Embracing Commitment and Performance: CEOs and Practices Used to Manage Paradox
Executive Summary — How do chief executives establish strategic practices around their visions and intents? How do such practices make it possible to create both high commitment and high performance? The central puzzle for HBS professor emeritus Michael Beer and colleagues is not the creation of high commitment per se, but the kind of commitment that is useful for the implementation of strategy and sustainable performance. Beer et al. sought out major companies in North America and Europe that had a history of sustainable, above-average financial performance, and where there were indications of the companies being high-commitment organizations. They then conducted in-depth interviews with 26 CEOs of such companies, asking about activities and practices that help create commitment and performance. Key concepts include:
- The CEOs did not frame choices as "either-or" but rather "both-and." They argued that seemingly conflicting outcomes cannot be made the subject of choice, nor can they be balanced.
- It is the role of a CEO to embrace paradoxes and at least at the espoused level try to reconcile them.
- The research team found 5 groups of interrelated managerial practices that characterize this kind of strategic management. The practices engage employees emotionally and rationally, and facilitate strategic change, rather than implement it top-down.
We tend to assume that great leaders must make difficult choices between two or more conflicting outcomes. In an interview study with 26 CEOs of top American and European companies (incl. IKEA, Campbell Soups, Nokia, H&M), we find that instead of choosing between conflicting outcomes such as long-term strategy or short-term performance drivers, top tier managers argue that their role is to embrace such paradoxes to make both things happen simultaneously. The study identifies five groups of practices that make this possible. Together, they reveal a systematic approach to managerial work at the top, which is seldom found in the literature. By building on the engagement of many in the development of the organization, the practices are important for our understanding of how a CEO facilitates the partaking of many in strategy making. The paper contributes to theory by relating the current findings to the literature on the connection between commitment and performance and on the strategic management literature that focuses on the proliferation of strategy and strategy as practice.
- Full Working Paper Text
- Working Paper Publication Date: January 2008
- HBS Working Paper Number: 08-052