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www.hbr.org
BEST OF HBR
What Leaders Really
Do
by John P. Kotter

Included with this full-text Harvard Business Review article:
The Idea in Briefthe core idea
The Idea in Practiceputting the idea to work
2 Article Summary
3 What Leaders Really Do
A list of related materials, with annotations to guide further
exploration of the articles ideas and applications
12 Further Reading
They dont make plans; they
dont solve problems; they
dont even organize people.
What leaders really do is
prepare organizations for
change and help them cope as
they struggle through it.
Reprint R0111F
This document is authorized for use only by Keresha Garlick in Leadership in the 21st Century at Strayer University, 2019.
B EST O F HBR
What Leaders Really Do
The Idea in Brief The Idea in Practice
COPYRIGHT 2001 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.
The most pernicious half-truth about leadership is that its just a matter of charisma
and visionyou either have it or you dont.
The fact of the matter is that leadership
skills are not innate. They can be acquired,
and honed. But first you have to appreciate
how they differ from management skills.
Management is about coping with complexity; it brings order and predictability to a
situation. But thats no longer enoughto
succeed, companies must be able to adapt
to change. Leadership, then, is about learning how to cope with rapid change.
How does this distinction play out?
Management involves planning and
budgeting. Leadership involves setting
direction.
Management involves organizing and
staffing. Leadership involves aligning
people.
Management provides control and
solves problems. Leadership provides
motivation.
Management and leadership both involve
deciding what needs to be done, creating
networks of people to accomplish the
agenda, and ensuring that the work actually
gets done. Their work is complementary, but
each system of action goes about the tasks in
different ways.
1. Planning and budgeting versus setting
direction. The aim of management is predictabilityorderly results. Leaderships function
is to produce change. Setting the direction of
that change, therefore, is essential work. Theres
nothing mystical about this work, but it is
more inductive than planning and budgeting.
It involves the search for patterns and relationships. And it doesnt produce detailed plans;
instead, direction-setting results in visions and
the overarching strategies for realizing them.
Example:
In mature industries, increased competition
usually dampens growth. But at American
Express, Lou Gerstner bucked this trend,
successfully crafting a vision of a dynamic
enterprise.
The new direction he set wasnt a mere
attention-grabbing schemeit was the result of asking fundamental questions about
market and competitive forces.
2. Organizing and staffing versus aligning
people. Managers look for the right fit between people and jobs. This is essentially a
design problem: setting up systems to ensure
that plans are implemented precisely and efficiently. Leaders, however, look for the right
fit between people and the vision. This is
more of a communication problem. It involves getting a large number of people, inside and outside the company, first to believe
in an alternative futureand then to take
initiative based on that shared vision.
3. Controlling activities and solving problems versus motivating and inspiring. Management strives to make it easy for people to
complete routine jobs day after day. But since
high energy is essential to overcoming the
barriers to change, leaders attempt to touch
people at their deepest levelsby stirring in
them a sense of belonging, idealism, and
self-esteem.
Example:
At Procter & Gambles paper products
division, Richard Nicolosi underscored the
message that each of us is a leader by
pushing responsibility down to newly
formed teams. An entrepreneurial attitude
took root, and profits rebounded.
page 2 This document is authorized for use only by Keresha Garlick in Leadership in the 21st Century at Strayer University, 2019.
BEST OF HBR
What Leaders Really
Do
by John P. Kotter
harvard business review december 2001
COPYRIGHT 2001 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.
They dont make plans; they dont solve problems; they dont even
organize people. What leaders really do is prepare organizations for
change and help them cope as they struggle through it.
The article reprinted here stands on its own, of
course, but it can also be seen as a crucial contribution to a debate that began in 1977, when
professor Abraham
Zaleznik published an HBR article with the deceptively mild title Managers and Leaders: Are
They Different? The piece caused an uproar in
business schools. It argued that the theoreticians
of scientific management, with their organizational diagrams and time-and-motion studies,
were missing half the picturethe half filled
with inspiration, vision, and the full spectrum of
human drives and desires. The study of leadership hasnt been the same since.
What Leaders Really Do, first published in
1990, deepens and extends the insights of the
1977 article. Introducing one of those brand-new
ideas that seems obvious once its expressed, retired Harvard Business School professor John
Kotter proposes that management and leadership are different but complementary, and that in
a changing world, one cannot function without
the other. He then enumerates and contrasts the
primary tasks of the manager and the leader. His
key point bears repeating: Managers promote
stability while leaders press for change, and only
organizations that embrace both sides of that
contradiction can thrive in turbulent times.
Leadership is different from management,
but not for the reasons most people think.
Leadership isnt mystical and mysterious. It
has nothing to do with having charisma or
other exotic personality traits. It is not the
province of a chosen few. Nor is leadership
necessarily better than management or a replacement for it.
Rather, leadership and management are
two distinctive and complementary systems
of action. Each has its own function and characteristic activities. Both are necessary for
success in an increasingly complex and volatile business environment.
Most U.S. corporations today are overmanaged and underled. They need to develop
their capacity to exercise leadership. Successful corporations dont wait for leaders to
come along. They actively seek out people
page 3 This document is authorized for use only by Keresha Garlick in Leadership in the 21st Century at Strayer University, 2019.
What Leaders Really DoBEST OF HBR
harvard business review december 2001
with leadership potential and expose them to
career experiences designed to develop that
potential. Indeed, with careful selection, nurturing, and encouragement, dozens of people
can play important leadership roles in a business organization.
But while improving their ability to lead,
companies should remember that strong leadership with weak management is no better,
and is sometimes actually worse, than the
reverse. The real challenge is to combine
strong leadership and strong management
and use each to balance the other.
Of course, not everyone can be good at
both leading and managing. Some people
have the capacity to become excellent managers but not strong leaders. Others have great
leadership potential but, for a variety of reasons, have great difficulty becoming strong
managers. Smart companies value both kinds
of people and work hard to make them a part
of the team.
But when it comes to preparing people for
executive jobs, such companies rightly ignore
the recent literature that says people cannot
manage and lead. They try to develop leadermanagers. Once companies understand the
fundamental difference between leadership
and management, they can begin to groom
their top people to provide both.
The Difference Between
Management and Leadership
Management is about coping with complexity.
Its practices and procedures are largely a
response to one of the most significant developments of the twentieth century: the emergence of large organizations. Without good
management, complex enterprises tend to become chaotic in ways that threaten their very
existence. Good management brings a degree
of order and consistency to key dimensions
like the quality and profitability of products.
Leadership, by contrast, is about coping
with change. Part of the reason it has become
so important in recent years is that the business world has become more competitive and
more volatile. Faster technological change,
greater international competition, the deregulation of markets, overcapacity in capitalintensive industries, an unstable oil cartel,
raiders with junk bonds, and the changing
demographics of the work-force are among
the many factors that have contributed to this
shift. The net result is that doing what was
done yesterday, or doing it 5% better, is no
longer a formula for success. Major changes are
more and more necessary to survive and compete effectively in this new environment. More
change always demands more leadership.
Consider a simple military analogy: A
peacetime army can usually survive with
good administration and management up
and down the hierarchy, coupled with good
leadership concentrated at the very top. A
wartime army, however, needs competent
leadership at all levels. No one yet has figured out how to manage people effectively
into battle; they must be led.
These two different functionscoping with
complexity and coping with changeshape
the characteristic activities of management
and leadership. Each system of action involves deciding what needs to be done, creating networks of people and relationships
that can accomplish an agenda, and then trying to ensure that those people actually do
the job. But each accomplishes these three
tasks in different ways.
Companies manage complexity first by planning and budgetingsetting targets or goals for
the future (typically for the next month or
year), establishing detailed steps for achieving
those targets, and then allocating resources to
accomplish those plans. By contrast, leading an
organization to constructive change begins by
setting a directiondeveloping a vision of the
future (often the distant future) along with
strategies for producing the changes needed to
achieve that vision.
Management develops the capacity to
achieve its plan by organizing and staffing
creating an organizational structure and set of
jobs for accomplishing plan requirements,
staffing the jobs with qualified individuals,
communicating the plan to those people,
delegating responsibility for carrying out the
plan, and devising systems to monitor implementation. The equivalent leadership activity,
however, is aligning people. This means communicating the new direction to those who can
create coalitions that understand the vision
and are committed to its achievement.
Finally, management ensures plan accomplishment by controlling and problem solving
monitoring results versus the plan in some
detail, both formally and informally, by
means of reports, meetings, and other tools;
Now retired, John P. Kotter was a
professor of organizational behavior
at Harvard Business School in Boston.
He is the author of such books as The
General Managers (Free Press, 1986),
The Leadership Factor (Free Press,
1988), and A Force for Change: How
Leadership Differs from Management
(Free Press, 1990).
page 4 This document is authorized for use only by Keresha Garlick in Leadership in the 21st Century at Strayer University, 2019.
What Leaders Really DoBEST OF HBR
harvard business review december 2001
identifying deviations; and then planning and
organizing to solve the problems. But for
leadership, achieving a vision requires motivating and inspiringkeeping people moving
in the right direction, despite major obstacles
to change, by appealing to basic but often untapped human needs, values, and emotions.
A closer examination of each of these activities will help clarify the skills leaders need.
Setting a Direction Versus Planning
and Budgeting
Since the function of leadership is to produce
change, setting the direction of that change is
fundamental to leadership. Setting direction is
never the same as planning or even long-term
planning, although people often confuse the
two. Planning is a management process, deductive in nature and designed to produce orderly results, not change. Setting a direction is
more inductive. Leaders gather a broad range
of data and look for patterns, relationships,
and linkages that help explain things. Whats
more, the direction-setting aspect of leadership does not produce plans; it creates vision
and strategies. These describe a business, technology, or corporate culture in terms of what
it should become over the long term and articulate a feasible way of achieving this goal.
Most discussions of vision have a tendency
to degenerate into the mystical. The implication is that a vision is something mysterious
that mere mortals, even talented ones, could
never hope to have. But developing good
business direction isnt magic. It is a tough,
sometimes exhausting process of gathering
and analyzing information. People who articulate such visions arent magicians but broadbased strategic thinkers who are willing to
take risks.
Nor do visions and strategies have to be
brilliantly innovative; in fact, some of the best
Aligning People: Chuck Trowbridge and Bob Crandall at Eastman Kodak
Eastman Kodak entered the copy business in
the early 1970s, concentrating on technically
sophisticated machines that sold, on average,
for about $60,000 each. Over the next decade,
this business grew to nearly $1 billion in revenues. But costs were high, profits were hard to
find, and problems were nearly everywhere. In
1984, Kodak had to write off $40 million in inventory. Most people at the company knew
there were problems, but they couldnt agree
on how to solve them. So in his first two
months as general manager of the new copy
products group, established in 1984, Chuck
Trowbridge met with nearly every key person
inside his group, as well as with people elsewhere at Kodak who could be important to
the copier business. An especially crucial area
was the engineering and manufacturing organization, headed by Bob Crandall.
Trowbridge and Crandalls vision for engineering and manufacturing was simple: to
become a world-class manufacturing operation and to create a less bureaucratic and
more decentralized organization. Still, this
message was difficult to convey because it
was such a radical departure from previous
communications, not only in the copy products group but throughout most of Kodak. So
Crandall set up dozens of vehicles to emphasize the new direction and align people to it:
weekly meetings with his own 12 direct reports; monthly copy product forums in
which a different employee from each of his
departments would meet with him as a group;
discussions of recent improvements and new
projects to achieve still better results; and
quarterly State of the Department meetings,
where his managers met with everybody in
their own departments.
Once a month, Crandall and all those who
reported to him would also meet with 80 to
100 people from some area of his organization
to discuss anything they wanted. To align his
biggest supplierthe Kodak Apparatus Division, which supplied one-third of the parts
used in design and manufacturinghe and
his managers met with the top management
of that group over lunch every Thursday.
Later, he created a format called business
meetings, where his managers meet with 12
to 20 people on a specific topic, such as inventory or master scheduling. The goal: to
get all of his 1,500 employees in at least one of
these focused business meetings each year.
Trowbridge and Crandall also enlisted written communication in their cause. A four- to
eight-page Copy Products Journal was sent
to employees once a month. A program
called Dialog Letters gave employees the
opportunity to anonymously ask questions of
Crandall and his top managers and be guaranteed a reply. But the most visible and powerful written communications were the
charts. In a main hallway near the cafeteria,
these huge charts vividly reported the quality, cost, and delivery results for each product, measured against difficult targets. A
hundred smaller versions of these charts
were scattered throughout the manufacturing area, reporting quality levels and costs
for specific work groups.
Results of this intensive alignment process
began to appear within six months, and still
more surfaced after a year. These successes
made the message more credible and helped
get more people on board. Between 1984 and
1988, quality on one of the main product lines
increased nearly 100-fold. Defects per unit
went from 30 to 0.3. Over a three-year period,
costs on another product line went down
nearly 24%. Deliveries on schedule increased
from 82% in 1985 to 95% in 1987. Inventory
levels dropped by over 50% between 1984
and 1988, even though the volume of products was increasing. And productivity, measured in units per manufacturing employee,
more than doubled between 1985 and 1988.
page 5 This document is authorized for use only by Keresha Garlick in Leadership in the 21st Century at Strayer University, 2019.
What Leaders Really DoBEST OF HBR
harvard business review december 2001
are not. Effective business visions regularly
have an almost mundane quality, usually consisting of ideas that are already well known.
The particular combination or patterning of
the ideas may be new, but sometimes even
that is not the case.
For example, when CEO Jan Carlzon articulated his vision to make Scandinavian Airlines
System (SAS) the best airline in the world for
the frequent business traveler, he was not saying anything that everyone in the airline industry didnt already know. Business travelers
fly more consistently than other market
segments and are generally willing to pay
higher fares. Thus, focusing on business customers offers an airline the possibility of high
margins, steady business, and considerable
growth. But in an industry known more for
bureaucracy than vision, no company had
ever put these simple ideas together and dedicated itself to implementing them. SAS did,
and it worked.
Whats crucial about a vision is not its
originality but how well it serves the interests of important constituenciescustomers,
stockholders, employeesand how easily
it can be translated into a realistic competitive strategy. Bad visions tend to ignore
the legitimate needs and rights of important
constituenciesfavoring, say, employees over
customers or stockholders. Or they are strategically unsound. When a company that has
never been better than a weak competitor
in an industry suddenly starts talking about
Setting a Direction: Lou Gerstner at American Express
When Lou Gerstner became president of the
Travel Related Services (TRS) arm at American
Express in 1979, the unit was facing one of its
biggest challenges in AmExs 130-year history.
Hundreds of banks offering or planning to
introduce credit cards through Visa and MasterCard that would compete with the American Express card. And more than two dozen
financial service firms were coming into the
travelers checks business. In a mature marketplace, this increase in competition usually reduces margins and prohibits growth.
But that was not how Gerstner saw the
business. Before joining American Express,
he had spent five years as a consultant to
TRS, analyzing the money-losing travel division and the increasingly competitive card
operation. Gerstner and his team asked fundamental questions about the economics,
market, and competition and developed a
deep understanding of the business. In the
process, he began to craft a vision of TRS that
looked nothing like a 130-year-old company
in a mature industry.
Gerstner thought TRS had the potential to
become a dynamic and growing enterprise,
despite the onslaught of Visa and MasterCard
competition from thousands of banks. The
key was to focus on the global marketplace
and, specifically, on the relatively affluent
customer American Express had been traditionally serving with .
By further segmenting this market, aggressively developing a broad range of new products and services, and investing to increase
productivity and to lower costs, TRS could
provide the best service possible to customers who had enough discretionary income to
buy many more services from TRS than they
had in the past.
Within a week of his appointment, Gerstner brought together the people running the
card organization and questioned all the
principles by which they conducted their
business. In particular, he challenged two
widely shared beliefsthat the division
should have only one product, the green
card, and that this product was limited in
potential for growth and innovation.
Gerstner also moved quickly to develop a
more entrepreneurial culture, to hire and
train people who would thrive in it, and to
clearly communicate to them the overall direction. He and other top managers rewarded
intelligent risk taking. To make entrepreneurship easier, they discouraged unnecessary
bureaucracy. They also upgraded hiring standards and created the TRS Graduate Management Program, which offered high-potential
young people special training, an enriched
set of experiences, and an unusual degree
of exposure to people in top management.
To encourage risk taking among all TRS employees, Gerstner also established something
called the Great Performers program to
recognize and reward truly exceptional customer service, a central tenet in the organizations vision.
These incentives led quickly to new markets,
products, and services. TRS expanded its
overseas presence dramatically. By 1988,
AmEx cards were issued in 29 currencies (as
opposed to only 11 a decade earlier). The unit
also focused aggressively on two market segments that had historically received little attention: college students and women. In 1981,
TRS combined its card and travel-service capabilities to offer corporate clients a unified
system to monitor and control travel expenses.
And by 1988, AmEx had grown to become the
fifth largest direct-mail merchant in the
United States.
Other new products and services included
90-day insurance on all purchases made with
the AmEx card, a Platinum American Express
card, and a revolving credit card known as
Optima. In 1988, the company also switched
to image-processing technology for billing,
producing a more convenient monthly statement for customers and reducing billing
costs by 25%.
As a result of these innovations, TRSs net
income increased a phenomenal 500% between 1978 and 1987a compounded annual
rate of about 18%. The business outperformed
many so-called high-tech/high-growth companies. With a 1988 return on equity of 28%, it
also outperformed most low-growth but highprofit businesses.
page 6 This document is authorized for use only by Keresha Garlick in Leadership in the 21st Century at Strayer University, 2019.
What Leaders Really DoBEST OF HBR
harvard business review december 2001
becoming number one, that is a pipe dream,
not a vision.
One of the most frequent mistakes that
overmanaged and underled corporations
make is to embrace long-term planning as a
panacea for their lack of direction and inability to adapt to an increasingly competitive
and dynamic business environment. But such
an approach misinterprets the nature of direction setting and can never work.
Long-term planning is always time consuming. Whenever something unexpected happens, plans have to be redone. In a dynamic
business environment, the unexpected often
becomes the norm, and long-term planning
can become an extraordinarily burdensome
activity. That is why most successful corporations limit the time frame of their planning
activities. Indeed, some even consider longterm planning a contradiction in terms.
In a company without direction, even
short-term planning can become a black hole
capable of absorbing an infinite amount of
time and energy. With no vision and strategy
to provide constraints around the planning
process or to guide it, every eventuality deserves
a plan. Under these circumstances, contingency planning can go on forever, draining
time and attention from far more essential
activities, yet without ever providing the clear
sense of direction that a company desperately needs. After awhile, managers inevitably become cynical, and the planning process
can degenerate into a highly politicized game.
Planning works best not as a substitute for
direction setting but as a complement to it. A
competent planning process serves as a useful
reality check on direction-setting activities.
Likewise, a competent direction-setting process provides a focus in which planning can
then be realistically carried out. It helps clarify what kind of planning is essential and
what kind is irrelevant.
Aligning People Versus Organizing
and Staffing
A central feature of modern organizations is
interdependence, where no one has complete
autonomy, where most employees are tied to
many others by their work, technology,
management systems, and hierarchy. These
linkages present a special challenge when organizations attempt to change. Unless many
individuals line up and move together in the
same direction, people will tend to fall all
over one another. To executives who are overeducated in management and undereducated
in leadership, the idea of getting people moving in the same direction appears to be an organizational problem. What executives need
to do, however, is not organize people but
align them.
Managers organize to create human systems that can implement plans as precisely
and efficiently as possible. Typically, this
requires a number of potentially complex decisions. A company must choose a structure
of jobs and reporting relationships, staff it
with individuals suited to the jobs, provide
training for those who need it, communicate
plans to the workforce, and decide how much
authority to delegate and to whom. Economic incentives also need to be constructed
to accomplish the plan, as well as systems to
monitor its implementation. These organizational judgments are much like architectural
decisions. Its a question of fit within a particular context.
Aligning is different. It is more of a communications challenge than a design problem.
Aligning invariably involves talking to many
more individuals than organizing does. The
target population can involve not only a managers subordinates but also bosses, peers,
staff in other parts of the organization, as well
as suppliers, government officials, and even
customers. Anyone who can help implement
the vision and strategies or who can block implementation is relevant.
Trying to get people to comprehend a vision of an alternative future is also a communications challenge of a completely different
magnitude from organizing them to fulfill a
short-term plan. Its much like the difference
between a football quarterback attempting to
describe to his team the next two or three
plays versus his trying to explain to them a totally new approach to the game to be used in
the second half of the season.
Whether delivered with many words or a
few carefully chosen symbols, such messages
are not necessarily accepted just because they
are understood. An-other big challenge in
leadership efforts is credibilitygetting people to believe the message. Many things contribute to credibility: the track record of the
person delivering the message, the content of
the message itself, the communicators repuThe idea of getting people
moving in the same
direction appears to be
an organizational
problem. But what
executives need to do is
not organize people but
align them.
page 7 This document is authorized for use only by Keresha Garlick in Leadership in the 21st Century at Strayer University, 2019.
What Leaders Really DoBEST OF HBR
harvard business review december 2001
tation for integrity and trustworthiness, and
the consistency between words and deeds.
Finally, aligning leads to empowerment in
a way that organizing rarely does. One of the
reasons some organizations have difficulty
adjusting to rapid changes in markets or technology is that so many people in those companies feel relatively powerless. They have
learned from experience that even if they
correctly perceive important external changes
and then initiate appropriate actions, they are
vulnerable to someone higher up who does
not like what they have done. Reprimands
can take many different forms: Thats against
policy, or We cant afford it, or Shut up and
do as youre told.
Alignment helps overcome this problem by
empowering people in at least two ways. First,
when a clear sense of direction has been communicated throughout an organization, lowerlevel employees can initiate actions without
the same degree of vulnerability. As long as
their behavior is consistent with the vision, superiors will have more difficulty reprimanding
them. Second, because everyone is aiming at
the same target, the probability is less that
one persons initiative will be stalled when it
comes into conflict with someone elses.
Motivating People Versus
Controlling and Problem Solving
Since change is the function of leadership,
being able to generate highly energized behavior is important for coping with the inevitable barriers to change. Just as direction
setting identifies an appropriate path for
movement and just as effective alignment gets
people moving down that path, successful motivation ensures that they will have the energy
to overcome obstacles.
According to the logic of management, control mechanisms compare system behavior
with the plan and take action when a deviation is detected. In a well-managed factory,
for example, this means the planning process
establishes sensible quality targets, the organizing process builds an organization that can
achieve those targets, and a control process
makes sure that quality lapses are spotted immediately, not in 30 or 60 days, and corrected.
For some of the same reasons that control
is so central to management, highly motivated
or inspired behavior is almost irrelevant. Managerial processes must be as close as possible
to fail-safe and risk free. That means they cannot be dependent on the unusual or hard to
obtain. The whole purpose of systems and
structures is to help normal people who behave in normal ways to complete routine jobs
successfully, day after day. Its not exciting or
glamorous. But thats management.
Leadership is different. Achieving grand visions always requires a burst of energy. Motivation and inspiration energize people, not by
pushing them in the right direction as control
mechanisms do but by satisfying basic human
needs for achievement, a sense of belonging,
recognition, self-esteem, a feeling of control
over ones life, and the ability to live up to
ones ideals. Such feelings touch us deeply
and elicit a powerful response.
Good leaders motivate people in a variety
of ways. First, they always articulate the organizations vision in a manner that stresses the
values of the audience they are addressing.
This makes the work important to those individuals. Leaders also regularly involve people
in deciding how to achieve the organizations
vision (or the part most relevant to a particular
individual). This gives people a sense of control. Another important motivational technique
is to support employee efforts to realize the
vision by providing coaching, feedback, and
role modeling, thereby helping people grow
professionally and enhancing their self-esteem.
Finally, good leaders recognize and reward
success, which not only gives people a sense
of accomplishment but also makes them feel
like they belong to an organization that cares
about them. When all this is done, the work
itself becomes intrinsically motivating.
The more that change characterizes the
business environment, the more that leaders
must motivate people to provide leadership
as well. When this works, it tends to reproduce
leadership across the entire organization,
with people occupying multiple leadership
roles throughout the hierarchy. This is highly
valuable, because coping with change in any
complex business demands initiatives from a
multitude of people. Nothing less will work.
Of course, leadership from many sources
does not necessarily converge. To the contrary,
it can easily conflict. For multiple leadership
roles to work together, peoples actions must
be carefully coordinated by mechanisms that
differ from those coordinating traditional
management roles.
Management is about
coping with complexity.
Leadership, by contrast,
is about coping with
change.
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What Leaders Really DoBEST OF HBR
harvard business review december 2001
Motivating People: Richard Nicolosi at Procter and Gamble
For about 20 years after its founding in
1956, Procter & Gambles paper products division had experienced little
competition for its high-quality, reasonably priced, and well-marketed
consumer goods. By the late 1970s,
however, the market position of the division had changed. New competitive
thrusts hurt P&G badly. For example,
industry analysts estimate that the
companys market share for disposable
diapers fell from 75% in the mid-1970s
to 52% in 1984.
That year, Richard Nicolosi came to
paper products as the associate general
manager, after three years in P&Gs
smaller and faster moving soft-drink
business. He found a heavily bureaucratic and centralized organization
that was overly preoccupied with internal functional goals and projects. Almost all information about customers
came through highly quantitative market research. The technical people
were rewarded for cost savings, the
commercial people focused on volume
and share, and the two groups were
nearly at war with each other.
During the late summer of 1984, top
management announced that Nicolosi
would become the head of paper products in October, and by August he was
unofficially running the division. Immediately he began to stress the need for
the division to become more creative and
market driven, instead of just trying to
be a low-cost producer. I had to make
it very clear, Nicolosi later reported,
that the rules of the game had changed.
The new direction included a much
greater stress on teamwork and multiple leadership roles. Nicolosi pushed a
strategy of using groups to manage the
division and its specific products. In
October, he and his team designated
themselves as the paper division
board and began meeting first
monthly and then weekly. In November,
they established category teams to
manage their major brand groups (like
diapers, tissues, towels) and started
pushing responsibility down to these
teams. Shun the incremental, Nicolosi stressed, and go for the leap.
In December, Nicolosi selectively
involved himself in more detail in
certain activities. He met with the advertising agency and got to know key
creative people. He asked the marketing manager of diapers to report directly to him, eliminating a layer in the
hierarchy. He talked more to the people who were working on new product
development projects.
In January 1985, the board announced a new organizational structure
that included not only category teams
but also new-brand business teams. By
the spring, the board was ready to plan
an important motivational event to
communicate the new paper products
vision to as many people as possible.
On June 4, 1985, all the Cincinnatibased personnel in paper plus sales
district managers and paper plant
managersseveral thousand people in
allmet in the local Masonic Temple.
Nicolosi and other board members described their vision of an organization
where each of us is a leader. The
event was videotaped, and an edited
version was sent to all sales offices and
plants for everyone to see.
All these activities helped create an
entrepreneurial environment where
large numbers of people were motivated to realize the new vision. Most
innovations came from people dealing
with new products. Ultra Pampers,
first introduced in February 1985, took
the market share of the entire Pampers
product line from 40% to 58% and
profitability from break-even to positive. And within only a few months of
the introduction of Luvs Delux in May
1987, market share for the overall
brand grew by 150%.
Other employee initiatives were oriented more toward a functional area,
and some came from the bottom of the
hierarchy. In the spring of 1986, a few
of the divisions secretaries, feeling empowered by the new culture, developed
a secretaries network. This association
established subcommittees on training, on rewards and recognition, and
on the secretary of the future. Echoing the sentiments of many of her peers,
one paper products secretary said: I
dont see why we, too, cant contribute
to the divisions new direction.
By the end of 1988, revenues at the
paper products division were up 40%
over a four-year period. Profits were
up 68%. And this happened despite
the fact that the competition continued to get tougher.
page 9 This document is authorized for use only by Keresha Garlick in Leadership in the 21st Century at Strayer University, 2019.
What Leaders Really DoBEST OF HBR
harvard business review december 2001
Strong networks of informal relationships
the kind found in companies with healthy
cultureshelp coordinate leadership activities in much the same way that formal structure coordinates managerial activities. The
key difference is that informal networks can
deal with the greater demands for coordination associated with nonroutine activities and
change. The multitude of communication
channels and the trust among the individuals
connected by those channels allow for an
ongoing process of accommodation and adaptation. When conflicts arise among roles,
those same relationships help resolve the conflicts. Perhaps most important, this process of
dialogue and accommodation can produce
visions that are linked and compatible instead
of remote and competitive. All this requires a
great deal more communication than is
needed to coordinate managerial roles, but
unlike formal structure, strong informal networks can handle it.
Informal relations of some sort exist in all
corporations. But too often these networks
are either very weaksome people are well
connected but most are notor they are
highly fragmenteda strong network exists
inside the marketing group and inside R&D
but not across the two departments. Such
networks do not support multiple leadership
initiatives well. In fact, extensive informal
networks are so important that if they do not
exist, creating them has to be the focus of activity early in a major leadership initiative.
Creating a Culture of Leadership
Despite the increasing importance of leadership
to business success, the on-the-job experiences of most people actually seem to undermine the development of the attributes
needed for leadership. Nevertheless, some
companies have consistently demonstrated an
ability to develop people into outstanding
leader-managers. Recruiting people with
leadership potential is only the first step.
Equally important is managing their career
patterns. Individuals who are effective in
large leadership roles often share a number of
career experiences.
Perhaps the most typical and most important is significant challenge early in a career.
Leaders almost always have had opportunities during their twenties and thirties to actually try to lead, to take a risk, and to learn from
both triumphs and failures. Such learning
seems essential in developing a wide range of
leadership skills and perspectives. These opportunities also teach people something
about both the difficulty of leadership and its
potential for producing change.
Later in their careers, something equally
important happens that has to do with broadening. People who provide effective leadership in important jobs always have a chance,
before they get into those jobs, to grow beyond the narrow base that characterizes most
managerial careers. This is usually the result
of lateral career moves or of early promotions
to unusually broad job assignments. Sometimes other vehicles help, like special task-force
assignments or a lengthy general management course. Whatever the case, the breadth
of knowledge developed in this way seems to
be helpful in all aspects of leadership. So does
the network of relationships that is often acquired both inside and outside the company.
When enough people get opportunities like
this, the relationships that are built also help
create the strong informal networks needed
to support multiple leadership initiatives.
Corporations that do a better-than-average
job of developing leaders put an emphasis on
creating challenging opportunities for relatively young employees. In many businesses,
decentralization is the key. By definition, it
pushes responsibility lower in an organization
and in the process creates more challenging
jobs at lower levels. Johnson & Johnson,
3M, Hewlett-Packard, General Electric, and
many other well-known companies have used
that approach quite successfully. Some of
those same companies also create as many
small units as possible so there are a lot of
challenging lower-level general management
jobs available.
Sometimes these businesses develop additional challenging opportunities by stressing
growth through new products or services. Over
the years, 3M has had a policy that at least 25%
of its revenue should come from products introduced within the last five years. That encourages small new ventures, which in turn
offer hundreds of opportunities to test and
stretch young people with leadership potential.
Such practices can, almost by themselves,
prepare people for small- and medium-sized
leadership jobs. But developing people for important leadership positions requires more
page 10 This document is authorized for use only by Keresha Garlick in Leadership in the 21st Century at Strayer University, 2019.
What Leaders Really DoBEST OF HBR
harvard business review december 2001
work on the part of senior executives, often
over a long period of time. That work begins
with efforts to spot people with great leadership potential early in their careers and to
identify what will be needed to stretch and
develop them.
Again, there is nothing magic about this
process. The methods successful companies
use are surprisingly straightforward. They go
out of their way to make young employees
and people at lower levels in their organizations visible to senior management. Senior
managers then judge for themselves who has
potential and what the development needs of
those people are. Executives also discuss their
tentative conclusions among themselves to
draw more accurate judgments.
Armed with a clear sense of who has considerable leadership potential and what
skills they need to develop, executives in
these companies then spend time planning
for that development. Sometimes that is
done as part of a formal succession planning
or high-potential development process; often
it is more informal. In either case, the key
ingredient appears to be an intelligent assessment of what feasible development opportunities fit each candidates needs.
To encourage managers to participate in
these activities, well-led businesses tend to
recognize and reward people who successfully
develop leaders. This is rarely done as part of
a formal compensation or bonus formula,
simply because it is so difficult to measure
such achievements with precision. But it does
become a factor in decisions about promotion, especially to the most senior levels, and
that seems to make a big difference. When
told that future promotions will depend to
some degree on their ability to nurture leaders, even people who say that leadership cannot be developed somehow find ways to do it.
Such strategies help create a corporate culture where people value strong leadership
and strive to create it. Just as we need more
people to provide leadership in the complex
organizations that dominate our world today,
we also need more people to develop the cultures that will create that leadership. Institutionalizing a leadership-centered culture is
the ultimate act of leadership.
Reprint R0111F
To order, see the next page
or call 800-988-0886 or 617-783-7500
or go to www.hbr.org
Well-led businesses tend
to recognize and reward
people who successfully
develop leaders.
page 11 This document is authorized for use only by Keresha Garlick in Leadership in the 21st Century at Strayer University, 2019.
B EST O F HBR
What Leaders Really Do
To Order
For Harvard Business Review reprints and
subscriptions, call 800-988-0886 or
617-783-7500. Go to www.hbr.org
For customized and quantity orders of
Harvard Business Review article reprints,
call 617-783-7626, or e-mail
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Further Reading
ARTICLES
The Managers Job: Folklore and Fact
by Henry Mintzberg
Harvard Business Review
MarchApril 1990
Product no. 90210
In this HBR Classic, Mintzberg uses his and
other research to debunk myths of the
managers role. Managerial work involves interpersonal roles, informational roles, and
decisional roles, he notes. These in turn require specific skillsfor example, developing
peer relationships, carrying out negotiations,
motivating subordinates, resolving conflicts,
establishing information networks and disseminating information, making decisions
with little or ambiguous information, and
allocating resources. These skills are different
from, but complementary to, the more concrete ones required of leaders.
The Work of Leadership
by Ronald A. Heifetz and Donald L. Laurie
Harvard Business Review
JanuaryFebruary 1997
Product no. 4150
Like Kotter, Heifetz and Laurie see leadership
as a unique set of tasks rather than a set of
character traits. Many efforts to transform an
organization through mergers and acquisitions, restructuring, reengineering, and strategy fail because leaders dont understand the
requirements of adaptive work. The principles
for leading adaptive work include: getting on
the balcony so that the entire organization is
visible; identifying the key challenge; regulating distress; maintaining disciplined attention; giving the work back to the people; and
protecting voices of leadership from below.
The Ways Chief Executive Officers Lead
by Charles M. Farkas and Suzy Wetlaufer
Harvard Business Review
MayJune 1996
Product no. 96303
CEOs inspire a variety of sentiments ranging
from awe to wrath, but theres little debate
over their importance in the business world.
The authors conducted 160 interviews with
executives around the world. Instead of finding 160 different approaches, they found five,
each with a singular focus: strategy, people,
expertise, controls, or change. Although approaches may vary, all leaders have three
major functions to fulfill in an organization:
setting direction, alignment, and motivation.
BOOK
Leading Change
by John P. Kotter
Harvard Business School Press
1996
Product no. 7471
Leadership is primarily about coping with
change, and this book describes what a
change initiative looks like. Kotter identifies
eight errors common to transformation efforts
and offers an eight-step process for overcoming them and successfully completing the
transformation: establishing a greater sense of
urgency; creating the guiding coalition; developing a vision and strategy; communicating
the change vision; empowering others to act;
creating short-term wins; consolidating gains
and producing even more change; and institutionalizing new approaches in the future.
page 12 This document is authorized for use only by Keresha Garlick in Leadership in the 21st Century at Strayer University, 2019.
www.hbr.org
U.S. and Canada
800-988-0886
617-783-7500
617-783-7555 fax
This document is authorized for use only by Keresha Garlick in Leadership in the 21st Century at Strayer University, 2019.

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