Leading in the 21st Century

Leading in the 21st Century
by John Kotter

A New Way of Exchanging Ideas

In this fast paced era of knowledge, a new means of exchanging ideas is necessary in order for us all to have access to the newest concepts and to have a timely dialogue about them. Promising ideas need to be disseminated, discussed and integrated rapidly. In "Leading in the 21st Century," John Kotter attempts to do just this. He presents you with new thoughts and ideas on leadership in a new era—ideas normally not available until they appear in book or article form. Here they are presented in raw form. We hope you will join others in a dialogue about these ideas and comment as often as you wish in each of the different sections.

5 Degrees of Change

Different industries operate at different levels of change and thus need to use different approaches to succeed. Read through the 5 degrees of change listed below, then continue on to see how the degrees of change relate to different types of leadership and winning in the new economy.

1.	Little change Making goods and services with long product life cycles.
2.	Continuous improvement Constant incremental changes in products and ways of operating.
3.	Non-incremental change within businesses In addition to degree 2, regularly introducing new product lines and significant improvements in how to run the business.
4.	Whole new businesses In addition to degrees 2 and 3, inventing not just new product lines but new businesses.
5.	Whole new business models In addition to degrees 2, 3, and 4, inventing not just new businesses but new economic and organizational models.

5 Degrees of Change: Leadership and Change

This chart shows the types of leadership necessary to operate at the "5 Degrees of Change." As you can see, using Energy-Unleashing Leadership does not mean you can abandon Basic Management or Visionary Leadership. To operate at the highest degrees of change, an effective combination of all three is needed.

Types of Leadership

Excellent Basic Management

Operating successfully at levels 1 and 2 demands excellent management—good planning and budgeting, good structures, systems, staff, controls.

Visonary Leadership

Operating at level 3 requires more than the above. In addition to good management, you need a sensible vision, employee alignment to the vision, and a work-force motivated to make it happen. Without this visionary leadership, enterprises fail at non-incremental change.

Energy-Unleashing Leadership

Operating successfully at levels 4 and 5 demands still more than the above. To do what seems astounding now demands, in addition to good management and visionary leadership, enormous energy compared to what we generally see today. This energy is essential if enterprises are to make bigger leaps faster.

Generating this energy requires a tough form of leadership that taps deeply into peoples' hopes and dreams, most basic human values, and needs for a meaningful life.

5 Degrees of Change: Winning in the New Economy

This chart shows the relation of enterprise performance in the Old and New Economies to the "5 Degrees of Change." As you can see, it takes a lot more to win in the New Economy than in the Old.

winningnew.gif (15627 bytes)

Energy-Unleashing Leadership

Basic Management
Basic
Management

Visionary Leadership

Energy-Unleashing Leadership

Sets agendas by:

Planning and budgeting

Developing visions and strategies

Helping people tap into their hopes and dreams

Organizes resources to accomplish agendas by:

Creating structures, hiring processes, training, etc.

Communicating visions and strategies

Helping people tap into, and be drawn together in trust by, healthy (high integrity) human values

Executes by:

Controlling, holding people accountable, problem solving

Motivating with extrinsic and intrinsic rewards

Helping people tap into their unlocked talent and energy

Results:

Creates very efficient systems which can offer a sense of stability and job security for employees, but without leadership can cope only with slow-moving change

With competent management, can create organizations which are challenging for employees and which adapt very well to change, but not to turbulence

With some competent management and visionary leadership, can create groups which find work meaningful and which produce astonishing change to which others must adapt

The Evolution of Leadership and Enterprise Performance

The Evolution of Leadership and Enterprise Performance

In 1975, Visionary Leadership is the central driving force, not the only driving force, of firms operating at an astonishing level of performance. For example, when it has worked well in the past, Visionary Leadership has been supplemented by basic management.

In 2015, Over-management is missing in the new economy because it puts organizations out of business, and terrible performance is missing because it will rarely be tolerated by customers. Visionary leadership performs less well because great alignment can stifle the massive innovation needed in the new economy. Also, motivated people are not motivated enough to produce the energy needed to move at the speed of the new economy.

Winning and Losing in the Old and New Economies

Winning in the Old Economy
	Enterprise's Goal	Type of Leadership
Traditional Business	Efficiency	Good Management
New Business	Avoid fundamentally new businesses because of the risks involved

Losing Today
	Enterprise's Goal	Type of Leadership
Traditional Business	Maintaining historical financial returns	Over-management which tries to force the achievement of increasingly impossible goals
New Business	Efficiency, which usually means immediate financial returns for new investments	Basic competent management

Winning Today
	Enterprise's Goal	Type of Leadership
Traditional Business	Adapting to significant changes in the market for traditional products and services	Visionary/Transformational Leadership
New Business	Adapting to significant changes in the marketplace	Visionary/Transformational Leadership

Winning in the New Economy
	Enterprise's Goal	Type of Leadership
Traditional Business	Adapting to significant changes in the market for traditional products and services	Visionary/Transformational Leadership
New Business	Leaping beyond today's frontiers	Energy-Unleashing Leadership

Speed, Leadership, and Performance

	20 miles per hour industry	70 miles per hour industry	150 miles per hour industry
Key Factor in a Firm Performing with Excellence	Good management	Visionary/ transformational leadership and good management. If you can’t see a few hundred yards ahead, you eventually crash.	Energy-unleashing leadership, visionary leadership, and good management. Seeing far ahead is less possible. Maneuverability and horsepower are essential.
What is needed to go from so-so to excellent	An infusion of some visionary/ transformational leadership. After ‘turnaround,’ leadership can exit as long as industry continues at 20 mph.	A strong infusion of visionary leadership. After ‘improvement,’ leadership must be institutionalized.	An infusion of more visionary leadership and energy-unleashing leadership. Both must eventually be institutionalized unless industry slows down.
A firm performing so-so	So-so management	So-so visionary leadership and management.	Only good management and good visionary leadership.

More Early Thoughts on Leadership

Visionary/Transforming Leaders...	Energy-Unleashing Leaders...
Think in terms of market-oriented visions and strategies; Look broadly around their domains and are willing to challenge the status quo; Work with others to create guiding elements for the group or enterprise, despite the difficulties in doing so; Understand that a vision is not a plan, that a strategy is more than numbers; Even at lower levels in organizations, they set clear direction by generating visions/strategies relevant to their areas of responsibility.	Fight past the cynicism and fear inside themselves to find their hopes, dreams, and childhood ideals; Help other people do the same, mostly through leader role modeling, even though that makes them vulnerable to criticism from "realistic" colleagues; Use the passion and creative power that is released from these actions to shape exceptionally bold group goals; When ideals are involved, just "good" is never good enough, and that attitude affects all visions and strategies.

Believe in and seek teamwork by constantly communicating visions and strategies; Communicate both with words and with their actions, and do so day after day and week after week; No meeting ends without some reference to longer-term goals; Often escape their offices to deliver messages face-to-face and to role model the teamwork they need.	Refuse to accept any parochial or self indulgent behavior; "Do what is right" is the guiding principal, and it’s created by appealing to very basic human values, by appealing to that which we share regardless of educational background, nationality, religion, or race: a desire for security for self and family, for love, for respect, for opportunities to grow, for a sense of purpose in one’s life; The talk goes beyond what we do (strategies) or how we do things (rules) to who we are.

Motivate action with positive incentives of all sorts: a pat on the back, public recognition, extra money in the paycheck; Tend to attack, sometimes courageously, that which can de-motivate employees, no matter the source; Dealing with these leaders, one senses the enthusiasm, even from introverted individuals; Working with them is exciting!	Help people unleash untapped energies in pursuit of the tough group goals. They do so, partially, by creating work that has true meaning, work that speaks to a deep level inside individuals, to that which some would call spiritual; The tenor of the conversation seems to always address the unasked (and very difficult) questions of: so what?; why are we here?; what difference does this make?; what difference can we make?; what difference should we make?