No matter how large a core group may be, it always consists of a minority of the people in an organization. Indeed, in most organizations, it's unlikely that more than 5 percent of the people ever become members of a core group. Such groups vary dramatically from organization to organization. At the Body Shop, the core group is almost entirely composed of women; at Patagonia, it consists largely of mountain climbers. At most magazines I've known, either the production staff has core group status (in which case deadlines are sacrosanct and unchangeable) or the editorial staff does (in which case the magazine is exceptionally tolerant of last-minute changes).
In the best organizations, the core group members represent the unique values and knowledge that distinguish their companies from the rest. For example, only a few Coca-Cola executives have access to the vault where the secret syrup formula is kept. Of course, no one is worried that anyone will actually steal and use it. But the Coke formula has tremendous value as a talisman that separates Coca-Cola's core group from other members of the organization—and from the core groups of other companies. To have seen the Coke formula is truly to be part of a powerful and envied secret society.
Whatever the oil of anointment—whether it's seeing the Coke formula or getting invited to the CEO's house—the inner circle derives its power from the fact that life is too complicated without some such group to act as a symbolic lodestar. Think about it for a minute. The basic building block of organizations isn't the job, the team, the process, or even the share—it's the decision. People in organizations collectively make hundreds of thousands of decisions each day, usually without knowing exactly what the results will be. These decisions are made amid a maelstrom of competing jurisdictions, commitments, desires, and needs, including each decision maker's own self-interest. We make sense of a particular decision by asking ourselves, consciously or not: "What would so-and-so think of this?" The organizational core group consists of the aggregate of all these individual so-and-sos.
Indeed, in some organizations you can hear the core group named in the decision-making process. When debating a new plan, for example, people will say, "John is really excited about it." Or, "Larry has a lot of heartburn about it." Or, "I don't want to be the one to tell Kevin we can't make it happen." (These are real quotes from a Cisco Systems employee who was describing how decisions at the company were made on behalf of core group members CEO John Chambers, chief financial officer Larry Carter, and then-senior vice president Kevin Kennedy.) These statements sound like comments about emotions, but they are actually hard-nosed assessments of the core group's readiness to act. It doesn't matter how good the plan is; if Larry has heartburn, it's not going to happen. That's not just because as CFO, Larry Carter has power. It is also because he is part of the group that matters in the company's decision-making process. In this way, the core group becomes involved in decisions even when none of its members is present.
| To have seen the Coke formula is truly to be part of a powerful and envied secret society. |
| — Art Kleiner |
Getting the group on track
The core group can use its enormous power to shape the creativity, efficiency, and accountability of an organization for good as well as ill. There are many examples of organizations where the leaders make decisions better because they can draw on a well-functioning core group as a resource. This is not because the core group sets policy but simply because of the group's potential to establish an example for the rest of the organization. If the core group is going to be the means to move the organization forward, we need to know how to clarify its priorities.
A first step toward improving any core group involves reducing the level of distortion in the signals that are amplified. Politicians, diplomats, and psychiatrists have long been aware that they have to be exceedingly careful with even their most offhand remarks, because these can have huge effects on their listeners. Every U.S. president and treasury secretary quickly learns, for example, not to make casual remarks about currency exchange rates. And aristocrats have long practiced elaborate protocols for reducing misunderstandings when they interact with people of lesser status. A friend of mine once had dinner with England's Princess Margaret and a group of visiting Americans. A professional ambassador, Princess Margaret arrived at the gathering and quickly asked for a drink. She then lit a cigarette and immediately stubbed it out. She knew that her hosts would not feel free to drink or smoke until she had done so first.
Few business leaders have that instinct of noblesse oblige. To compensate, therefore, they need to make themselves more aware of the signals they send, both intended and unintended. This means not only knowing what messages they unconsciously convey about the types of programs they favor and the ideas they want. It also means being cognizant of how those messages are communicated. In many organizations, conversation up and down the hierarchy is limited to sports talk and superficial inquiry. News of business realities travels only through projections and forecasts, which sends the message that if you see a discrepancy in these numbers, you may correct it—but don't try to talk about the reasons why a discrepancy appears. That would be getting too personal.
Often, the unconscious message is simply that core group members don't want to be disturbed or made uncomfortable. It takes a lot to disabuse people of that idea. A core group member's expression of even the slightest irritation has a tremendous impact on subordinates. Some senior executives try to compensate for this by demonstrating that they are willing to be uncomfortable. One consumer-products company CEO, for example, drags his direct reports through arduous mountain-climbing trips and desert safaris to shock everyone out of complacency. The intended message is: Our leaders are so passionate and involved that they will endure discomfort and even pain for the sake of high performance. Sure, subordinates come back talking about the life-changing, team-building experience they've had. But they all know what it means—if you really want to talk to this guy, you've got to let him drag you out to the Sahara first.
| A core group member's expression of even the slightest irritation has a tremendous impact on subordinates. |
| — Art Kleiner |
You can't break a core group pattern by convening a retreat or issuing a policy. You have to set an example and reinforce that example, time after time, action after action, for a year or more. The essential component of communication is trust, and trust is something that has to be earned; there are no shortcuts. One small step you can take is to demonstrate, through continual soft-spoken patience and receptiveness, that you really would rather get bad news than false good news. Once you've done that, you will have taken a giant leap toward ensuring the health of the core group.
Finally, organizational design plays a role in determining how healthy a core group is. In the most effective organizations I know of, the leaders create the largest possible core group, and members work under policies that combine access to inner-circle information with opportunities for taking actions whose results will affect the bottom line. In general, the more widely held financial information is, the less likely it is that the members of the core group will be able to enrich themselves at the expense of an organization's broader interests. Similarly, a core group that is diverse in terms of race, gender, and nationality will tend to operate more capably and with more awareness than one whose homogeneity sends a message that "the only people who count around here are people like us."
Of course, any kind of organizational engineering conducted for the sake of influencing core group dynamics needs a delicate touch and a deliberate design; a company should not just set up a raft of sinecures for the core group members to keep them happy. Nor is it easy for a core group to suddenly make itself open up to new members. In order for an inner circle to allow different types of people to enter, members must be willing and able to talk about misunderstandings and disagreements—subjects that homogeneous groups can avoid.
Does Your Company Love You?
Excerpted with permission from "Are You In with the In Crowd?" Harvard Business Review, Vol. 81, No. 7, July 2003.
Welcome to the core group. There is no formal initiation, not even a celebratory lunch. There are no forms to fill out, and there's probably no change in your official job description. But everything is different now. The organization suddenly sees you as central to its fate. From now on, it will pivot and twist to give you what it thinks you want and need.
If you need a high-status position, the organization will find you one. When you travel, someone will meet you at the airport. The organization will boost your pay without waiting for you to ask for a raise. And if you have children who need watching, your company will set up a childcare program. You won't even have to request it; it will be justified as a general benefit for all employees.
And the more you ask of your organization, the more it will do for you. It's as if the organization has fallen in love with you—a passionate, head-over-heels kind of love in which you are never far from the center of its thoughts. If you have ever started an organization, or if you have become part of the core group of an existing one, you know how exhilarating this kind of treatment can be. Drinks in the chairman's office after work…an invitation to join the golf club…the quiet extension of perks into retirement. Tony O'Reilly, when he was head of Heinz, used to give parties for his staff at his castle in Ireland. There would be plenty of drinking, and O'Reilly, who was famously clever, would lead the group in making up extemporaneous limericks. An invitation was a sign that you were in the core group. At GE, Jack Welch got key lieutenants to buy houses near him in Florida.
And yet the most significant and irresistible benefits are the intangible ones. Core group members are taken seriously in a way that few other people are. They are invited to solve problems, even when they don't have any special knowledge or skill. They are magically "in the know." They hear early—maybe earlier than their superiors—about new projects in other divisions that the CEO is championing. Their solutions are deemed brilliant because everyone sees to it that their solutions work. In fact, core members routinely receive credit for others' insights. "Nobody at Citibank was interested in anything," wrote Charles Ferguson in High Stakes, No Prisoners, "unless John Reed thought of it first." The lives of core members are a succession of peak experiences—often the kinds of epiphanies that money can't buy, that come only from access to remarkable people or once-in-a-lifetime events. Few of us get to experience it. We only hear stories from afar, glimpses of fairy-tale-like perks and privilege, where the organization lays the world at its lover's feet.