Leadership, Innovation and Organisational Performance?
Andrew Andrew Μ. Μ. Pettigrew, OBE, FBA, PhDPettigrew, OBE, FBA, PhD
Professor of Strategy and OrganisationProfessor of Strategy and Organisation
SaSaïd Business Schoolïd Business School
University of OxfordUniversity of Oxford
[email protected]@sbs.ox.ac.uk
Presentation to Stavanger Innovation SummitPresentation to Stavanger Innovation Summit
1515thth June 2009 June 2009
Our journey…Our journey…
• The Contrary PositionThe Contrary Position
• Leadership, Complementary Innovation & Leadership, Complementary Innovation & PerformancePerformance
• Leadership, Innovation and Performance in BPLeadership, Innovation and Performance in BP
• Key Messages for Leaders and Leading ChangeKey Messages for Leaders and Leading Change
The contrary position…The contrary position…
• Performance is largely shaped by external conditions –
economic, market and technological factors.
• Leaders are faced by many internal constraints. Leaders
as pawns not potentates.
• People attribute and thereby exaggerate leader effects to
make sense of complex, confusing events.
• Leaders magnify followers attributions by managing
impressions.
• Luck and chance are key determinants of performance.
New Forms of Organization:New Forms of Organization:4 Themes4 Themes
• Greater Permeability of Organization Boundaries, the
development of networks, webs, co-operative relations, alliances
and clusters
• Compressing the structural and cultural features of hierarchy
through delayering, downsizing, and building more co-operative
forms of managerial style
• Associated drives to develop more creative, agile, learning forms
(competition as an innovation contest)
• The Linguistic turn from organization to organizing
The primary questionsThe primary questions
?ProgressHow far have new organisational forms been implemented?
Performance ?What are the performance effects??
Process ?What are the managerial processes?
Research methodResearch method• Four surveys in:
• UK
• Continental Western
Europe
• Japan
• USA
• 18 Case studies in
• 8 UK
• 10 Continental
Western Europe
Progress and performance questions
Process questions
Three dimensions of changeThree dimensions of change
changingchanging
structuresstructures
changingchanging
processesprocesses
changingchanging
boundariesboundaries
The multiple indicatorsThe multiple indicators
processes
Horizontal & vertical
communication
Invest in I.T.
Practice Practice new HRnew HR
boundaries
Outsource Downscope
Developstrategicalliances
structuresDecentralise
Project formsof organizing
Delayer
The Innovating OrganizationThe Innovating Organization
(Eds) Andrew Pettigrew and Evelyn Fenton(Eds) Andrew Pettigrew and Evelyn Fenton
London, Sage, 2000London, Sage, 2000
Innovative Forms of Organizing: Innovative Forms of Organizing: An International PerspectiveAn International Perspective
((Eds) Andrew Pettigrew et al.Eds) Andrew Pettigrew et al.
London, Sage, 2003London, Sage, 2003
Key OutputsKey Outputs
Dualities in changingDualities in changing
• Living with hierarchies Living with hierarchies andand networks networks
• Greater performance accountability upwards Greater performance accountability upwards andand greater horizontal integration sidewaysgreater horizontal integration sideways
• Empowering Empowering andand holding the ring holding the ring
• Centralising strategy Centralising strategy andand decentralising decentralising operationsoperations
• Standardising Standardising andand customising customising
• Discipline to identify knowledge Discipline to identify knowledge andand the good the good
citizenship to share knowledgecitizenship to share knowledge
• Balancing continuity Balancing continuity andand change “to change the world change “to change the world
one must live with it”one must live with it”
• Continuous innovation requires platforms of relative Continuous innovation requires platforms of relative
stabilitystability
• Delivering a complementary Delivering a complementary andand contextually contextually
appropriate set of innovations (not latest fad)appropriate set of innovations (not latest fad)
Dualities in changingDualities in changing
benefitsbenefits
of complementary of complementary innovations?innovations?
What are theWhat are the
Strategic complementaritiesStrategic complementarities
• ““Doing Doing moremore of one thing increases the of one thing increases the
returns of doing returns of doing moremore of another of another” ”
Milgrom and Roberts, 1995Milgrom and Roberts, 1995
• Investing in one practice makes more Investing in one practice makes more
profitable investing in another, setting off a profitable investing in another, setting off a
potential virtual circle of high performancepotential virtual circle of high performance
Two key propositionsTwo key propositions
The Positive Proposition:The Positive Proposition:
• Changing only a few of the system Changing only a few of the system
elements at a time may not come close elements at a time may not come close
at all to achieving all the benefits that are at all to achieving all the benefits that are
available through a fully co-ordinated available through a fully co-ordinated
movemove
The Negative Proposition:The Negative Proposition:
• Partial moves may drive down Partial moves may drive down
performanceperformance
Systemic change: Systemic change: Europe, Japan and US, 1992-1997Europe, Japan and US, 1992-1997
The 3 DimensionsThe 3 Dimensions
StructureStructure
ProcessesProcesses
BoundariesBoundaries
The 4 SystemsThe 4 Systems
System 1 (S+P+B)System 1 (S+P+B)
System 2 (S+P)System 2 (S+P)
System 3 (P+B)System 3 (P+B)
System 4 (S+B)System 4 (S+B)
EuropeEurope
30.3%30.3%
74.9%74.9%
44.9%44.9%
EuropeEurope
13.0%13.0%
25.1%25.1%
34.2%34.2%
16.4%16.4%
• Very few companies adopting whole system of change
JapanJapan
6.2%6.2%
53.7%53.7%
30.7%30.7%
JapanJapan
1.2%1.2%
4.7%4.7%
18.7%18.7%
1.6%1.6%
USUS
16.5%16.5%
82.3%82.3%
57.0%57.0%
USUS
8.9%8.9%
12.7%12.7%
46.8%46.8%
11.4%11.4%
One symbol, + or -, indicates weak positive or negative significance; two symbols, ++ or --, indicate strong positive or negative significance.
Systemic change and performance: Systemic change and performance: Summary of regression resultsSummary of regression results
The 4 SystemsThe 4 Systems
System 1 (S+P+B)System 1 (S+P+B)
System 2 (S+P)System 2 (S+P)
System 3 (P+B)System 3 (P+B)
System 4 (S+B)System 4 (S+B)
Pooled Sample of Pooled Sample of
Western FirmsWestern Firms
++++
--
--
UKUK
++
----
--
USUS
++
----
• The adoption of a full set of changes (System 1) increases the probability of improving corporate
performance
• The adoption of partial systems (System 2 and System 3) is likely to reduce performance
Performance gains require doing
many practices together
Performance effects depend
upon whole system
thinking and action
BP:Complementary Innovations & BP:Complementary Innovations & Performance 1990 – 1999Performance 1990 – 1999
19901990 19911991 19921992 19931993 19941994 19951995 19961996 19971997 19981998 19991999
H O R TO NH O R TO N S I M O NS I M O N B R O W N EB R O W N E
Leading and Complementary Leading and Complementary InnovationsInnovations
Key Messages::
• For LeadersFor Leaders
• For Leading ChangeFor Leading Change
Key Messages (1)Key Messages (1)
1.1. Leader Qualities of Holistic Thinking Leader Qualities of Holistic Thinking andand Holistic Action Holistic Action
2.2. Beware of Attempts to Improve Performance throughBeware of Attempts to Improve Performance through
Singular ChangesSingular Changes
3.3. Building the Complementary ChangesBuilding the Complementary Changes
The Integrated Systems of Mutually Reinforcing ElementsThe Integrated Systems of Mutually Reinforcing Elements
4.4. This Approach Points to the Importance of:This Approach Points to the Importance of:
Strong, Aware and Engaged Central DirectionStrong, Aware and Engaged Central Direction Bottom Up Approaches are Handicapped in DeliveringBottom Up Approaches are Handicapped in Delivering Complementary ChangeComplementary Change
Key Messages (2)Key Messages (2)
5.5. Be Prepared for the Dangers of Transitions and the Perils Be Prepared for the Dangers of Transitions and the Perils of the 'J' Curve of the 'J' Curve
Performance
Extent of Change
Things May Get Worse Before They Get Better
Need For Strong Leaders To Survive Transition Processes
Key Messages (3)Key Messages (3)6.6. Partial Changes may be Politically and Emotionally Easier Partial Changes may be Politically and Emotionally Easier
to Contemplate, but Encourage Long Term Declinesto Contemplate, but Encourage Long Term Declines
7.7. Beware of Complementary Traps: Sticking With the Old Beware of Complementary Traps: Sticking With the Old
System that WorksSystem that Works
8.8. Learning is Crucial, But it is Also a Challenge Learning is Crucial, But it is Also a Challenge
Complements May Be:Complements May Be:
9.9. Building the Complements and the Capabilities that Underpin Building the Complements and the Capabilities that Underpin
them Takes Time and Couragethem Takes Time and Courage
• Hard to Understand• Hard to Implement• Hard to Imitate
Key Messages (4)Key Messages (4)
10.10. Building Complements Requires CustomizationBuilding Complements Requires Customization
11.11. The Virtual Cycle of Complementary Change Needs to The Virtual Cycle of Complementary Change Needs to
Stay In MotionStay In Motion
Leading Change is a Continuous ProcessLeading Change is a Continuous Process
12.12. The Crucial Importance of: The Crucial Importance of: Duration of Leader in Post
Careful Management of Leader Succession
Leading Continuity and Change
The Importance of Inter-Generational Leader Effects
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