The purpose of vision, after all, is to inspire: vision provides motivation through inspiration. As discussed in a previous post, inspiration is one key element of the “why should people get excited about this” dimension of establishing strategic direction (the other is incentives). An effective statement of vision provides an inspiring portrait of what it will look like and feel like to achieve the organization’s mission and goals. It crystallizes an emotional connection between employees and the business. Critically, a formal statement of vision is not an end in itself. It is both the product of and a symbol of a process of generating shared understanding and shared commitment among employees.

When shared visioning sessions work, the results can be powerful. My favorite example of a great statement of vision was developed at a unit of Johnson & Johnson that designs, manufactures and markets orthopedic implants, such as artificial hips and knees. The company’s statement of vision is “Restoring the Joy of Motion.” It’s an evocative encapsulation of the values the company creates for people suffering the debilitating pain of severe joint disease. It brings to mind great athletes who can return to competition and grandparents who can play with their grandchildren again. (Disclosure: Johnson & Johnson is a client.)

But there are instances, and lots of them, when formal shared visioning is better avoided. It could be that the organization is simply not an intrinsically inspiring place. Or it could be that the timing is wrong. Don't try one when a business is in the midst of a painful restructuring, or when you are planning to make major changes in your team.

Then there are the situations where you are leading a part of a larger organization that already has a vision statement. Here it rarely makes sense to create a separate vision statement for your own unit because layers of vision statements rarely add up to something that inspires. You can decide not to create a shared statement of vision and still be a good leader (this is heresy, I know). After all, when visioning is an empty exercise it fools no one.

Also there is much you can do to inspire the people who work for you without trying to formalize it in a vision statement. You do this by living the vision and values that you believe in. Think of it as creating a vision-in-action. My favorite example of this is Herb Kelleher at Southwest Airlines. So far as I can tell, Southwest has no formal vision statement. But would anyone argue that Kelleher isn’t a visionary and inspiring leader?

Read all of Michael Watkins' Leading Edge posts.

I’ve decided to end 2007 and usher in the new year with the first annual Predictably Surprised Awards, granted to the people who either should have seen it coming but didn’t (call them the “Predictably Surprised”) or saw it coming and demonstrated the sort of leadership we need more of (call them the “Courageous Cassandras”). I’m also going to go out on a limb with a few predictions of my own for 2008.

My first Predictably Surprised Award for 2007 goes to former Secretary of Defense Donald Rumsfeld for failing to figure out for more then three years that the best way to fight an insurgency in Iraq was with counter-insurgency tactics. As a recent front-page article in USA Today charts in depressing detail, Rumsfeld and his advisers were being told and told again that the administration’s clear-and-hold, train-the-Iraqis-and-get-out strategy wasn’t working. But, and this is a hallmark of the predictably surprised, they tried to define reality to be consistent with their beliefs and hopes, rather than the other way around.

The companion Courageous Cassadra Award goes to General David Petraeus, who stuck with his guns (if you will pardon the pun) to make counterinsurgency work, first in Anbar Province and now increasingly in Iraq as a whole.

My second Predictably Surprised Award is granted to Alan Greenspan for ignoring repeated warnings about the risk of sub-prime borrowing to the financial system. As The New York Times has documented in unequivocal terms, Greenspan was repeated warned by serious people that sub-prime lending posed a serious threat to the US financial system, and repeated did nothing about it. Here, it seems that blinkered belief in Ayn Randian ideology (ideological blindness is another common cause) may have played a role in tarnishing the Maestro’s legacy.

The companion Courageous Cassandra award is shared between Edward M. Gramlich, a recently-deceased Fed Governor who began sounding the alarm about lending practices more than seven years ago, and Sheila Blair, a senior Treasury official, who tried to push subprime lenders to adopt a code of “best practices” for their risky lending.

My third and final Predictably Surprised Award goes to George Bush for being one of the few people left on the planet who doesn’t think global warming is an existential problem. Lurching from arguing that there is no problem (denial is not just a river in Egypt) to asserting that nothing could be done to prevent it, Bush continues to fight a rear-guard delaying action when every serious climate scientist says we stand on the brink and there is still time to avoid disaster -- at a reasonable cost.

The companion Courageous Cassandra Award goes to (sorry, Al) members of the Intergovernmental Panel on Climate Change, which has done more than any individual or group to raise our collective awareness of the peril we face if we don’t take action, and soon to reduce greenhouse gas emissions.

And what about 2008, what predictable surprises lie lurking out there for us? My favorite candidates are repetitions of predictable surprises have already happened, call them predictable, predictable surprises:

• Another major Gulf-coast hurricane disaster, because little of what we have learned from Hurricane Katrina has been acted upon;
• Another financial systems crisis, because we let pernicious conflicts of interest take root in our financial system (my favorite current example is investment banks competing with their customers through proprietary trading and investing) and because we still have an allergy to appropriate government regulation;
• Another failure to deal adequately with global terrorism because we can’t act as a honest broker in pushing the Israelis and the Palestinians to reach an equitable agreement (Annapolis will fail) and we won’t devote the necessary resources to winning the war in Afghanistan; and
• Another failure for the U.S. to take a leadership role in dealing with the challenges of global warning.

Lots of other things will happen in 2008, predictable and not-so-predictable. But virtually all of it will be noise. It will be our collective willingness to step up or not step up to these sorts of big challenges that will be what matters.

Finally, lest I come across as a complete pessimist, I am cautiously optimistic that we will elect some leaders in 2008 that are actually willing to step up and do something about the gathering storm. If not, well, it’s really too awful to contemplate.

Identify the critical alliances.

To transform their organizations, new CEOs must gain the support of powerful internal and external constituencies. Influential players must perceive it to be in their interest to help realize your goals. You must therefore begin to identify them and at least begin to gain their support during the transition. Doing so lays the groundwork for building coalitions to drive key initiatives. It also will enable you to decide not only whom you can count on, but also who you need to invest in winning over -- and who you need to confront. Typically, a relatively small percentage of managers will be either very supportive or very opposed at the outset. Most will lie between these extremes. Neither dedicated supporters nor implacable opponents, they will be undecided and, hence, persuadable.

Get the right top team in place -- fast.

Like most new CEOs, you will inherit a group of senior executives. Some will have the knowledge, skills, and background needed to drive the business forward. Others will not. Some may have aspired to the CEO slot, perhaps even have been told that the job was virtually theirs in the past. Others may have hidden agendas because you represent a potential threat to their positions and power. All-too-often, new CEOs find that “senior team” is less than descriptive of reality. If your assessments are negative, you will confront the dilemma of either staying with people who are less than what you need or making a change early in your tenure. The decision to remove a senior-level manager is among the most serious and complicated that any leader makes. But among the most common regrets CEOs have is not replacing senior-level people once it becomes clear they are not the right fit for the situation and for the CEO’s style or vision. Don't let it happen to you.

Secure early wins.

To create momentum, you must secure some early wins. Bringing the wounded SIVs onto Citi's balance sheet may be a start. But by the end of the first six months, at the most, you must have made substantial progress in addressing some of Citigroup's most pressing problems. This means marshalling resources to focus on issues that meet three criteria: (1) they yield tangible financial benefit, (2) they address issues that employees understand to be important, and (3) results can achieved early in the new leader’s tenure. New CEOs secure early wins by identifying substantial problems that can be tackled in a reasonable period of time and whose solutions result in tangible operational and financial (not just behavioral/attitudinal) improvements in performance. Critically, your early-win initiatives should focus attention on the vital few issues that you believe to be central to your agenda. In doing this, you should seek not only to get results, but also to set the right tone and to energize employees.

Lay the groundwork for effective communications.

New CEOs prepare for derailment when they fail to get their messages about priorities across, to convey the values that they hold as important, or to clearly define expectations. As a result they create vacuums of understanding and emotional connection that undermine their effectiveness. Why? Because no one associated with the organization views your transition with indifference. Everyone is parsing your actions and words closely and critically, hunting for signals of direction, purpose, motives, and, especially, for the answer to “who is this person?” Leaders lay the seeds of their own destruction when they fail to gain control of the communication processes of the company. As a result, do not effectively get their messages across to the people whom they most want to influence; nor do they shape the mood or morale of the organization.

Shape your vision.

The term “vision” has been watered down to the point where is can mean everything or nothing. Often it is used to describe the overarching objectives leaders want to achieve, or the organization’s mission statement. All too often these are mere slogans or lists of desired objectives or “values” that are put up on the wall and left on coffee tables in executive waiting rooms, but have little impact on behaviors and attitudes in the organization. What we mean by vision is a vivid mental image that depicts your view of the desired future state of the organization in an inspiring way. It is not a statement of mission, a set of objectives, or a list of values. It is a picture of what will be seen, heard, and felt when the organization fulfills that mission, and achieves those objects. It’s about the desired culture, perhaps including embracing a return to traditional values. If it’s not inspiring, for the leader and for key people in the organization, then it’s not a vision.

Build and use a balanced advice network.

Finally, and perhaps most important, you have to build and use the right kind of advice and counsel network. No leader is an island. New CEOs cannot succeed alone in overcoming the complex and sometimes chaotic challenges of taking over large organizations. You have inherited problems and mistakes (known and yet to emerge) left over from your predecessors. Given that you are coming in from outside, these problems and mistakes may be far from obvious; things rarely are what they appear to be. So is essential that you find ways to accelerate learning about markets, products, technologies, organizational capabilities, team, politics and culture. Identifying and leveraging the best advisors -- internally and externally -- is the most effective way to do this.

While adhering to these guidelines is of course no guarantee of success, the failures of new CEOs usually can be tied to violating one or more of them. Don't let it happen to you!

Sincerely,
Dan Ciampa and Michael Watkins

Read all of Michael Watkins's "Leading Edge" posts.

The lure of the off-site meeting is strong for many leaders taking new roles. Like Julia Martinez in the promotion scenario we have been discussing, they have agendas they want to pursue and teams that they want to mobilize. “Just let me get the team in a quiet place with their attention undivided,” they say, “and we can move mountains.”

There is no question that off-site meetings are a potentially powerful vehicle with which to mobilize needed change. Done well, they focus attention, break through barriers, and build commitment, leaving teams energized, aligned, and ready to achieve great things.

But before launching reflexively into an off-site meeting, you, like Julia Martinez, would be well-advised to take a step back and think hard about (1) what you are trying to accomplish and (2) whether an off-site is the best way to accomplish it. Why? Because off-sites are no panacea and, without proper planning and facilitation, they can go badly wrong. In the worst cases, they cement divisive conflict, empower opposing coalitions, and undermine the leadership of the erstwhile off-siter.

The place to start is with the question of what you are trying to accomplish with an off-site meeting. There are at least six big reasons why you might want to take your team off-site:

* To gain a shared understanding of the business (diagnostic focus)
* To create a vision and strategy (strategy focus)
* To alter the way the team works together (team-process focus)
* To build or alter relationships in the team (relationship focus)
* To develop a plan and commit to achieving it (planning focus)
* To resolve significant conflicts (conflict-resolution focus)

One trap to avoid is trying to do too much in a single off-site. You can’t realistically accomplish more than two of the goals laid out above in a day or two. Decide what will your focus be beforehand.

A second trap is putting the cart before the horse. It’s easy to jump directly to trying to create a vision and strategy. But to have a successful strategy-focused off-site, it’s crucial that the right foundation of shared understanding (diagnostic focus) and work relationships (relationship focus) are in place.

You know what you want to do? Great. Now make sure an off-site is the best way to accomplish it. There are potential costs to off-sites that go beyond the requisite financial expenses. Chief among these is that you are committing yourself to accomplishing something significant, so you should be pretty confident that you will. Otherwise you risk pumping up expectations and then having the air leak out.

Opposing coalitions are a second reason why you might avoid off-sites. If there is a significant risk that bringing people together could crystallize latent opposition, then you would be well advised to proceed to build support through one-on-one and smaller group meetings until you're confident an off-site would succeed. This is akin to the way diplomats use shuttle diplomacy to lay the foundation for major summit meetings.

What are the implications for Julia Martinez? She wants to make a shift in her organization’s strategic direction but needs to convince her boss. She also wants to alter the way the team works to encourage more shared accountability. So it would be natural for her to focus the off-site on strategy and team process. It would also be a big mistake. She has not laid the groundwork with her boss for creating a new strategy, nor has she established sufficient authority in her new role to introduce democracy.

She should go ahead with the off-site. But the primary objectives should be diagnosis and relationship-building. She should work with her new team to do some rigorous diagnosis of changes in the business environment and come to a common view of the situation. That would provide her with insight and support that would help her to convince her boss of the need to shift the strategy. She definitely should not try to develop a vision and strategy or do any planning at this point. Her second major objective should be to re-engineer her relationships with her former peers, and establish herself, firmly but judiciously, in control. Once these foundations are in place she can turn her attention to strategy and process, perhaps by holding a subsequent off-site.

Assuming that you’ve concluded an off-site is the way to go, you can shift to three supporting questions:
* When and where should it be held?
* Which issues will be dealt with in what order?
* Who should act as facilitator for the session?

The “when” and “where” are of course dictated by schedules and availability. The schedule will flow directly from your agenda for the session.

Don’t neglect the “who should facilitate it” question. If you are a skilled facilitator of group process and if the team respects you -- and if the team is not enmeshed in a conflict -- then it may make sense for you to be both leader and facilitator for the session. If not, you would be well advised to bring in a skilled outsider. Keep in mind that involving a respected external facilitator both signals seriousness and can elevate your status.

Given that Julia Martinez is working to establish herself in her new role, she would be well advised to involve a skilled facilitator. The right person would help to buffer the emotional currents that are bound to be present in the room and also subtly assist her in establishing herself in her new leadership role.

Let's keep the conversation going. Do you agree with advice about why and whether to have off-sites? Do you agree with the implications for Julia Martinez?

Read all of Michael Watkins' "Leading Edge" posts.

MORE ON LEADERSHIP TRANSITIONS:
The First 90 Days: Critical Success Strategies for New Leaders at All Levels (Hardcover)
Off-Sites that Work (HBR Article)
Strategy Meetings that Work (HBR Article Collection)
The Leadership Transitions Collection

There is a scene in Shakespeare’s Henry V that brilliantly captures the tensions that leaders like Julia Martinez face at the moment they are promoted to new roles. Henry has spent much of his youth hanging around with disreputable characters, in particular Falstaff and his cronies. Now his father has died and he is crowned King. In the coronation scene, he walks past Falstaff and essentially ignores him. This signifies the seismic shift Henry makes in the play from dissolute youth to one of the great Kings of England. His role, and hence his relationships, have to change dramatically.

This is not to say, of course, that Julia Martinez should in any way ignore her former-peers-now-direct-reports. Rather, it highlights the importance of rites of passage in symbolizing the shifts that newly promoted leaders make. And it has immediate implications for what Julia needs to do on Day One: first symbolism, then substance.

In an ideal world, the stage for Julia’s promotion would have been set by her boss, Robert Collins. He would have called the team together to announce his decision to promote Julia, and would have met privately with Andy to communicate the reasons why he made his decision. This would have laid the groundwork for Julia to transition smoothly into her new role.

Unfortunately, it didn’t unfold this way, so Julia has to write the script for and direct her own promotion scene. This should include calling together her team for a short meeting that constitutes a public acknowledgement by everyone that a shift has occurred. It should be short, because its function is mostly symbolic. She should carefully craft a short script around a few key messages: that she is looking forward to working with the team to chart a course forward for the organization, that she values their contributions, and that she is looking forward to meeting with each of them individually (if possible, she should already have begun the process of setting up those meetings).

The cafeteria scene mentioned at the end of the scenario is also rich with symbolic import. She comes to eat lunch on the day of the announcement of her promotion and is immediately confronted with a choice of whether to sit with her old peers or new peers. In the real situation, the person decided to go her office, which is definitely the wrong answer. The right answer depends in part on the culture of her organization and the implications for what the “right behavior” looks like in this situation. But it probably involves one of two options. Either she should (1) go first to her old peers/new team and say something about looking forward to meeting with them to chart a course forward and then go sit with her new peers or (2) she should stop by the table with her new peers to say that she is looking forward to working with them and will reach out to set up meetings with them individually, and then go to sit with her old peers/new team and begin to engage them in their views of the business situation.

Regardless, Julia must strive to handle the situation with grace. Ideally, her actions will look relaxed, and not convey a sense that anything really big is at stake. It is, but she doesn’t want to appear like she thinks it is.

Do you agree with this assessment about what Julia should do on her first day? If not, what do you think she should do differently?

Read all of Michael Watkins' Leading Edge posts.

MORE ON LEADERSHIP TRANSITIONS:
Becoming the Boss (HBR Article)
Living into Your New Promotion (HMU Article)
The Leadership Transitions Collection
Right from the Start: Taking Charge in a New Leadership Role (Paperback)

Because the scenario has a number of elements and because there is such richness to readers’ responses, I’ve decided to devote several posts to analyzing and discussing it. The remainder of this post will provide an overview of the full set of challenges that Julia faces. The next post will deal with what Julia should do on her first day after the announcement of her promotion. A third post will focus on what she should do to plan for and lead the off-site meeting. Beyond that, we could look at the challenges she faces in dealing with the boss and new peers in this situation.

The overall challenge for Julia Martinez, and every leader who gets promoted, is what I think of as “relationship re-engineering.” On the face of it, not much changes. The organization is the same, the culture and politics is the same, and the players are the same. Also, Julia has accumulated substantial “relationship equity” on which she can draw to get things done. She understands the business and the key levers that drive it. And she’s gotten the job because senior leadership believes she is the right person.

But what does and must change is all of the relationships that Julia has with others in the system: former peers, new peers, and her boss. As Kartik Jain notes in his response, “Work is not a problem because all the former peers of Julia are [professionals] and they know how to get things done successfully. [The] problem lies in the new…relationships between Julia and [the others].” This is why stepping up in your current organization can be fraught with peril. Because you think you know everyone and everyone thinks they know you, it’s easy to miss the fact that all your existing work relationships were shaped, in part, by the role that you previously played. The corollary is that now that you have taken a new role, those relationships must change: relationship re-engineering is therefore at the heart of meeting the promotion challenge.

What should Julia, and every leader in this kind of situation, do to make a successful transition? Reader "Guru" highlights the key priorities in his response saying, “she should… define realistic objectives, build trust with team members, clearly communicate the objectives, brainstorm, develop solid & flexible plans with a pragmatic approach, ask for feedback, define roles and authority for [her direct reports] and implement the plans made."

Beyond that, there are some basic principles for re-engineering relationships if you are promoted to lead former peers. Adhering to them would help Julia-and every leader in this situation-to make the requisite shifts:

1. Establish your authority deftly. To exert authority effectively in your new role, you have to walk a knife’s edge between under- and over-doing control. On one hand, there is the temptation to act as a sort of “super-peer”; leaders who get caught in this trap focus over-much on coaching, encouraging, and supporting their former peers, now direct reports. On the other hand, there is the risk that you will develop a Napoleon complex and begin issuing edicts. Seek to find the middle ground early on. Julia should consider putting her plans to create a new work culture on hold for a while. As Ajay Philip put it in his response, “The change in style of leadership will require being gradual and not rapid to make it successful.” Julia should use a “consult-and-decide” style for dealing key issues for the first few months, in part to establish her own authority, and in part because that’s what people are used to. She should listen carefully, consider carefully, and then make and communicate her calls. The “consult” piece of consult-and-decide shows she values thoughtful input. The “decide” piece conveys both that she is capable of decisiveness and knows that she are ultimately accountable for results. Once she has established a new rhythm with your team, she can engage in more consensus-building if and when it’s appropriate.

2. Focus on what’s good for the business. Some former peers, now direct reports, may worry that the new leader’s promotion heralds the installation of a new regime. Early on, they will be hyper-vigilant, straining to discern whether you will play favorites or seek to advance your political agendas at their expense. One antidote to this is a relentless, principled focus on doing what is right for the business. As Ramesh put it so aptly, “She must… be clear that welfare of others is the thing that matters most, and that any hidden agenda will only upset her colleagues.” Every decision Julia makes should therefore be framed in those terms -- so long as she is genuinely committed to it, and prepared to live with the consequences. The sooner her new direct reports see that she will be “hard on the issues and soft on the people,” the better. A second antidote is reliance on what Chan Kim and Renee Mauborgne have termed “fair process” for making key decisions. This means establishing and upholding work processes that are perceived as fair, perhaps by melding consult-and-decide decision-making with “put the interests of the business first” criteria for evaluating alternative courses of action.

3. Rethink what you delegate. As Peter Drucker highlighted in the early 1950’s, the ability to delegate lies at the heart of leadership. Delegation is, as Gautam notes in his response, a key challenge for Julia, “For increasing her acceptance, she [needs] to reassure people on two counts…she would … listen to all, and delegate to all.” Regardless of your level, the “how” of effective delegation remains pretty much the same: you build a team of competent people whom you trust, you establish goals and metrics through which you can measure progress, you translate them into specific responsibilities for your direct reports, and your reinforce them in some variation of a management-by-objectives (MBO) process. While the how remain the same, however, it’s easy to miss that what you delegate -- the basic units of analysis through which you engage with your direct reports -- typically shifts dramatically when you get promoted. If you are leading an organization of six people it makes sense to delegate specific tasks. At 60 people, your focus has to shift from tasks to projects and processes. At 600 people, you often need to delegate responsibility for specific functions. At 6,000 people, your direct reports may be responsible for diverse businesses, and so on. So it’s essential that Julia take a step back and figure out what she needs to delegate before turning to the how. This has big implications for what she should try to achieve at the off-site meeting.

4. Communicate, communicate, communicate. The good news about moving up is that you get a broader view of the business and more scope to shape it. The bad news is that you are further from the front lines and more likely to receive filtered information. It’s ironic, but inevitable, that your former peers will share information differently with you now that you are the boss. One recently-promoted leader spoke to the heart of this challenge saying, "People treat me differently in the way they funnel information. I see folks shield me from information that I ordinarily would have received." To avoid this, Julia should work to establish a climate of openness and a culture of “no surprises.” Making this work requires that she (1) not punish people for sharing bad news (while of course not condoning negligence or incompetence) and (2) not require them to have iron-clad answers when they bring problems to her (plans to deal with the issues yes, but specific answers no.) It also requires that she create alternative channels for figuring out what is going on at the front-lines of your organization - for example engaging in regular direct contact with customers and front-line employees and providing direct channels for raising serious legal or ethical concerns - without, of course, undermining the integrity of the chain of command. As the response from the Sport and Exercise Psychology class at CSU, Fresno, stresses, Julia “has to stick to what made her successful -- good communication skills.”

5. Re-enlist your (good) former peers. For every “winner” who gets promoted, there are likely to be one or more “losers” who wanted the job but didn’t get it. When promotion processes are managed well, the ultimate decisions come as disappointments, but not surprises. Regardless, however, newly-promoted leaders like Julia typically have to deal with the reality that some former peers may be deeply disappointed, even angry or nursing feelings of victimization. When direct reports are not “good,” that is not competent or unable to get over their disappointment and support the new leader, the key is to help them find other opportunities. When they are “good” and perhaps even essential to getting things done as in the case of Andy, the new leader has to find ways to re-enlist them. As L Subramanian put it, Julia must show “she respects what each of them has contributed to Alpha's stature today. She must make sure to recognize individual contributions elaborately.” In part, this means recognizing that disappointed former peers will experience a process akin to the Kubler-Ross stages of grieving (denial, anger, bargaining, depression, acceptance) and that it will take some time for them to work things through. It also means thinking hard about when and how to best engage with disappointed direct reports -- early or later on, directly or obliquely, empathetically or matter-of-factly. Above all it means recognizing that career prospects -- and an associated fear that they have been dead-ended -- are likely to rank on their lists of concerns. Andy’s belief that Julia is genuinely committed to helping him to develop and advance may therefore be one key driver of re-enlistment.

6. Re-think your advice and counsel network. My Right from the Start co-author Dan Ciampa (who also authored the recent Taking Advice) makes the important distinction between technical advice (How best should we design a market research study?) and political counsel (Who is likely to resist my change initiative, why, and what can I do about it?). Leaders always need a network of people who can provide advice and counsel, but the mix changes at you rise up through organizations. The more senior you are, the more likely it is that you need sophisticated and supportive political advisers in your network, both knowledgeable insiders in your organization and impartial outsiders. The implication is that the advice and counsel network that served Julia well before her promotion is unlikely to be what you need in her new role. So she may need to re-engineer her relationships with existing advisers and counselors to focus on new topics in different ways. She may also need to develop entirely new sources of advice and counsel and rely less on existing ones.

7. Recognize that relationships have to change. Finally, and perhaps most importantly, you must accept that one price of promotion is that personal relationships with former peers have to become less personal. In the process of working together and facing shared challenges, some former peers may have become friends. Now, as in the case of Julia and Amanda, you are overseeing their work. The unfortunate reality is that close personal relationships and effective supervisory relationships rarely are compatible. And it’s not just (or even often) the case that people will expect you to do them favors. It’s that you can’t afford to have your judgment about key issues clouded by personal feelings. Nor can you allow the perception to take hold that you play favorites (see the principle above about putting the interests of the business first). Julia could very well find herself sitting across the table from Amanda, needing to deliver hard-edged performance feedback, yet experiencing a desire to cushion the hurt. If she succumbs to the temptation to go easy, Julia would undermine the performance of her new organization and her own leadership. If she does what’s right for the business, she irreversibly alters the relationship and she will see it in Amanda’s eyes. There is a right answer, but that doesn’t make it easy. As a starting point, Julia should take the advice of Sport and Exercise Psychology class at CSU, Fresno and “Define what [Amanda’s] role is …[and send the message] ‘I will be fair in my evaluation of you within this organization’”

While unquestionably challenging, success in adopting these principles will help position Julia, and you if you are in this situation, for success in a leading former peers. Recognize, however, that moving into any new role is a journey and not a destination. Of course, getting off to a good start helps, but recognize too that you will have to grow into the role and that this will take some time.

Read all of Michael Watkins' Leading Edge posts.

MORE ON LEADERSHIP TRANSITIONS:
Becoming the Boss (HBR Article)
So You Want to Be CEO (HBR Article Collection)
The Leadership Transitions Collection
Right from the Start: Taking Charge in a New Leadership Role (Paperback)

Julia Martinez’s promotion to Director of Internet Marketing took several of her former peers, now direct reports, by surprise. Julia’s boss and mentor Robert Collins was good at many things, but communication on people issues was not one of them. When he was promoted to the VP of Marketing role at Alpha Technology, a mid-size telecommunication services firm, Collins quickly appointed Julia to be his successor.

Prior to her promotion, Julia was one of five marketing managers reporting to Collins. She inherited an organization that had achieved significant success; this was a primary reason why her boss had been promoted. Effective Internet marketing had helped propel Alpha to a leading position in the market for Voice Over Internet Protocol (VOIP) communication services.

Julia had been convinced for some time that Alpha’s basic approach to Internet marketing needed to shift. Rather than engage in the “broadcast marketing” approach that Collins had adopted, she believed that the future lay in focused efforts to identify the most attractive market segments, and to engage in targeted campaigns to reach them. She also thought that resources should be shifted from new-customer acquisition to customer retention and brand-building.

While there had not been much time to engage in discussion with Collins about goals and expectations, she was confident she could sell him on the new direction.

Julia did have some concerns, however, about two of her former-peers-now-direct-reports. One of them, Andy, had viewed himself as the logical candidate for advancement. He was a capable, if somewhat ego-driven, leader in charge of market positioning and message development. She knew that her promotion would come as a blow to him, and wondered if he would be able get over his disappointment and work effectively under her direction. If he were willing to get on board, Andy would be an important ally in taking the organization in a new direction. But the last thing Julia needed was a resentful former colleague undermining what she was trying to do.

Another of her new direct reports, Amanda, posed a different challenge. As Manager of Marketing Support, Amanda had done a reasonable job. But she was not a particularly strong leader, nor perhaps, was she the person Julia needed in that role if she were to implement her new strategy. At the same time, Amanda had often sought out Julia’s advice when they were peers. Over time, they had become, if not friends, something more than business colleagues. Now Julia was in the position of being Amanda’s boss and having to evaluate her performance.

In addition, Julia planned to manage her team somewhat differently than Collins had. He was a strong “hands-on” manager, a style which worked well for him. Julia, by contrast, preferred to vest more authority with members of her team, and to foster shared commitment and collective accountability to the greatest extent possible. She had therefore decided to take her team off-site for a one-day situation assessment and strategy discussion as soon as the schedule allowed.

Your assignment, to be filled out in the comments box: What should Julia do for the off-site? What can she accomplish there to address the challenges she faces? How can she build support for her agenda?

Read all of Michael Watkins's "The Leading Edge" posts.

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The idea that senior leader behavior is truly viral became clear to me when I was doing organizational change consulting for the CEO of a manufacturing company in the mid-1990s. Facing aggressive competition, the business was in dire need of adopting a new generation of technology and moving to team-based production methods. Doing so required breaking down barriers between functions in manufacturing, as well as retraining the unionized workforce.

Virtually everyone in the company understood that the company’s future was at stake, and that new technology and methods were key to remaining competitive. At the same time, it became evident that the basis of trust necessary to move forward was completely absent. No one trusted anyone and an environment of fear completely permeated the organization. The critically important relationship between union leadership and manufacturing management was as toxic as one could possibly imagine.

As I began to delve into the history of the business, I found it had not always been this way. The breakdown in trust and the rise of fear-based management had begun close to a decade earlier when a new head of manufacturing had been brought in from the outside. The company, which until then had enjoyed reasonably cordial labor-management relations, had fallen on some hard times, and the founders had decided they needed a “strong hand” to put things right.

What they got was a micromanaging bully. Let’s call him Carl. Carl was able to turn the situation around, but it came at a great cost to the culture of the company. Charming to his boss and peers, he was ruthlessly controlling in his fiefdom. He made virtually every decision regardless of how small and set up what amounted to a spy network to keep an eye on everyone. He was relentlessly critical of the people working for him, and rapidly moved to promote a supporting cast of henchmen and yes-men. They in, turn, forced the people working for them into defensive crouches, and so on down the line. Relationships with the union degenerated into bitter acrimony, as the union elected ever more adversarial leaders and pushed aside the moderates. The needed change simply wasn’t possible until the CEO figured out what was really going on and ousted Carl and his cronies from the organization.

Although arguably less damaging, pyromaniac leaders have the same sort of viral impact on their organizations. As I discussed in a previous post, pyromaniacs are leaders who relish fighting fires—sometimes to the point of igniting them. As their attention shifts from crisis to crisis, they force their direct reports into the same mode, forcing them to respond—on short notice—to requests for information or action spawned from the fire-du-jour. Here too, senior leader behavior propagates downward, infecting the entire organization.

Lest you think the news is all bad, the infectious nature of leadership applies as much to good behaviors as to bad. I was reminded of this while recently watching a 60 Minutes segment on Herb Kelleher, the chairman (and formerly CEO) of Southwest Airlines. Everything he did communicated his genuine passion for the business, commitment to excellence, and respect for the company’s employees. And his enthusiasm was truly infectious.

Of course, the organization also had to have a great strategy and supporting processes and capabilities, but it was Kelleher who breathed life into the place. And he had surrounded himself with people who felt and acted in the same ways. It was firmly rooted in the culture and in the way that people got promoted and hired. It was hard to imagine Southwest getting poisoned by a bad apple the way that Carl had poisoned the manufacturing company I had worked with.

To understand just how infectious leaders are, I invite you to try the following experiment on successive days. On the first day enter smiling. Greet everyone cheerfully. Go out of your way to compliment people on work well done. Accentuate the positive, even it if hurts. Find the glass to be half-full wherever you go. On the second day enter frowning. Evidence a clear irritability. Go out of your way to focus on the problems and call people to account if they missed even the smallest detail or commitment. Accentuate the negative in every interaction you have.

You are likely to be amazed at the difference in the atmospheres that you engender. On the first day, your people are likely to mirror your positive mood and energy levels will rise. On the second day, it will be like you sucked the oxygen out the room. Your people will become increasingly anxious and struggle to figure out what’s wrong. Now imagine what it’s like to live constantly with leaders with these characteristics and the impact it would have on their organizations.

The implication? Leaders need to think hard about their viral impact on their organization. What kind of infectious agent do you want to be? Infectious like humor or infectious like the plague?

Read all of Michael Watkins' The Leading Edge posts here.

This is unfortunate, but it's not that surprising. It's a direct consequence of confusion about what a “business strategy” is... and is not. Here’s my definition: A business strategy is a set of guiding principles that, when communicated and adopted in the organization, generates a desired pattern of decision making. A strategy is therefore about how people throughout the organization should make decisions and allocate resources in order accomplish key objectives. A good strategy provides a clear roadmap, consisting of a set of guiding principles or rules, that defines the actions people in the business should take (and not take) and the things they should prioritize (and not prioritize) to achieve desired goals.

As such, a strategy is just one element of the overall strategic direction that leaders must define for their organizations. A strategy is not a mission, which is what the organization’s leaders want it to accomplish; missions get elaborated into specific goals and performance metrics. A strategy also is not the value network -- the web of relationships with suppliers, customers, employees, and investors within which the business co-creates and captures economic value. Finally, a strategy is not a vision, which is an inspiring portrait of what it will look and feel like to pursue and achieve the organization’s mission and goals. Visioning is part (along with incentives) of what leaders do to motivate people in the organization to engage in above average effort.

In a nutshell, as illustrated below, mission is about what will be achieved; the value network is about with whom value will be created and captured; strategy is about how resources should be allocated to accomplish the mission in the context of the value network; and vision and incentives is about why people in the organization should feel motivated to perform at a high level. Together, the mission, network, strategy, and vision define the strategic direction for a business. They provide the what, who, how, and why necessary to powerfully align action in complex organizations.

One straightforward implication is that you can't develop a strategy for your business without first thinking through mission and goals. Likewise, you can't develop a coherent strategy in isolation from decisions concerning the network of partners with whom the business will co-create and capture value. By focusing on all four elements, and sequencing them in the right way, the process of crafting strategy can be demystified.

Do you agree with my definition of business strategy and the other elements of strategic direction? Have you seen people get into trouble confusing strategy with mission, goals, network, or vision? Do you have advice for how leaders can best establish strategic direction for their organizations?

Read all of Michael Watkins' The Leading Edge posts

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Dictionaries list two quite distinct definitions for the word “remote,” both of which can apply to the challenge of dealing with a virtual boss. One meaning is “operating effectively from a distance,” for example using a remote control. This is of course the primary objective in a virtual boss-subordinate relationship: to have coordination and control work as well from a distance as it does up close.

The other, less benign, meaning of “remote” is “distant or unapproachable.” Sometimes the black-hole boss is the problem. Try as you might, you really can’t pin her down and get direction from her -- in person or electronically.

More commonly, though, it’s the direct report who doesn’t make enough effort to make communication work across the distance. Particularly at risk for falling into this trap are those leaders who have a strong independent streak and a burning desire to prove themselves. They relish the opportunity to operate remotely and to chart their own course. So they don’t put out the effort they should to get feedback and direction from their distant bosses.

This is, unfortunately, akin to sailing by dead reckoning when you are out of sight of land (in the days before GPS, naturally). You may navigate effectively and end up at the desired destination. But if you lack a reference point and get off course, it could take a long time to figure it out, and you may have a lot of distance to make up when you finally do.

What does it take to make remote leadership work? Here are some basic guidelines:

1. Find a way to spend some face time with the new boss early on. As soon as you know you are taking on a new role with a virtual boss, secure a significant block of time on his calendar. Regardless of how far away you are and how much you feel you need to do back home, force yourself to spend some time in the same room. Because there is no way you can make a personal connection and lay the foundation for a strong working relationship solely through electronic means.

2. Discipline yourself to choose the right modes of electronic communication. Email and instant messaging have revolutionized business communication, but they can never convey the sorts of contextual cues and emotional subtleties that are exchanged in conversation. Bias yourself toward electronic conversation and away from messaging in virtual relationships. Pick up the phone more than you would if you were located nearby. If you can’t talk in real time, make more use of voice mail.

3. Find windows of opportunity to check in with your boss. You and your boss are both busy and it’s all too easy for an “out of sight, out of mind” dynamic to creep in. So take the time to figure out your boss’s routines and identify times when she is more likely to be available. One accomplished virtual manager I recently spoke with described how he arranged calls when his boss was in the car on the way to or from work.

4. Discipline yourself to make the connection. Think of yourself as having 100% responsibility for making the relationship work with your virtual boss. Force yourself to take the initiative to reach out regularly. Put reminders to do so into your calendar. Above all, keep in mind that the consequences of getting disconnected, and going off course as a result, will mostly be borne by you.

Have you experienced particular challenges in dealing with virtual bosses? Do you have suggestions for how to make remote leadership work?

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Does your organization have a sink-or-swim culture? See if the following descriptions ring true:

• While the company may do a reasonable job of deciding who to recruit and promote, little or nothing is done to help leaders make successful transitions. Regardless of the magnitude of the challenges transitioning leaders face, they are left to figure out their new roles by themselves.
• Senior leadership believes that it’s best to test leaders by fire in order to separate the good from the bad. Respected executives perceive efforts to support leaders making transitions as “coddling” or worry that it will blunt the company’s edge in some way.
• The organization makes little effort to help leaders hired from the outside understand the culture of the company or to make the right connections with key stakeholders. Most of the emphasis in the recruiting process is placed on evaluating people for raw capability, and relatively little attention is given to cultural fit or adaptability.
• External hires often are placed in situations where they are set up to fail. Newly hired executives are told, for example, that they are being brought in for their ability to bring new ideas to the company, encouraged to try to make change happen, but not adequately supported or protected. So they are attacked and destroyed by the organization’s immune system.
• Executive coaching is viewed as remedial rather than developmental. The only people who get coaching, if anyone gets it, are the ones already in serious trouble.

Unsurprisingly, sink-or-swim organizations have high rates of failure in on-boarding outside hires. The associated costs for this approach are very high, and not just in terms of salary and recruiting fees. There also can be a very high opportunity costs associated with having someone leading a business in an ineffective way, undercutting performance and disrupting the work of many others in the organization.

For internal promotions, outright derailment is relatively uncommon, even in sink-or-swim cultures. In part, this is because it’s difficult for companies to promote people and then admit that they made mistakes, even if leaders in question are failing to meet expectations. But the costs, in terms of failures of new leaders to thrive, are still significant.

Are you in a sink-or-swim culture? If not, what are you and your organization doing to avoid it?

HARVARD BUSINESS ONLINE RECOMMENDS:
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I'm speaking of the June 15 announcement by the U.S. Consumer Product Safety Commission of the recall of 1.5 million Thomas the Tank Engine toys because they were coated with lead paint during their manufacture in a Chinese factory. Lead paint has been proven to cause brain damage in children who chew on objects coated with it. It’s highly toxic to the developing minds of the 2-to-4 year old (mostly) boys who are the target market for the Thomas train sets.

For those of you who don’t have kids that age, Thomas is a human-like train engine. He was created by the Reverend W. V. Awdry in a series of books dating back to 1945 and popularized in a video series - Thomas the Tank Engine and Friends - which spawned a much-loved line of toys. My 3-year son loves his Thomas toys, as did his older brother (we own some of the recalled toys).

The Thomas brand is owned by HIT Entertainment which contracted with RC2 to do the manufacturing. The toys are by-no-means cheap. A single 2" long Thomas engine sells for $10 or more in a toy store. Parents typically buy a dozen or more engines and cars, as well as tracks, fixtures, stations, etc. We’ve spent more than $300 on our set.

Here lies the root of parents' feelings of outrage. They believed that Thomas was a premium brand, and so let their kids do things with the toys that they wouldn't have otherwise. When a mother saw her child put a Thomas engine is his mouth, she thought "It's OK, it's not some cheap piece of garbage." We trusted that the people behind the brand wouldn't put our children at risk, and that's why we feel so betrayed.

We will never purchase another Thomas toy, and I mean never. And we are actively informing everyone we know about the recall and telling them we believe the companies must be punished for their unconscionable negligence in putting our children at risk. That’s the infuriating part of the story.

The illuminating part is about how this came to happen, and it boils down to the lack of an effective organizational immune system. HIT contracted with RC2 to manufacture the toys. RC2 outsourced the work to plants in China. One of the plants in question used lead paint, probably because it was left over from some other application, and no one raised the alarm. There was no distributed early-warning system and no effective allocation of responsibility for problem-avoidance in the supply chain. As this New York Times article so vividly illustrates, workers at the plant in China had no inkling of the potential consequences of their actions. Nor, given they were low-skill workers being paid a pittance, should we have expected them to be accountable. Responsibility for the failure lies higher up the chain.

The bottom line is that neither HIT nor RC2 leadership put in place an effective surprise-avoidance system, one that would have identified this problem earlier and driven corrective action. As a consequence, they have damaged the Thomas brand -- perhaps fatally, given the growing backlash and likelihood of lawsuits. (Update: A class action lawsuit against RC2 has been launched.)

Having suffered an immune system failure, the companies are now demonstrating that their brains aren't working too well, either. (Recall that in my previous post I argued that organizations need both macro-centralized systems like the brain and micro-decentralized systems like the immune system to avoid predictable surprises.) Rather than admit responsibility and apologize, both RC2 and HIT are saying little. HIT is pointing fingers at RC2. RC2 offered to do the minimum possible - replace the tainted toys if parents mailed them in - but initially balked at paying for the postage, reinforcing the perception of greed. Under pressure, they reversed themselves, but the refunds will come only after a couple of months, apparently because the company is having difficulty coordinating its own internal operations. Everything they have done is the antithesis of what we know about how to manage crises effectively.

All this is quite ironic given that the Thomas stories are morality plays about reliability, taking responsibility, and trying to be a “really useful engine.” HIT and RC2's clumsy responses will help fuel the engine of value destruction, and the companies will reap what they have sowed. HIT may try to foist responsibility solely onto RC2, but if the guardians of the brand don't mandate and enforce quality policies on their suppliers, they only have themselves to blame. And what does it matter who is at fault if Thomas is forever tarnished?

What’s the next predictable surprise in this sorry tale? Don’t be shocked if we find out that one or both of the companies knew about the problem for some time before informing the Consumer Product Safety Commission. Such a delay would be unforgivable if it occurred, but not at all surprising.

Update: There is a wonderful story by David Barboza in the June 24 New York Times about how he was held captive for nine hours at RC2 Industrial Park in China, the factory that produced the lead-coated Thomases. Lots of insight into why there was no early-warning system in place.

Update 2: The Chicago Tribune has reported that Senator, Amy Klobuchar (D-Minn.) is calling for Congressional hearings on unsafe imports prompted by the Thomas situation. On the same page, the Triibune also noted that "a Kansas City public health nurse working in that city's lead-prevention program had found that a toy train from the metal line of railway toys called Take Along Thomas tested at an unsafe lead level." If this is confirmed, it would prompt a widening of the recall and another round of highly damaging publicity. Two other senior members of Congress are calling for tightening consumer safety regulations and giving the Consumer Product Safety Commission more funding for enforcement.

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