency is quite naturalbecause many executives reach their pt>-sitions of authority by virtue of their

Solutions to adaptive challenges reside not

in the executive suite but in the collective

intelligence of employees at all levels.

competence in taking responsibility andsolving problems. But the locus of re-sponsibility for problem solving whena company faces an adaptive challengemust shift to its people. Solutions toadaptive challenges reside not in theexecutive suite but in the collective in-telligence of employees at all levels, whoneed to use one another as resources,often across boundaries, and learn theirway to those solutions.

Second, adaptive change is distress-ing for the people going through it. Theyneed to take on new roles, new rela-tionships, new values, new behaviors,and new approaches to work. Manyemployees are ambivalent about theefforts and sacrifices required of them.They often look to the senior executiveto take problems off their shoulders.But those expectations have to be un-learned. Rather than fulfilling the ex-pectation that they will provide answers,leaders have to ask tough questions.Rather than protecting people from out-side threats, leaders should allow themto feel the pinch of reality in order tostimulate them to adapt. Instead of ori-enting people to their current roles,leaders must discirient them so that newrelationships can develop, instead ofquelling conflict, leaders have to drawthe issues out. Instead of maintainingnorms, leaders have to challenge "theway we do business" and help others

Ronald A. Heifetz is codirector of the Center for Public Leadership at Harvard Univer-sity's John F. Kennedy School of Government in Cambridge, Massachusetts. Donald L.Laurie is founder and managing director of Laurie International, a Boston-basedmanagement consultingßrm. He is also a founder and partner at Oyster International,another Boston-based management consultingßrm. He is the author (if VentureCatalyst (Perseus Books, 2001). This article is based in part on Heifetz's LeadershipWithout Easy Answers (Belknap Press of Harvard University Press, i994)-

distinguish immutable values from his-torical practices that must go.

Drawing on our experience with man-agers from around the world, we offersix principles for leading adaptive work:"getting on the balcony," identifyingthe adaptive challenge, regulating dis-tress, maintaining disciplined attention,giving the work back to people, andprotecting voices of leadership frombelow. We illustrate those principleswith an example of adaptive changeat KPMG Netherlands, a professional-services firm.

Get on the BalconyEarvin "Magic" Johnson's greatness inleading his basketball team came in partfrom his ability to play hard while keep-ing the whole game situation in mind,as if he stood in a press box or on a bal-cony above the field of play. Bobby Orrplayed htxkey in the same way. Otherplayers might fail to recognize the largerpatterns of play that performers likeJohnson and Orr quickly understand,because they are so engaged in thegame that they get carried away by it.Their attention is captured by the rapidmotion, the physical contact, the roar ofthe crowd, and the pressure to execute.In sports, most players simply may notsee who is open for a pass, who is miss-ing a block, or how the offense and de-fense work together. Players like John-son and Orr watch these things andallow their observations to guide theiractions.

Business leaders have to be able toview patterns as if they were on a bal-cony. It does them no good to be sweptup in the field of action. Leaders have tosee a context for change or create one.

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The Work of Leadership • BEST O F HBR

They should give employees a strongsense ofthe history ofthe enterpriseand what's good about its past, as wellas an idea ofthe market forces at worktoday and the responsibility peoplemust take in shaping the future. Lead-ers must be able to identify strugglesover values and power, recognize pat-terns of work avoidance, and watch forthe many other functional and dys-functional reactions to change.

Without the capacity to move backand forth between the field of actionand the balcony, to reflect day to day,moment to moment, on the manyways in which an organization's habitscan sabotage adaptive work, a leadereasily and unwittingly becomes a pris-oner of the system. The dynamics ofadaptive change are far too complex tokeep track of, let alone influence, ifleaders stay only on the field of play.

We have encountered several lead-ers, some of whom we discuss in thisarticle, who manage tt> spend much oftheir precious time on the balcony asthey guide their organizations throughchange. Without that perspective, theyprobably would have been unable tomobilize people to do adaptive work.Getting on the balcony is thus a pre-requisite for following the next fiveprinciples.

Identify theAdaptive Challengewhen a leopard threatens a band ofchimpanzees, the leopard rarely suc-ceeds in picking off a stray. Chimpsknow how to respond to this kind ofthreat. But when a man with an auto-matic rifle comes near, the routineresponses fail. Chimps risk extinctionin a world of poachers unless they fig-ure out how to disarm the new threat.Similarly, when businesses cannotlearn quickly to adapt to new chal-lenges, they are likely to face their ownform of extinction.

Consider the well-known case ofBritish Airways. Having observed the

BREAKTHROUCH LEADERSHIP DECEMBER 2001 133


revolutionary changes in the airline in-dustry during the lgSos, then chief ex-ecutive Colin Marshall clearly recog-nized the need to transform an airlinenicknamed Bloody Awful by its ownpassengers into an exemplar of cus-tomer service. He also understood thatthis ambition would require more thananything else changes in values, prac-tices, and relationships throughout thecompany. An organization whose peo-ple clung to functional silos and valuedpleasing their bosses more than pleas-ing customers could not become "theworld's favorite airline." Marshall neededan organization dedicated to servingpeople, acting on trust, respecting theindividual, and making teamwork hap-pen across boundaries. Values had tochange throughout British Airways.People had to learn to collaborate and

Marshall and his team set out to di-agnose in more detail the organization'schallenges. They looked in three places.First, they listened to the ideas and con-cerns of people inside and outside theorganization - meeting with crews onflights, showing up in the 350-personreservations center in New York, wan-dering around the baggage-handlingarea in Tokyo, or visiting the passengerlounge in whatever airport they hap-pened to be in. Their primary questionswere. Whose values, beliefs, attitudes,or behaviors would have to change inorder for progress to take place? Whatshifts in priorities, resources, and powerwere necessary? What sacrifices wouldhave to be made and by whom?

Second, Marshall and his team sawconflicts as clues - symptoms of adap-tive challenges. The way conflicts across

A leader must sequence and pace the work. Too often,

senior managers convey that everything is important.

They overwhelm and disorient the very people

need to take responsibility for the work.

to develop a collective sense of respon-sibility for the direction and perfor-mance of the airline. Marshall identi-fied the essential adaptive challenge;creating trust throughout the organi-zation. He is one ofthe first executiveswe have known to make "creating trust"a priority.

To lead British Airways, Marshall hadto get his executive team to understandthe nature of the threat created bydissatisfied customers: Did it representa technical challenge or an adaptivechallenge? Would expert advice andtechnical adjustments within basic rou-tines suffice, or would people through-out the company have to learn differ-ent ways of doing business, developnew competencies, and begin to workcollectively?

functions were being expressed weremere surface phenomena; the under-lying conflicts had to be diagnosed. Dis-putes over seemingly technical issuessuch as procedures, schedules, and lines ofauthority were in fact proxies for under-lying confiicts about values and norms.

Third, Marshall and his team held amirror up to themselves, recognizingthat they embodied the adaptive chal-lenges facing the organization. Early inthe transformation of British Airways,competing values and norms were playedout on the executive team in dysfunc-tional ways that impaired the capacityof the rest of the company to collab-orate across functions and units andmake the necessary trade-offs. No exec-utive can hide from the fact that his orher team reflects the best and the worst

ofthe company's values and norms, andtherefore provides a case in point forinsight into the nature ofthe adaptivework ahead.

Thus, identifying its adaptive chal-lenge was crucial in British Airways'bid to become the world's favorite air-line. For the strategy to succeed, thecompany's leaders needed to under-stand themselves, their people, and thepotential sources of conflict. Marshallrecognized that strategy developmentitself requires adaptive work.

Regulate DistressAdaptive work generates distress. Be-fore putting people to work on chal-lenges for which there are no readysolutions, a leader must realize thatpeople can learn only so much so fast.At the same time, they must feel theneed to change as reality brings newchallenges. They cannot learn new wayswhen they are overwhelmed, but elimi-nating stress altogether removes theimpetus for doing adaptive work. Be-cause a leader must strike a delicatebalance between having people feel theneed to change and having them feeloverwhelmed by change, leadership isa razor's edge.

A leader must attend to three funda-mental tasks in order to help maintaina productive level of tension. Adheringto these tasks will allow him or her tomotivate people without disabling them.First, a leader must create what can becalled a holding environment. To use theanalogy of a pressure cooker, a leaderneeds to regulate the pressure by turn-ing up the heat while also allowingsome steam to escape. If the pressureexceeds the ctwker's capacity, the cookercan blow up. However, nothing cookswithout some heat.

In the early stages of a corporatechange, the holding environment canbe a temporary "place" in which a leadercreates the conditions for diverse groupsto talk to one another about the chal-lenges facing them, to frame and debate

134 HARVARD BUSINESS REVIEW

The Work of Leadership • BEST OF HBR

Define problems andprovide solutions

Identify the adaptivechallenge and frame keyquestions and issues

Shield the organizationfrom external threats

Let the organization feelexternal pressures withina range it can stand

Orientation

Managing Conflict

Shaping Norms

Clarify roles andresponsibilities

Restore order

Maintain norms

Challenge current rolesand resist pressure todefine new roles quickly

Expose conflict orlet it emerge

Challenge unproductivenorms

In the course of regulating people's distress, a leader faces several keyresponsibilities and may have to use bis or her autbority differentlydepending on tbe type of work situation.

issues, and to clarify the assumptionsbehind competing perspectives andvalues. Over time, more issues can bephased in as they become ripe. At Brit-ish Airways, for example, the shift froman internal focus to a customer focustook place over four or five years anddealt with important issues in succes-sion: building a credible executive team,communicating with a highly fragmentedorganization, defining new measures ofperformance and compensation, anddeveloping sophisticated informationsystems. During that time, employeesat all levels learned to identify what andhow they needed to change.

Thus, a leader must sequence andpace the work. Ttx) often, senior man-agers convey that everything is impor-tant. They start new initiatives without

stopping other activities, or they starttoo many initiatives at the same time.They overwhelm and disorient the verypeople who need to take responsibilityfor the work.

Second, a leader is responsible fordirection, protection, orientation, man-aging confiict, and shaping norms. (Seethe exhibit "Adaptive Work Calls forLeadership.") Fulfilling these responsi-bilities is also important for a managerin technical or routine situations. But aleader engaged in adaptive work useshis authority to fulfill them differently.A leader provides direction by identify-ing the organization's adaptive chal-lenge and framing the key questionsand issues. A leader protects people bymanaging the rate of change. A leaderorients people to new roles and respon-

sibilities by clarifying busi-ness realities and key values.A leader helps expose con-flict, viewing it as the engineof creativity and learning.Finally, a leader helps theorganization maintain thosenorms that must endure andchallenge those that needto change.

Third, a leader must havepresence and poise; regulat-ing distress is perhaps a lead-er's most difficult job. Thepressures to restore equilib-rium are enormous, just asmolecules bang hard againstthe walls of a pressure cook-er, people bang up againstleaders who are trying to sus-tain the pressures of tough,conflict-filled work. Althoughleadership demands a deepunderstanding of the painof change -the fears and sac-rifices asstxiated with majorreadjustment - it also re-quires the ability to holdsteady and maintain the ten-sion. Otherwise, the pressureescapes and the stimulus for

learning and change is lost.

A leader has to have the emotionalcapacity to tolerate uncertainty, frustra-tion, and pain. He has to be able to raisetough questions without getting tooanxious himself. Employees as well ascolleagues and customers will carefullyobserve verbal and nonverbal cues to aleader's ability to hold steady. He needsto communicate confidence that he andthey can tackle the tasks ahead.

Maintain Disciplined AttentionDifferent people within the same orga-nization bring different experiences,assumptions, values, beliefs, and habitsto their work. This diversity is valuablebecause innovation and learning arethe products of differences. No onelearns anything without being open to

BREAKTHROUGH LEADERSHIP DECEMBER 2001 135


contrasting points of view. Yet managersat all levels are often unwiliing-or un-able - to address their competing per-spectives collectively. They frequentlyavoid paying attention to issues thatdisturb them. They restore equilibriumquickly, often with work avoidance ma-neuvers. A leader must get employees toconfront tough trade-offs in values, pro-cedures, operating styles, and power.

That is as true at the top ofthe orga-nization as it is in the middle or onthe front line, indeed, if the executiveteam cannot model adaptive work, theorganization will languish. If seniormanagers can't draw out and deal withdivisive issues, how will people else-where in the organization change theirbehaviors and rework their relation-ships? As Jan Carlzon, the legendaryCEO of Scandinavian Airlines System(SAS), told us, "One of the most inter-esting missions of leadership is gettingpeople on the executive team to listento and learn from one another. Heldin debate, people can learn their wayto collective solutions when they un-derstand one another's assumptions.The work of the leader is to get conflictout into the open and use it as a sourceof creativity."

Because work avoidance is rampantin organizations, a leader has to coun-teract distractions that prevent peoplefrom dealing with adaptive issues. Scape-goating, denial, focusing onty on today'stechnical issues, or attacking individualsrather than the perspectives they repre-sent - all forms of work avoidance - areto be expected when an organizationundertakes adaptive work. Distractionshave to be identified when they occur sothat people will regain focus.

When sterile conflict takes the placeof dialogue, a leader has to step in andput the team to work on reframing theissues. She has to deepen the debatewith questions, unbundling the issuesinto their parts rather than letting con-flict remain polarized and superficial.When people preoccupy themselves

with blaming external forces, highermanagement, or a heavy workload, aleader has to sharpen the team's senseof responsibility for carving out the timeto press forward. When the team frag-ments and individuals resort to protect-ing their own turf, leaders have todemonstrate the need for collaboration.People have to discover the value of con-sulting with one another and using oneanother as resources in the problem-st>lving process. For example, one CEOwe know uses executive meetings, eventhose that focus on operational andtechnical issues, as opportunities toteach the team how to work collectivelyon adaptive problems.

Ofcourse, only the rare manager in-tends to avoid adaptive work. In gen-eral, people feel ambivalent about it.Although they want to make progresson hard problems or live up to theirrenewed and clarified values, peoplealso want to avoid the associated dis-tress. Just as millions of U.S. citizenswant to reduce the federal budget def-icit, but not by giving up their taxdollars or benefits or jobs, so, too, man-agers may consider adaptive work apriority but have difficulty sacrificingtheir familiar ways of doing business.People need leadership to help themmaintain their focus on the toughquestions. Disciplined attention is thecurrency of leadership.

Give the Work Backto PeopleEveryone in the organization has specialaccess to information that comes fromhis or her particular vantage point.Everyone may see different needs andopportunities. People who sense earlychanges in the marketplace are often atthe periphery, but the organization willthrive if it can bring that information tobear on tactical and strategic decisions.When people do not act on their specialknowledge, businesses fail to adapt.

All too often, people look up thechain of command, expecting senior

management to meet market challengesfor which they themselves are responsi-ble. Indeed, the greater and more per-sistent distresses that accompany adap-tive work make such dependence worse.People tend to become passive, and se-nior managers who pride themselves onbeing problem solvers take decisive ac-tion. That behavior restores equilibriumin the short term but ultimately leads tocomplacency and habits of work avoid-ance that shield people from responsi-bility, pain, and the need to change.

Getting people to assume greater re-sponsibility is not easy. Not only aremany lower-level employees comfort-able being told what to do, but manymanagers are accustomed to treatingsubordinates like machinery that re-quires control. Letting people take theinitiative in defining and solving prob-lems means that management needsto learn to support rather than control.Workers, for their part, need to learn totake responsibility.

Jan Carlzon encouraged responsibilitytaking at SAS by trusting others anddecentralizing authority. A leader hasto let people bearthe weight of respon-sibility. "The key is to let them discoverthe problem,"he said,"You won't be suc-cessful if people aren't carrying therecognition ofthe problem and the st>lution within themselves." To that end,Carizon sought widespread engagement.

For example, in his first two years atSAS, Carlzon spent up to 50% of his timecommunicating directly in large meet-ings and indirectly in a host of innova-tive ways: through workshops, brain-storming sessions, learning exercises,newsletters, brochures, and exposure inthe public media. He demonstratedthrough a variety of symbolic acts-forexample, by eliminating the pretentiousexecutive dining room and burningthousands of pages of manuals andhandbooks-the extent to which ruleshad come to dominate the company.He made himself a pervasive presence,meeting with and listening to people



both inside and outside the organiza-tion. He even wrote a book, Moments ofTruth {HarperCollins, 1989), to explainhis values, philosophy, and strategy.As Carlzon noted,"If no one else read it,at least my people would."

A leader also must develop collectiveself-confidence. Again, Carlzon said itwell: "People aren't born with self-confidence. Even the most self-confidentpeople can be broken. Self-confidencecomes from success, experience, andthe organization's environment. Theleader's most important role is to in-still confidence in people. They mustdare to take risks and responsibility.You must back them up if they makemistakes."

Protect Voices of Leadershipfrom BelowGiving a voice to all people is the foun-dation of an organization that is willingto experiment and learn. But, in fact,whistle-blowers, creative deviants, andother such original voices routinely getsmashed and silenced in organizationallife. They generate disequilibrium, andthe easiest way for an organization torestore equilibrium is to neutralizethose voices, sometimes in the nameof teamwork and "alignment."

The voices from below are usually notas articulate as one would wish. Peoplespeaking beyond their authority usuallyfeel self-conscious and sometimes haveto generate "too much" passion to getthemselves geared up for speaking out.Of course, that often makes it harder forthem to communicate eftectively. Theypick the wrong time and place, andoften bypass proper channels of com-munication and lines of authority. Butburied inside a poorly packaged inter-jection may lie an important intuitionthat needs to be teased out and consid-ered. To toss it out for its bad timing,lack of clarity, or seeming unreason-ableness is to lose potentially valuableinformation and discourage a potentialleader in the organization.

Management needs to learn to support rather

than control. Workers, for their part, need to

learn to take responsibility.

That is what happened to David, amanager in a large manufacturing com-pany. He had listened when his supe-riors encouraged people to look forproblems, speak openly, and take re-sponsibility. So he raised an issue aboutone of the CEO's pet projects-an issuethat was deemed "too hot to handle"and had been swept under the carpetfor years. Everyone understood that itwas not open to discussion, but Davidknew that proceeding with the projectcould damage or derail key elementsof the company's overall strategy. Heraised the issue directly in a meetingwith his boss and the CEO. He provideda clear description of the problem, arundown of competing perspectives,and a summary of the consequencesof continuing to pursue the project.

The CEO angrily squelched the dis-cussion and reinforced the positiveaspects of his pet project. When Davidand his boss left the room, his bossexploded: "Who do you think you are,with your holier-than-thou attitude?"He insinuated that David had neverliked the CEO's pet project becauseDavid hadn't come up with the ideahimself The subject was closed.

David had greater expertise in thearea of the project than either his bossor the CEO. But his two superiors dem-onstrated no curiosity, no effort to inves-tigate David's reasoning, no awarenessthat he was behaving responsibly withthe interests of the company at heart.It rapidly became clear to David that itwas more important to understandwhat mattered to the boss than to focuson real issues. The CEO and David's bosstogether squashed the viewpoint of aleader from below and thereby killed

his potential for leadership in the orga-nization. He would either leave the com-pany or never go against the grain again.

Leaders must rely on others withinthe business to raise questions thatmay indicate an impending adaptivechallenge. They have to provide coverto people who point to the internalcontradictions of the enterprise. Thoseindividuals often have the perspectiveto provoke rethinking that people in au-thority do not. Thus, as a rule of thumb,when authority figures feel the refiexiveurge to glare at or otherwise silencesomeone, they should resist. The urgeto restore social equilibrium is quitepowerful, and it comes on fast. One hasto get accustomed to getting on the bal-cony, delaying the impulse, and asking,What is this guy really talking about?Is there something we're missing?

Doing Adaptive Workat KPMG NetherlandsThe highly successful KPMG Nether-lands provides a good example of howa company can engage in adaptivework. In 1994, Ruud Koedijk, the firm'schairman, recognized a strategic chal-lenge. Although the auditing, consult-ing, and tax-preparation partnershipwas the industry leader in the Nether-lands and was highly profitable, growthopportunities in the segments it servedwere limited. Margins in the auditingbusiness were being squeezed as themarket became more saturated, andcompetition in the consulting businesswas increasing as well. Koedijk knewthat the firm needed to move into moreprofitable growth areas, but he didn'tknow what they were or how KPMGmight identify them.

BREAKrHROUCH LEADERSHIP DECEMBER 2001 137


Koedijk and his board were confidentthat they had the tools to do the ana-lytical strategy work: analyze trends anddiscontinuities, understand core com-petencies, assess their competitive posi-tion, and map potential opportunities.They were considerably less certain thatthey could commit to implementing thestrategy that would emerge from theirwork. Historically, the partnership hadresisted attempts to change, basicallybecause the partners were content withthe way things were. They had been suc-cessful for a long time, so they saw noreason to learn new ways of doing busi-ness.either from their fellow partners orfrom anyone lower down in the organi-zation. Overturning the partners' atti-tude and its deep impact on the organi-zation's culture posed an enormousadaptive challenge for KPMG.

Koedijk could see from the balconythat the very structure of KPMG inhib-ited change. In truth, KPMG was less apartnership than a collection of smallfiefdoms in which each partner was a

kill the issue directly. "Say yes, do no"was the operative phrase.

Koedijk a\5o knew that this sense ofautonomy got in the way of devel-oping new talent at KPMG. Directorsrewarded their subordinates for twothings: not making mistakes and deliv-ering a high number of billable hoursper week. The emphasis was not on crea-tivity or innovation. Partners were look-ing for errors when they reviewed theirsubordinates' work, not for new un-derstanding or fresh insight. AlthoughKoedijk could see the broad outlines ofthe adaptive challenges facing his orga-nization, he knew that he could notmandate behavioral change. What hecould do was create the conditions forpeople to discover for themselves howthey needed to change. He set a processin motion to make that happen.

To start, Koedijk held a meeting of all300 partners and focused their atten-tion on the history of KPMG, the cur-rent business reality, and the businessissues they could expect to face. He then

As a result of confronting strategic and adaptive

challenges, KPMG task forces identified $50 million

to $60 million worth of new business opportunities.

lord. The firm's success was the cumula-tive accomplishment of each ofthe in-dividual partners, not the unified resultof 300 colleagues pulling together t oward a shared ambition. Success wasmeasured solely in terms of the prof-itability of individual units. As one part-ner described it,"If the bottom line wascorrect, you were a 'gtxid fellow.'" As aresult, one partner would not trespasson another's turf, and learning from oth-ers was a rare event. Because indepen-dence was so highly valued, confron-tations were rare and conflict wascamouflaged. If partners wanted toresist firmwide change, they did not

raised the question of how they wouldgo about changing as a firm and askedfor their perspectives on the issues. Bylaunching the strategic initiative throughdialogue rather than edict, he built trustwithin the partner ranks. Based on thisemerging trust and his own credibility,Koedijk persuaded the partners to re-lease 100 partners and nonpartnersfrom their day-to-day responsibilities towork on the strategic challenges. Theywould devote 60% of their time fornearly four months to that work.

Koedijk and his colleagues estab-lished a strategic integration team of12 senior partners to work with the 100

professionals {called "the loo") fromdifferent levels and disciplines. Engag-ing people below the rank of partner ina major strategic initiative was unheardof and signaled a new approach fromthe start: Many of these people's opin-ions had never before been valued orsought by authority figures in the firm.Divided into 14 task forces, the 100 wereto work in three areas: gauging futuretrends and discontinuities, defining corecompetencies, and grappling with theadaptive challenges facing the organi-zation. They were housed on a separatefloor with their own support staff, andthey were unfettered by traditional rulesand regulations. Hennie Both, KPMG'sdirector of marketing and communica-tions, signed on as project manager.

As the strategy work got under way,the task forces had to confront the ex-isting KPMG culture. Why? Becausethey literally could not do their newwork within the old rules. They couldnot work when strong respect for the in-dividual came at the expense of effec-tive teamwork, when deeply held indi-vidual beliefs got in the way of genuinediscussion, and when unit loyaltiesformed a barrier to cross-functionalproblem solving. Worst of all, task forcemembers found themselves avoidingconfiict and unable to discuss thoseproblems. A number of the task forcesbecame dysfunctional and unable to dotheir strategy work.

To focus their attention on whatneeded to change. Both helped the taskforces map the culture they desiredagainst the current culture. They discov-ered very little overlap. The top descrip-tors ofthe current culture were: developopposing views, demand perfection,and avoid conflict. The top characteristicsof the desired culture were: create theopportunity for self-fulfillment, developa caring environment, and maintaintrusting relations with colleagues. Ar-ticulating this gap made tangible forthe group the adaptive challenge thatKoedijk saw facing KPMG. In other



words, the people who needed to do thechanging had finally framed the adap-tive challenge for themselves: Howcould KPMG succeed at a competence-based strategy that depended on cooper-ation across multiple units and layersif its people couldn't succeed in these taskforces? Armed with that understanding,the task force members could becomeemissaries to the rest ofthe firm.

On a more personal level, each mem-ber was asked to identify his or her in-dividual adaptive challenge. What atti-tudes, behaviors, or habits did each oneneed to change, and what specific ac-tions would he or she take? Who elseneeded to be involved for individualchange to take root? Aaing as coachesand consultants, the task force membersgave one another supportive feedbackand suggestions. They had learned toctïnfide, to listen, and to advise with gen-uine care.

Progress on these issues raised thelevel of trust dramatically, and task forcemembers began to understand whatadapting their behavior meant in every-day terms. They understood how to iden-tify an adaptive issue and developed alanguage with which to discuss whatthey needed to do to improve theircollective ability to solve problems.They talked about dialogue, work avoid-ance, and using the collective intelli-gence of the group. They knew how tocall one another on dysfunctional be-havior. They had begun to develop theculture required to implement the newbusiness strategy.

Despite the critical breakthroughstoward developing a collective under-standing of the adaptive challenge,regulating the level of distress was aconstant preoccupation for Koedijk,the board, and Both. The nature of thework was distressing. Strategy workmeans broad assignments with limitedinstructions; at KPMG, people wereaccustomed to highly structured assign-ments. Strategy work also means be-ing creative. At one breakfast meeting.

a board member stood on a table tochallenge the group to be more creativeand toss aside old rules.This radical andunexpected behavior further raised thedistress level: No one had ever seen apartner behave this way before. Peoplerealized that their work experience hadprepared them only for performingroutine tasks with people "like them"from their own units.

The process allowed for conflict andfocused people's attention on the hotissues in order to help them learn howto work with confiict in a constructivemanner. But the heat was kept withina tolerable range in some ofthe follow-ing ways:• On one occasion when tensions wereunusually high, the loo were broughttogether to voice their concerns to theboard in an Oprah Winfrey-style meet-ing. The board sat in the center of anauditorium and took pointed questionsfrom the surrounding group.- The group devised sanctions to discour-age unwanted behavior. In the soccer-crazy Netherlands, all participants inthe process were issued the yellowcards that soccer referees use to indicate"foul" to offending players. They usedthe cards to stop the action when some-one started arguing his or her pointwithout listening to or understandingthe assumptions and competing per-spectives of other participants.• The group created symbols. They com-pared the old KPMG to a hippopota-mus that was large and cumbersome,liked to sleep a lot, and became aggres-sive when its normal habits were dis-turbed. They aspired to be dolphins,which they characterized as playful,eager to learn, and happily willing togo the extra mile for the team. Theyeven paid attention to the statementthat clothes make; It surprised someclients to see managers wanderingthrough the KPMG offices that summerin Bermuda shorts and T-shirts.• The group made a deliberate point ofhaving fun. "Playtime" could mean long

bicycle rides or laser-gun games at alocal amusement center. In one sponta-neous moment at the KPMG offices,a discussion of the power of peoplemobilized toward a common goal ledthe group to go outside and use theircollective leverage to move a seeminglyimmovable concrete block.• The group attended frequent two- andthree-day off-site meetings to help bringclosure to parts ofthe work.

These actions, taken as a whole, al-tered attitudes and behaviors. Curiositybecame more valued than obedience tortiles. People no longer deferred to thesenior authority figure in the room; gen-uine dialogue neutralized hierarchicalpower in the battle over ideas. The ten-dency for each individual to promotehis or her pet solution gave way to un-derstanding other perspectives. A confi-dence in the ability of people in differ-ent units to work together and workthings out emerged. The people withthe most curious minds and interest-ing questions soon became the mostrespected.

As a result of confronting strategicand adaptive challenges, KPMG as awhole will move from auditing to assur-ance, fi-om operations consulting to shap-ing corporate vision, from business-process reengineering to developingorganizational capabilities, and fromteaching traditional skills to its ownclients to creating learning organiza-tions. The task forces identified $50 mil-lion to $60 million worth of new busi-ness opportunities.

Many senior partners who had be-lieved that a firm dominated by theauditing mentality could not containcreative people were surprised whenthe process unlocked creativity, passion,imagination, and a willingness to takerisks. T\vo stories illustrate the funda-mental changes that took place in thefirm's mind-set.

We saw one middle manager developthe confidence to create a new business.He spotted the opportunity to provide

BREAKTHROUGH LEADERSHIP DECEMBER 2001 139


KPMG services to virtual organizationsand strategic alliances. He traveled theworld, visiting the leaders of 65 virtualorganizations.The results of his innova-tive research served as a resource toKPMG in entering this growing mar-ket. Moreover, he represented the newKPMG by giving a keynote address dis-cussing his findings at a world forum.We alst.1 saw a 28-year-old female auditorskillfully guide a group of older, malesenior partners through a complex dayof kx>king at opportunities associatedwith implementing the firm's newstrategies. That could not have occurredthe year before. The senior partnersnever would have listened to such avoice from below.

Leadership as LearningMany efforts to transform organizationsthrough mergers and acquisitions, re-structuring, reengineering, and strat-egy work falter because managers failto grasp the requirements of adaptivework. They make the classic error oftreating adaptive challenges like tech-nical problems that can be solved bytough-minded senior executives.

The implications of that error go tothe heart ofthe work of leaders in or-ganizations today. Leaders crafting strat-egy have access to the technical exper-tise and the tools they need to calculatethe benefits of a merger or restruc-turing, understand future trends anddiscontinuities, identify opportunities,map existing competencies, and iden-tify the steering mechanisms to supporttheir strategic direction. These tools andtechniques are readily available bothwithin organizations and from a varietyof consulting firms, and they are veryuseful. In many cases, however, seem-ingly good strategies fail to be imple-mented. And often the failure is mis-diagnosed: "We had a good strategy, butwe couldn't execute it effectively."

in fact, the strategy itself is often de-ficient because too many perspectiveswere ignored during its formulation.

The failure to do the necessary adaptivework during the strategy developmentprocess is a symptom of senior man-agers' technical orientation. Managersfrequently derive their solution to aproblem and then try to sell it to somecolleagues and bypass or sandbag othersin the commitment-building process.Too often, leaders, their team, and con-sultants fail to identify and tackle theadaptive dimensions of the challengeand to ask themselves. Who needs tolearn what in order to develop, under-stand, commit to, and implement thestrategy?

The same technical orientation en-traps business-process-reengineeringand restructuring initiatives, in whichconsultants and managers have theknow-how to do the technical work offraming the objectives, designing a newwork flow, documenting and communi-cating results, and identifying the activ-ities to be performed by people in theorganization. In many instances, reengi-neering falls short ofthe mark becauseit treats process redesign as a technicalproblem: Managers neglect to identifythe adaptive work and involve thepeople who have to do the changing.Senior executives fail to invest theirtime and their souls in understandingthese issues and guiding people throughthe transition. Indeed, engineering isitself the wrong metaphor.

In short, the prevailing notion thatleadership consists of having a visionand aligning people with that vision isbankrupt because it continues to treatadaptive situations as if they were tech-nical: The authority figure is supposedto divine where the company is going,and people are supposed to follow.Leadership is reduced to a combinationof grand knowing and salesmanship.Such a perspective reveals a basic mis-conception about the way businessessucceed in addressing adaptive chal-lenges. Adaptive situations are hard todefine and resolve precisely becausethey demand the work and responsibil-

ity of managers and people throughoutthe organization. They are not amena-ble to solutions provided by leaders; adap-tive solutions require members of theorganization to take responsibility for theproblematic situations that face them.

Leadership has to take place everyday. it cannot be the responsibility ofthe few, a rare event, or a once-in-a-lifetlme opportunity. In our world, inour businesses, we face adaptive chal-lenges all the time. When an executiveis asked to square conflicting aspira-tions, he and his people face an adaptivechallenge. When a manager sees a solu-tion to a problem -technical in manyrespects except that it requires a changein the aftitudes and habits of subordi-nates-he faces an adaptive challenge.When an employee close to the frontline sees a gap between the organiza-tion's purpose and the objectives he isasked to achieve, he faces both an adap-tive challenge and the risks and oppor-tunity of leading from below.

Leadership, as seen in this light, re-quires a learning strategy. A leader, fromabove or below, with or without author-ity, has to engage people in confrontingthe challenge, adjusting their values,changing perspectives, and learning newhabits. To an authoritative person whoprides himself on his ability to tacklehard problems, this shift may come asa rude awakening. But it alsti should easethe burden of having to know all the an-swers and bear all the load. To the per-son who waits to receive either thecoach's call or "the vision" to lead, thischange may also seem a mixture of g(H>dnews and bad news. The adaptive de-mands of our time require leaders whotake responsibility without waiting forrevelation or request. One can lead withno more than a question in hand. ^

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ARTICLES'Whatever Happened to the Take-Charge Manager?**Nitin Nohria and James D. BerkleyHarvard Business Review, January-February 1994

Product No. 94109

This article shares with Heifetz and Laurie the conviction that the fundamentalresponsibility of leadership cannot be outsourced. Many American managersfelt that the emergence of new managerial ideas such as total quality and self-managed teams signaled a rejuvenation of U.S. business. But their thinkingdidn't correspond to the facts. U.S. managers didn't take charge in the 1980s;they abdicated their responsibility to a burgeoning industry of managementprofessionals. If business leaders want to reverse this trend, they mustreclaim managerial responsibility-and pragmatism is the place to start

BOOKS

Will to Lead: Running a Business with a Network of Leaders 'Marvin BowerHarvard Business School Press, 1997 , ,Product No. 7587

Command-and-controi leadership helped build the U.S. economy, butit's no longer the best system for today's intensely competitive global market.Bower sets forth his vision of a leadership model that replaces hierarchy witha network of leaders and leadership groups placed strategically throughout acompany. The goal? Helping individual workers learn to lead, work moreefficiently, generate more ideas, and exercise more creativity and initiative.

BREAKTHROUCH LEADERSHIP DECEMBER 2001 141

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