Responsible Leadership in an Unforgiving World
In a provocative new book, Joseph Badaracco argues that our world is increasingly characterized by struggle—for labor, technology, funds, and partners. Leaders who embrace that struggle can also reap its rewards.
Struggle is an experience we instinctively avoid, looking for any way to minimize the hard work and pain involved in getting what we want. And yet—nearly every book we read and movie we watch involves someone struggling mightily to achieve their ends. Like them, we find that almost everything meaningful we achieve in life comes with some form of struggle attached, and rarely do we pause long after one struggle before we're on to the next. If Sisyphus ever were to finally get the rock up the top of that hill, it's likely he'd soon be looking for a bigger hill with a nicer view from the top.
It's that paradox—that struggle can be both something to overcome on the way to success and something to embrace for the meaning it gives our lives—that motivated Harvard Business School Professor Joseph Badaracco to take a closer look at the concept of struggle in a business context. He encapsulated the results of his inquiry in a new book The Good Struggle: Responsible Leadership in an Unforgiving World, which deals head on with the growing management complexities in the new economy.
"What's going on now is a return to an earlier more volatile form of capitalism, where there is a lot of turbulence"
Badaracco, the John Shad Professor of Business Ethics, argues that, while market-based competition has been with us as long as capitalism, companies have been insulated from it over the last half-century by the growth of large companies supported by friendly governments, domestic monopolies, and a lack of foreign competition. This is the environment that allowed the GM's and IBM's of the world to grow, dominate, and achieve previously unseen levels of corporate success.
"What's going on now is a return to an earlier more volatile form of capitalism, where there is a lot of turbulence," Badaracco says. Furthermore, the "new invisible hand" of the markets is even more intense than the old one due to rapid global dissemination of information.
Badaracco's vision suggests it's more difficult to be a responsible leader today than a generation ago. But also more rewarding.
Badaracco started by researching the experience of entrepreneurs-figuring that if anyone knew what it meant to struggle it was those who started small businesses, half of which fail within the first year. In the wake of the financial crisis of 2008, however, he began to see that no company-no matter how large-was immune to failure, and that the lessons he was learning from startups could be applied far more broadly.
"I realized it wasn't just small companies who were fragile, and whose leaders were facing high uncertainty and intense performance pressure," he says. "A lot of managers and companies were."
Markets today not only control the buying and selling of goods and services, they shape nearly every aspect of our lives. Employees see themselves as individual brands, forever on the lookout for new opportunities; home life has become an act of managing supply chains, outsourcing housecleaning, childcare, and even grocery shopping to others; and churches market themselves like fast food companies to potential parishioners.
In this world, success in business isn't about creating large hierarchical organizations with huge factories—it's about learning to combine and recombine dozens of "modules" both internally and externally to achieve goals.
"What leaders are doing much more often is creatively searching the world for talent, technology, and funds, and assembling companies," says Badaracco. "It's plug-and-play management, technology, and partnerships. Whatever you have assembled may not last long, even if it's working."
The very nature of this new recombinant world requires leaders to live constantly in the midst of struggle, Badaracco argues, making leadership both more difficult and more rewarding than it was a generation ago. If critical decisions in the last century were typified by an all-or-nothing gamble on a new big new factory or business arm, then decisions in this century are characterized by a constantly evolving set of commitments to a number of fluid circumstances. At times, Badaracco argues, the most responsible decision can be putting off the "big decision" as long as possible in order to respond to an ever-evolving configuration of moving parts.
The measures of accountability are changing as well. One need only look at the financial crisis to see how traditional guardians of accountability—regulators and boards of directors—have failed to keep up with the speed of the markets. In the new marketplace, leaders are called upon more than ever to keep themselves accountable to the commitments they make, to their employees, their investors, and their partners, knowing that if they don't, then the market will punish them.
"If you don't appear to be making good on those commitments, a lot of your key assets will go out the door"
"Those commitments are real and serious—morally, personally, and maybe even legally," says Badaracco. "If you don't appear to be making good on those commitments, a lot of your key assets will go out the door."
That necessarily means that some constituencies such as the environment or other causes traditionally associated with corporate social responsibility may be outside the realm of what business can properly be supposed to support.
"I am inclined to think that this intense market pressure keeps most managers in most companies meeting what they have committed to investors, customers, and other core groups," he says. "It's easy for them to pay less attention to some constituencies that aren't as well organized and can't contribute as directly to performance."
While Badaracco is clear that he is describing, not endorsing, the reality of business today, he thinks it is more honest for companies to clearly spell out their commitments, rather than espousing the catch-all values statements of vague promises to make the world a better place that most companies proffer.
"You've got to get beyond the values laundry list, which for most companies comes down to them being committed to everyone for almost everything," says Badaracco. "It's a waste of trees—it's waste of electricity moving through the Internet."
CORE VALUES THAT COUNT
The core values companies should rightly espouse, say Badaracco, fall into three categories.
The first is clarity: that is, not just being transparent about your business practices, but being honest and upfront with partners, customers, and employees about your commitments and goals—and, above all, the hard problems and threats facing your organization.
Second, leaders need to champion "meaningful projects"—not small contributions to some grand long-term vision, but rather shorter-term projects with tangible goals that unite and excite members of a team.
Finally, because intense performance pressure and complexity can lead to ethical and legal violations, leaders have to draw bright lines and let employees know they crossing them will bring serious or severe consequences.
Taken as a whole, these guidelines aren't easy for leaders to follow. But, Badaracco argues, those who do will reap more lasting satisfaction from their work—not in spite of this struggle, but because of it.
"Leaders are motivated by having a good life, but it's surprising how many people who could kick back and watch things from the deck of the boat don't," he says. "They like creating, building, trying, experimenting, partly because it's fun, partly because hard work tells them what they are doing is important. The struggle is part of who they are."