Page 167 - Managing Change in Organizations

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Chapter 9 ■ Leadership in practice
Trust turns out to be central. If leaders seek new ways of dealing with clients,
deploying services and products, and of negotiating change, then people must
trust them.
Thus it is that Burns (1978), in his seminal work, was concerned with ‘follow-
ership’ as the other side of the coin to ‘leadership’. How do leaders establish the
conditions under which people will follow? Writers often mention vision.
Successful corporate leaders are capable of articulating a clear vision of the future.
Capable of engaging support to that vision, they work with the values and ide-
ology of the business or organizations. But what does this mean? Itami (1987)
adds the key concept of ‘invisible assets’: technology, consumer loyalty, brand
image, control of distribution, corporate culture and management skill are all
invisible assets. Physical, financial and human assets are essential for business to
be transacted but the invisible assets of knowledge, values and skill are needed
for competitive success.
Itami tells us that invisible assets are the key to adaptability and competitive
advantage for three reasons: they are hard to accumulate, are capable of multiple
uses and grow through further use. Developing brand image or technical skills is
time consuming and costly. Money cannot buy a change of corporate culture.
Thus a firm can differentiate itself from the competition by developing its invis-
ible asset. A firm’s reputation with customers will impact on its business across a
range of products and sectors.
People are important assets of the firm, largely because they develop knowl-
edge and experience; they are the accumulators of invisible assets.

Leadership, vision and strategy

Following both Stewart and Chadwick, and Itami, the corporate leader enables
people to contribute, solve problems, learn from and by experience and to
accumulate invisible assets. The leader must do so both by making strategy
explicit (vision) and by using the process of strategy formulation to mobilize
the organization.

The need for explicit strategy is clear enough: it allows for coordination of
activity; it provides direction to people; it can boost morale and sustain self-
esteem; it can provide a shield against anxiety in a period of change. Explicit
strategy also fosters better planning. Rather than merely reacting, people can
plan change. Thus explicit strategy allows people to plan, create change and then
learn from the experience. Explicit strategy allows for the development of invis-
ible assets.
Corporate leaders must make strategy explicit and ensure its diffusion through-
out the organization. Words and actions are important. Repeated attempts to
inform and persuade must be supported by appropriate actions. Selecting people
with strong reputations to lead new projects can help. Visits to departments with
key roles display the importance of the new strategy with powerful symbolism.
Reward systems designed to recognize excellent performance are important (see
Stewart and Chadwick, 1987), just as are slogans. IBM’s ‘right-first-time’ campaign
articulated the company’s concern for service with a powerfully simple slogan.

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