The Enigma of Steve Jobs...leadership as secretive leadership and quote examples of similar kind of leadership from Phil Knight, Ratan Tata, etc. Is there any such thing as a secretive

3EFFECTIVE EXECUTIVE FEBRUARY 2010

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Fortune has judged Steve Jobs as the CEO of the decade.Defending the decision, Adam Lashinsky, the editor-at-largefor Fortune argued: “How’s this for a gripping corporatestoryline: Youthful founder gets booted from his companyin the 1980s, returns in the 1990s, and in the followingdecade survives two brushes with death, one securities-lawscandal, an also-ran product lineup, and his own oftenunpleasant demeanor to become the dominant personalityin four distinct industries, a billionaire many times over,and CEO of the most valuable company in Silicon Valley.”This, in essence unravels the enigma of Steve Jobs. “Remakingany one business is a career-defining achievement; four isunheard-of.” The four industries – computing (Apple), music(iPod), movies (Pixar) and mobile phones (iPhone) – havealtered the way businesses are done, thanks to Steve Jobs.

While Randall E Stross (the author of Steve Jobs & TheNeXt Big Thing) described Steve Jobs as, ‘arrogantly oblivious’,‘unmerciful’, and an ‘unapologetic snob’ who is ‘imprisoned...by his selected historical memory’. Others describe him as‘the perfectionist’, who “sets expectations for quality,challenging the status quo... and never accepts no for ananswer”, someone who is ‘too good a human being’ and‘unparalleled institutional builder’. Who is the true SteveJobs? Commenting on Steve Jobs, Andy Grove said, “There’sno other company in technology that’s started with a strong

The Enigma of Steve Jobs

core business and developed another very strong one. Therest of us are lucky, or good (if we’re) right once”. How couldSteve Jobs be right more than once? Was it his predictiveabilities or iconoclastic arrogance?

It has been 32 long years since Steve Jobs and SteveWozniak began selling the Apple II, the first commerciallysuccessful mass-produced microcomputer. Many argue thathe is reclusive and secretive and end up describing hisleadership as secretive leadership and quote examples ofsimilar kind of leadership from Phil Knight, Ratan Tata, etc.Is there any such thing as a secretive leadership? What wouldbe the impact of such leadership on the organization in theshort run and in the long run?

In one of the widely watched and read speeches(commencement address at Stanford, in 2005), Steve Jobsobserved, “Your work is going to fill a large part of yourlife, and the only way to be truly satisfied is to do what youbelieve is great work. And the only way to do great work isto love what you do”. What specific qualities make SteveJobs stand out as a unique and enigmatic leader? Is it hislove for what he is doing or is it his love for what he hascreated? Effective Executive, while saluting the spirit of SteveJobs, wishes him and Apple the best of luck. Wish SteveJobs finds “who’s next” for Apple?

Volume XIII, No. 02 February 2010

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Effective_Executive_Feb-2010.pmd 1/4/2010, 5:33 PM3


On HiringRecruiting is hard. It’s just finding the needles in thehaystack. You can’t know enough in a one-hour interview.So, in the end, it’s ultimately based on your gut. How do Ifeel about this person? What are they like when they’rechallenged? I ask everybody that: ‘Why are you here?’ Theanswers themselves are not what you’re looking for. It’s themeta-data.

On FiringWe’ve had one of these before, when the dot-com bubble burst.What I told our company was that we were just going to investour way through the downturn, that we weren’t going to layoff people, that we’d taken a tremendous amount of effort toget them into Apple in the first place – the last thing we weregoing to do is lay them off.

On a CEO Succession PlanI mean, some people say, ‘Oh, God, if [Jobs] got run over by abus, Apple would be in trouble.’ And, you know, I think itwouldn’t be a party, but there are really capable people atApple.My job is to make the whole executive team good enough tobe successors, so that’s what I try to do.

On ManagementMy job is to not be easy on people. My job is to make thembetter. My job is to pull things together from different partsof the company and clear the ways and get the resources forthe key projects.And to take these great people we have and to push them andmake them even better, coming up with more aggressivevisions of how it could be.

On FocusPeople think focus means saying yes to the thing you’ve gotto focus on. But that’s not what it means at all. It means sayingno to the hundred other good ideas that there are. You haveto pick carefully.

Your time is limited, so don’t waste it living someone else’slife. Don’t be trapped by dogma – which is living with theresults of other people’s thinking. Don’t let the noise ofother’s opinions drown out your own inner voice. And mostimportant, have the courage to follow your heart andintuition. They somehow already know what you truly wantto become. Everything else is secondary.US computer engineer & industrialist

A lot of companies have chosen to downsize, and maybe thatwas the right thing for them. We chose a different path. Ourbelief was that if we kept putting great products in front ofcustomers, they would continue to open their wallets.US computer engineer & industrialist

Here’s to the crazy ones, the misfits, the rebels, thetroublemakers, the round pegs in the square holes... the oneswho see things differently—they’re not fond of rules... Youcan quote them, disagree with them, glorify or vilify them,but the only thing you can’t do is ignore them because theychange things... they push the human race forward, and whilesome may see them as the crazy ones, we see genius, becausethe ones who are crazy enough to think that they can changethe world, are the ones who do.US computer engineer & industrialist

I didn’t see it then, but it turned out that getting fired fromApple was the best thing that could have ever happened to me.The heaviness of being successful was replaced by the lightnessof being a beginner again, less sure about everything. It freedme to enter one of the most creative periods of my life.Stanford University commencement address

Innovation has nothing to do with how many R&D dollarsyou have. When Apple came up with the Mac, IBM wasspending at least 100 times more on R&D. It’s not aboutmoney. It’s about the people you have, how you’re led, andhow much you get it.Fortune

Quotes by Steve Jobs

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Building a Company theSteve Jobs’ WayA Positive DevianceApproach to Strategy ........................ 10

Why Apple, Not Sony?The Smart Moves ............................... 16

Embracing Innovationand ChangeThe Critical Moments ......................... 24

Leveraging the CorporateEcosystem and The NewInnovative Role for HRM ..... 30

The Need for Managersto Have Greater CulturalIntelligenceBuilding a New Competency .............. 38

Competing with CustomerValue AddedFor Better Service .............................. 44

Stewardship as LeadershipAn Empirical Investigation ................. 52

One Good Turn DeservesAnotherThe Case of Dr Beat Richner ............... 70

Reuters Market LightBusiness Model Innovationfor Growth ........................................ 78

PERSPECTIVEThe Moral of the MomentSteve Jobs and The K.I.S.S. Theory ...... 36

Why 2009 was the MostExtraordinary Year of My LifeLessons for 2010 ............................... 48

LEADERSHIPLeadership DuosMultiplies Effectiveness ...................... 84

FEATURESPlatform .............................................. 3

Quotes ................................................ 4

Executive Brief ..................................... 6



Bill Campbell Chairman and FormerCEO, IntuitI’ve never seen him not intense. I’ve known himsince 1983. I started at Apple then as the vice presidentof marketing, and now I sit on its board. There hasn’tbeen a day in Steve’s life that he doesn’t get up, thinkabout the company he works for, or what he’s goingto do next. These are things that drive him. He is awonderful husband and a wonderful father, but hislife is all about doing this kind of thing.

He wants to create something that has value,that has a legacy. “Legacy” is my word. I’m not surehe ever thinks about legacy. He’s just driven likethat. The biggest thing for me was to watch himhire. He’s a terrific interviewer. He understandswhat he wants, and he knows how to get great people.And if you take a look at his management teamafter 12 years, some are still there, some are gone,

but in every position, you’ll finda high-quality person.

When you watched how thecompany performed without him,I think the durability of what hecreated was pretty evident. Whoknows what it would look like ifhe had stayed away longer? Asclose as I am, I don’t even know.But I know that him coming backputs real excitement into the

product development process.– Interview by A.L.

Jimmy Iovine Founder and Chairman,Interscope RecordsWhatever anyone says about Apple, if it wasn’t forSteve Jobs there would be no legitimate music online.

Everybody was lost. The record labels werefrozen. When he came up with iTunes, it gave us a[legal] way to get the license ready to go online.

Before iTunes, Napster was out of business fortwo or three years, and then Kazaa and other filesharing started. There was no legitimate way tobuy music. I think his impact on music has beenextraordinary.

– Interview by Jon Fortt

Ralph de la Vega President and CEO,AT&T MobilityWhen I first saw the iPhone, even though itwasn’t in its final state, I was blown away bywhat Steve had been able to put into that device.

He’d found a way to squeeze the Mac OS Xoperating system into a handheld device. That’swhen the light bulb went off for me — this devicewas going to change the industry forever. Andit has. It’s made the US the epicenter ofsmartphone development.

– Interview by Stephanie N Mehta

Bob Iger Chairman and CEO, DisneyWhen I think of Steve, the word “friend” comesfirst. Second, he is an incredible sounding board.

We recently decided to revamp our Disneystores, and his contribution, very early in theprocess, was to ask that we create a statement—in other words, ask ourselves, “What do youwant the stores to say to people when they walkin?” He didn’t tell us what it would be, but hetold us it was necessary that we have one.

Another piece of valuable advice he gave tome was to build a prototype of the new storeon your property—don’t put it in a mall or onthe street—build it close enough so that youcan visit it often, massage it, and learn fromit. And when you’re really ready, roll it out.

One remarkable thing about Steve is howhe sets expectations on people. I worked for[the legendary ABC News chairman] RooneArledge for 10 years. He demanded perfection,never accepted mediocrity.

Steve is the same. I see that in the way hemanages his people. He sets expectations forquality, challenging the status quo — and neveraccepts no for an answer.

– Interview by Richard Siklos

Marc Andreessen General Partner,Andreessen HorowitzI don’t know if publicly this is known, but whenhe came back [to Apple in 1997], they were weeksaway from going bankrupt. He went from weeks



away from bankruptcy to building these kindof products. He was under pressure the entiretime. But he set the performance standard forproduct thinking and product execution thatall the rest of us should aspire to hit. And he’staught us that in this industry, the productsreally, really matter.

– Interview by A L

Andrea Jung Chairman and CEO,AvonAll of us like to think that we’re as focused onthe consumer and the end-user experience asSteve is—that maniacal passion for the bestphone, the best MP3 player, the best PC, thebest retail experience.

He does it in a very black-and-white way,while the rest of the world gets caught up inthe gray—or caught up in themselves. He makesit sound so simple, but he’s taking on thingsthat are extraordinarily complex and arguablyrisky. He’s laser-focused on getting it right. It’sa great lesson in this quarter-to-quarter world.

With seven directors, the Apple board—which I am on—is smaller than most, includingAvon’s. There’s an extraordinary openness inthe boardroom. Any board member would feelfree to challenge an idea or raise a concern.

It’s not only been gratifying, it’s been great.I feel like I’m part of history being made. I leaveApple board meetings thinking, “I’ve got to doa better job.”

– Interview by Patricia Sellers

Andy Grove Former Chairman andCEO, IntelWhen you talk about Steve, you need todistinguish between Jobs 1, the young man whostarted Apple, and Jobs 2, the guy who cameback to Apple and turned it around.

During the Jobs 1 era, some of us from SiliconValley were invited to a dinner in Palo Alto. Itwas 1983. At one point during the meal, Stevestands up and yells, “Nobody over 30 can possiblyunderstand what computing is all about.”

I pulled him aside, waved my finger, and lecturedhim, telling him, “You’re incredibly arrogant. Youdon’t know what you don’t know.” His responsewas, “Teach me. Tell me what I should know.”

We had lunch and talked, mostly about personalstuff. I don’t think I taught him anything. But hewas wrong when he singled a generation out. Howold was Steve when the iPod came out — 46?

As Jobs 2 he became the turnaround artist ofthe decade. There’s no other company in technologythat’s started with a strong core business anddeveloped another very strong one. The rest of usare lucky, or good, if we’re right once.

– Interview by Michael V Copeland

Larry Ellison Co-founder and CEO,OracleI remember when Steve was my neighbor inWoodside, Calif., and he had nofurniture. It struck me that therewasn’t furniture good enough forSteve in the world. He’d ratherhave nothing if he couldn’t haveperfection.

And I jokingly said, “Thedifference between me and Steveis that I’m willing to live with thebest the world can provide. WithSteve that’s not always goodenough.” And if you look at how he tackles buildinga phone, or building a laptop, he really is in pursuitof this technical and aesthetic perfection. And hejust won’t compromise.

But he’s never been motivated by money. Oncewe were hiking, and Steve looked at me, put hisright hand on my left shoulder and his left handon my right shoulder, and said, “Larry, that’s whyit’s really important that I’m your friend. See, youdon’t need any more money.”

He’s enormously proud of the fact that Appleis now the highest-valued company in Silicon Valley,higher than Cisco, higher than Intel, higher thanGoogle, higher than Oracle.

– Interview by Adam LashinskySource: http://money.cnn.com/



The Consumer Decision Journey

Source: McKinsey Quarterly, 2009

Active EvaluationInformation Gathering, Shopping

Postpurchase ExperienceOngoing Exposure

Moment ofPurchase

InitialConsideration

Set

Trigger

Loyalty Loop

Ultimately, the consumer selects a brand at themoment of purchase.

After purchasing a product or service,the consumer builds expectations based on experience to inform the nextdecision journey.

Consumer add or subtractbrands as they evaluate whatthey want.

The consumer considersan initial set of brands, based on brand perceptionsand exposure to recenttouch points.

2

1

4

3

In today’s uncertain businessenvironment, traditionalstrategic planning tools mayno longer be sufficient.Business wargaming can helpdecision-makers prepare theircompanies for specialsituations that are not in linewith well-known trends orpast experience. When therules of the game change,companies that have plannedfor all the possible scenarioswill be better able to tackle the challenge.

Source: http://www.atkearney.com

Business Wargaming

The Rules of Engagement in an UnstableEnvironment

How the Recession has Changed USConsumer Behavior

While the downturn hascertainly changed theeconomic landscape, itmay also havefundamentally altered thebehavior of numerous USconsumers, who are nowlearning to live withoutexpensive products. Manycompanies with strongpremium brands areanticipating a rapidrebound in consumer behavior— a return to normality, asafter previous recessions. They are likely to be disappointed.

Source:www.mckinseyquarterly.com

Reference # 03M-2010-02-01-10



Ext Ad 1



A Positive Deviance Approachto Strategy

Building a CompanyThe Steve Jobs’ Way

This article proposesthat the success ofApple is embedded inSteve Jobs’ strength-based approach to thecompany’s strategy.This approachconcentrates oncreating positivedeviant performance—the achievement ofextraordinary successbeyond the expecta-tions of bothstakeholders andoutside observers. Thepillars of Steve Jobs’strategy are builtupon a core ofcapabilities, theseizing of opportuni-ties, and anorganizational culturethat enables theattainment of Apple’sgoals. Furthermore,through the executionof strategy, Steve Jobshas created a learningorganization that isresult-oriented.

Most of the strategic planning tasks startwith identifying a problem, analyzing itsroot cause, developing solutions, and thenformulating a set of initiatives to addressit. This approach can work for manyorganizations, but it will not result in a stateof positive deviant performance – theachievement of extraordinary success beyondthe expectations of both stakeholders andoutside observers. In other words, a stateof positive deviance is when the organizationis flourishing at its best functionally andachieving optimal performance. Whenorganizations embrace positive deviance asa goal, it demands a strength-based approachto strategic planning. Focusing on strengthsdoes not ignore the organization’s problemsor threats, but energy is channeled intoorganizational members digging deep to truly

understand the organization’s corecapabilities that have the potential togenerate and sustain positive deviantperformance.

To achieve positively deviantoutcomes from the strategic planningprocess, leaders form a different mindsetsupported by value-creating processesthat make it possible for organizationalmembers to achieve excellence. SteveJobs, CEO of Apple, is an example of aleader who has built a company arounda strength-based strategy that hasachieved positive deviance. In 2000,when Jobs returned to Apple, thecompany was worth about $5 bn. TodayApple is valued at approximately $170

1 Lashinsky, A. & Burke, D. (2009). The Decadeof Steve. Fortune International. 160(9): 7-10.



Dr. Lynn Perry Wootenis a clinical associate professor of

strategy, management, and

organizations at the University of

Michigan’s Ross School of

Business. She co-directs the

Center for Positive Organizational

Scholarship and the Executive

Leadership Institute. She teaches

corporate strategy, human

resource management, leadership,

and organization behavioral

courses. Her research has been

funded by the National Institutes

of Health, Sloan Foundation, and

the Society for Human Resource

Management. Her research on

executive development and

diversity won awards from the

Academy of Management and the

consulting firm McKinsey and

Company, and The Financial

Times selected her as a “Next

Generation Business Thinker in

Human Resource Management.

Her work has been published in

academic journals such as,

Academy of Management

Journal, Human Resource

Management, Journal of

Management Inquiry, and

Organizational Dynamics and

has been featured in newspapers

and industry trade journals and

on radio programs.

Wooten is an associate editor of

Human Resource Management

Journal and a consulting editor

for the Journal of Business and

Education. She consults in the

areas of strategic HRM, positive

organizing practices, and

workforce diversity with both

profit and not-for-profit

organizations.

Building a Company the Steve Jobs' Way

bn.1 Financial performance is not theonly indicator of Apple’s success.Although the company’s market sharein the personal computer industry is only9%, which is a substantial gain since Jobs’return, it also has 73% in the US MP3player market and 11% market sharein the worldwide smart phone market.2

In addition, Apple has won “bestcompany” awards for innovation,marketing, and management.

In this article, I propose that SteveJobs’ ability to combine a generativeset of “ingredients” into Apple’s strategicplanning process produced positivelydeviant results. The next sections ofthis article delve into Jobs’ recipe forstrategic planning by exploring his skillset for framing Apple’s strategy throughstorytelling, formulating a strategyaround seizing opportunities, andcreating core capabilities thatdifferentiate Apple in the marketplace.In addition, this article examines therole that organizational culture playedin Jobs’ leadership as a prop forexecuting strategy and creating alearning organization focused onresults.

Steve Jobs as a ‘StrategicStoryteller’Throughout Jobs’ tenure at Apple hereceived accolades for this ability to framethe firm’s strategy as story. This isbecause Jobs crafts a compelling,coherent narrative that interweaves theorganization’s implicit mission and valueproposition as a dominant theme ofApple’s strategy. For example, Apple, inits 2009 Annual Report, states its formalstrategy as:

“Bringing the best personal computing,mobile communication, and portable digitalmusic and video experience to consumers,students, educators, businesses, andgovernment agencies through its innovativehardware, software, peripherals, services,and Internet offerings.”

This strategy may not sounddifferent from other firms in theelectronics or computer industry.However, Jobs and his managementteam have brought Apple’s strategy tolife by adopting narratives thatincorporate metaphors, images, andrhetoric. In some instances, thesenarratives have been birthed bymarketing campaigns, such as the seriesof ‘Think Different’ advertisements.Symbolically, the ‘Think Different’marketing campaign gave Jobs aplatform for distinguishing Apple fromits competitors by making it cool to bedifferent as described in the commercialsound bite:

Here’s to the crazy ones.The misfits. The rebels. Thetroublemakers.The round pegs in the square holes.The ones who see things differently.They’re not fond of rules.And they have no respect for thestatus quo.You can quote them, disagree withthem, glorify or vilify them.About the only thing you can’t do isignore them.Because they change things.They push the human race forward.And while some may see them as thecrazy ones,We see genius.Because the people who are crazyenough to think they can change theworldare the ones who do.

2 Dalrymple, J. (2009). Apple doubles its iPhonemarket share. Cnet News, http://news.cnet.com/8301-13579_3-10245339-37.html, Accessed, December 2009.



Icons accompanying this marketingcampaign represented Apple’s strategicstory and included historical heroes andpoliticians who were known for breakingbarriers and thinking differently, suchas civil rights activist Rosa Parks andJimmy Carter, the former President ofthe United States, founder of Habitatfor Humanity, and Nobel Peace PrizeRecipient. These historical figuresallowed Jobs to represent Apple in apositive light by aligning the company’svalues with their social identities.3

However, Jobs’ use of strategic storieswas more than marketing gimmicks. Thestrategic stories created by Jobs informedemployees and stakeholders of Apple’sactions by setting a stage that providedboth insightful and futuristic descriptionsof how Apple would compete in differentindustries and respond to its macro-environment. Jobs’ strategic story definedApple strategy. For example, early on inApple’s history Jobs set to create astrategic story that portrayed the firmas a company committed to bringinguser-friendly and aesthetically designedcomputers to “ordinary” people andprophesized that the personal computerwould change lives similar to theautomobile and telephone.4&5 In 1981,Jobs’ strategic story was infused witha mission to put “An Apple computer

on every desk.” To bring this story to life,Jobs started internally by issuing a memoto Apple’s employees:

Effective Immediately!! No MoreTypewriters Are To Be Purchased,Leased, etc., etc. Apple is aninnovative company. We must believeand lead in all areas. If wordprocessing is so neat, then let’s all useit! Goal: by 1-1-81, No typewritersat Apple... We believe the typewriteris obsolete. Let’s prove it insidebefore we try and convince ourcustomers. 6

Over time, Jobs’ strategic storiesevolved to include a dramatic tensionbetween Apple and its competitors sothat stakeholders would rally around itsproducts. For instance in 1984, the villainwas IBM; and to motivate Apple’s salestaff Jobs made the statement, “IBMwants it all. Apple will be the onlycompany to stand in its way.”7 Similarlywhen communicating in the company’s1984 annual report, Jobs’ narrativesportrayed a David versus Goliath battlebetween Apple and IBM to encourageMAC users to rebel against IBM. Thegoal of this war was for the user-friendlyMac computer to win over the blandly

functional IBM PC.8 Later on in Jobs’strategic stories, Microsoft became thevillain, such as discussed in the PBSdocumentary, Triumph of the Nerds:

The only problem with Microsoftis they just have no taste. Theyhave absolutely no taste. And Idon’t mean that in a small way, Imean that in a big way, in thesense that they don’t think oforiginal ideas, and they don’tbring much culture into theirproducts… I am saddened, not byMicrosoft’s success – I have noproblem with their success.They’ve earned their success, forthe most part. I have a problemwith the fact that they just makereally third-rate products.As can be surmised from Jobs’

narratives featured in this article,strategic stories help organizationalmembers develop the capacity to lay outpaths for the future by painting a clearpicture that defines the organization’sidentity and the journey it plans to take.Moreover, strategic stories implicitlyexplain the purpose and objectives ofa given strategy. Hence, Steve Jobs’ abilityto craft strategic stories empowered him

3 Harvey A (2001), A Dramaturgical Analysis ofCharismatic Leader Discourse. Journal ofOrganizational Change Management, 14(3):253-265.

4 Harvey A (2001).5 Westley F and Mintzberg H (1989). Visionary

Leadership and Strategic Management.Strategic Management Journal, 10:17-32.

6 Ditlea S (1981) An Apple on Every Desk. Inc.magazine. Accessed from http://www.inc.com/magazine/19811001/2033.html, December2009.

7 Gallo C (2009). The Presentation Secrets ofSteve Jobs. New York: McGraw Hill.

8 Mayo A and Benson M (2008). Bill Gates andSteve Jobs. Harvard Business School Publishing,Case # 9-407-028.

9 Westley & Mintzberg (2009).

Exhibit I: Apple’s Positive Core



to collectively create a market andconvince investors and consumers ofthe ‘worthiness’ of Apple’s products.9

These strategies set the tone for howApple would interact with its externalenvironment and leverage its strengthsin the marketplace.

Steve Jobs as a Leader WhoSeizes OpportunitiesA positive deviance approach to strategicplanning challenges a leader to identifyopportunities in its externalenvironment and to position theorganization to seize these opportunities.Fundamentally, this requires a leaderto think not only about the needs ofstakeholders, and how these needs willchange, but also how the organizationcan reinvent or create new markets,products, customers, and services. Theskill set to seize opportunities is afunction of a leadership’s ability to makesense of external trends and forces, andthen take this knowledge to buildscenarios and formulate a strategy thatdifferentiates the organization fromothers.10

To position Apple for seizingopportunities, Steve Jobs aligned thefirm’s strategy with insights into externalopportunities. He acknowledged thatApple had a very small niche in thepersonal computing industry. However,Jobs emphasized that the company hada longer-term strategy beyond personal

computers, and that he was waiting forthe next big thing, which turned out tobe such technologies as the iPod andiPhone.11 Jobs succeeded at seizingopportunities because he is adept atrecognizing and initiating trends.

Furthermore, Jobs’ strategicsolutions embraced an opportunisticperspective because he pushesorganizational members of Apple tocreate the future. Jobs perceives his roleas a leader to innovate by creatingproducts that consumers do not knowthey want. He perceives himself similarto Henry Ford who, when commentingon the design of the automobile stated,“If I’d have asked my customers whatthey wanted, they would have told me‘A faster horse.’” Therefore, Jobs’ abilityto seize opportunities has succeededbecause he is a risk-taker. He embracescreative disruption by changing the rulesof the game in an industry. Jobs’description of the iPhone captures thiscreative disruption:

We all had cell phones. We justhated them, they were so awful touse. The software was terrible. Thehardware wasn’t very good. We

talked to our friends, and they allhated their cell phones too.Everybody seemed to hate theirphones. And we saw that thesethings really could become muchmore powerful and interesting tolicense. It’s a huge market. I meana billion phones get shipped everyyear, and that’s almost an order ofmagnitude greater than thenumber of music players. It’s fourtimes the number of PCs that shipevery year. 12

Note, though, that seizingopportunities is more than creatingmarkets. It also entails the ability tounderstand industry dynamics and thekey success factors that driveperformance. It involves contextmapping of the macro-environmentto analyze the implications of theeconomy, demographics, socioculturaltrends, and the global marketplace.Furthermore, knowledge ofcompetitors’ strategy is useful becausethis helps leaders to identify wherethe potential ‘white spaces’ are andattain first mover’s advantage forseizing opportunities. Jobs is known

Exhibit II: A Positive Deviant Strategy

10 Stavros J and Hinrichs G (2009). The Thin Bookof Soa: Building Strengths-based Strategy.Bend, Oregon: Thin Book Publishing Company.

11 (McKinsey, 2007). McKinsey on Strategy –Interview with Richard Rumelt.

12 (Fortune, 2009). American’s Most AdmiredCompany: Steve Jobs Speaks Out. CNNMoney.com - http://money.cnn.com/galleries/2008/fortune/0803/gallery.jobsqna.fortune/,Accessed December 2009.

13 Hartung A, Value Creating CEO – Steve Jobs,Innovation and Apple. The Phoenix Principle Blog,http://www.thephoenixprinciple.com/blog/2009/11/value-creating-ceo-steve-jobs-innovation-and-apple.html. Accessed December 2009.




to obsess about the strategic actionof Apple’s competitors and encourageshis employees to do the same so thatthe company does not becomecomplacent.13

Steve Jobs and Apple’s CoreCapabilitiesCentral to the plot of a positive deviantapproach to strategy is the organization’s

core capabilities, which are the essenceof its collective DNA that explains howit uniquely creates value and achievessuperior performance. Core capabilitiesare the proven strengths that differentiateone organization from another becauseof tacit knowledge, historical investmentsover time, relationships, human capital,and its culture. Examples of corecapabilities include customer servicepractices, brand equity, strengths ofproducts, work processes, human capital,and financial assets.

Since Jobs’ return to Apple, the firm’score capability has expanded frominnovative and easy-to-use computersto a digital lifestyle product line designedto ‘wow’ consumers. As illustrated inExhibit I, this core capability is leveragedthrough Apple’s value chain to includethe development and sales of hardware,operating systems, and software forcomputers, cellular phones, and MP3players. Jobs depicts Apple’s corecapability as a chair supported by threelegs with maybe one day the Apple TVrepresenting the fourth leg.14 Sealing the

core of Apple’s business model is a closedsystem of technology since Jobs will notlicense Apple’s operating system, allowfor iTunes music or video to be playedon other MP3 players, and so far Applehas only partnered with AT&T for saleof iPhones.

Although technology is an essentialasset in Jobs’ strategy for Apple, the realvalue generated from its core capability

is the “wow factor” that consumers feelabout Apple products. Severalcomponents contribute to this ‘wowfactor.’ Dominating this is the designof Apple’s products. In the eyes of a typicalconsumer, the design of Apple productsis technologically state-of-the-art andfashionable. Yet, in contrast to otherfirms in Apple’s industry, itstechnological advantages are rooted ina holistic process that starts from theoutside and works its way to the inside.15

After product architects and industrialdesigners figure what the product shouldlook like and designate its features, thenApple engineers configure the electricaland mechanical work that brings theproduct to life. This process has resultedin Jobs being compared to fashiondesigner Marc Jacobs because Appleproducts are exquisitely wrapped witha user-friendly interface.16

Another contributing componentof the ‘wow factor’ is how Jobs hasdiffused Apple’s core capabilities intothe ultimate brick and mortar andvirtual retail experience. The Apple

Store has become the ideal retailexperience with features such as glassstaircases and contemporaryarchitectural design. Beneath thestructural design are all of Apple’sproducts under one roof coupled withstellar customer service. The customerservice encompasses product tours,consultations on the right product fora consumer’s usage, workshops, and

Apple ‘geniuses’ that are on-site andwill help you troubleshoot hardwareand software problems. Likewise, theiTunes store is a virtual retailexperience focused on the consumerthrough a library of videos, music, andpodcasts with the ability forcustomization. Interestingly, iTunesis one example of Jobs allowingpartners to create applications forApple ’s mobile devices and MP3players. Hence, this alliance expandedApple’s core capability to create asuperstore of games and productivitytools while Apple pockets 30% of therevenue earned for any App program.This revenue has been estimated atbillions of dollars a year for Apple.17

14 Penenberg A. (2008). All Eyes on Apple. FastCompany, January/February: 83-87; 133-135.

15 Burrows P (2005). Apple’s Blueprint for Genius:Handling its Own Design Work is One Reasonfor Best-sellers like the iPod and Shuffle. SteveJobs is the other. BusinessWeek, http://www.businessweek.com/magazine/content/05_12/b3925608.htm. Accessed January2009.

16 Penenberg A (2008).17 Wortham J (2009). Apple Game Changer,

Downloading Now. The New York Times, http://www.nytimes.com/2009/12/06/technology/06apps.html?_r=1. Accessed, December2009.

On Jobs’ return, the Apple’s core capability has expandedfrom innovative and easy-to-use computers to a digitallifestyle product line designed to ‘wow’ consumers



Organizational Culture asSteve Jobs’ Leadership PropVery often when we think of acompany’s strategy, organizationalculture is found to be the missing puzzlepiece. Instead, attention is focused oncustomers, competitors, and financialresources. The neglect of organizationalculture is unfortunate since leaders areresponsible for so many other demands,but an understanding of theorganization’s culture and its potentialfor enabling a positive deviant strategyis important.

Organizational culture is the sharedbeliefs, principles, values, andassumptions that shape behavior bybuilding commitment, providingdirection, establishing a collectiveidentity, and creating a community. Itmanifests as the organization’s behaviorthat has endured over time and allowedthe organization to adapt to theenvironment. Therefore, culture is theglue that holds together anorganization’s strategy and becomesinstitutionalized as members repeatpatterns of successful behavior.

The effectiveness of culture dependson its alignment with the organization’senvironment, resources, values, andgoals. Moreover, it requires leaders tounderstand how the culture can be avehicle for creating positive deviance.Steve Jobs excels at aligning Apple’sculture with its strategy. Jobs has builta culture that is driven by a vision tomake great products. Innovation is thedominant value of Apple’s culture.

Employees are rewarded forexperimenting, risk taking, andcreativity. As Jobs describes in aninterview, the challenge to innovate isa norm of Apple’s culture:

It was a great challenge. Let’s makea great phone that we fall in lovewith. And we’ve got the technology.We’ve got the miniaturization fromthe iPod. We’ve got thesophisticated operating systemfrom Mac. Nobody had everthought about putting operatingsystems as sophisticated as OS Xinside a phone, so that was a realquestion. We had a big debate insidethe company whether we could dothat or not. And that was one whereI had to adjudicate it and just say,“We’re going to do it. Let’s try.” Thesmartest software guys were sayingthey can do it, so let’s give them ashot. And they did.18

Going beneath the surface of Apple’sculture, Jobs has infused the quest forexcellence as a mantra. Jobs haspurposely created a culture whereemployees are encouraged to treat theirwork as a calling that is worthwhile andto pursue excellence in their endeavors.Therefore, a large role for Jobs and hisleadership teams is creating processesto recruit and socialize employees intoApple’s culture. When recruiting forApple senior positions, Jobs contendedthat intelligence is the baseline. Moreimportant, however, Jobs recruitsemployees who can fall in love with Applebecause if an employee has love for Apple,he/she will do what is best for Apple.19

Steve Jobs, Apple, and theLearning OrganizationFinally, I propose that Steve Jobs hasformulated a positive deviant strategy

18 Fortune (2009).19 Fortune (2009).20 Garvin D (2000). Learning in Action: A Guide

to Putting the Learning Organization to Work.Boston, Massachusetts: Harvard BusinessSchool Press.

21 Barrett F (1995) Creating AppreciativeLearning Cultures. Organizational Dynamics,24(2): 36-49 Reference # 03M-2010-02-02-01

© 2010 Dr. Lynn Perry Wooten. All Rights Reserved.


because of his talent for building alearning organization. Learningorganizations are skilled at creating,acquiring, transferring, and retainingknowledge so that collectively memberscan use knowledge to produce results.20

In learning organizations, knowledgeis not only used to react and adapt tothe organization’s external condition,but also is employed as a double-loopfeedback system to inform theorganization’s actions for holistic,reflective thinking and experimentation.21

Learning organizations are resourcefulin their approach to strategy becauseorganizational members can reconfigureknowledge to achieve organizational goals.

As illustrated in Exhibit II, thespokes of Jobs’ brain are constantlychurning to craft strategic stories thatengage, inspire, and provide directionsfor stakeholders. His transformationalleadership positioned the companyto seize opportunities and build apositive core of capabilities thatproduced results which exceeded theexpectations of its stakeholders. Atleast for the next couple of decades,students of business will study Jobs’leadership strategy, because it is anexemplary case of how a leader reviveda company with more than fixingproblems or conventional solutions.Steve Jobs envisioned possibilities inthe marketplace by expanding Apple’svalue proposition from the status quoto connecting with consumers beyondtheir imagination. Thus, through astrategic leadership lens, we will allremember Steve Jobs for his abilityto create ‘aha’ moments in businesshistory.



The Smart Moves

Why Apple,Not Sony?

By killing Sony’s musicdownload service‘Sony Connect’, Jobsnot only proved histechnical expertise indigital music but alsothe mastery ofdesigning one of themost successfulbusiness models forthe Internet age.Whether Jobsdelivered a decisiveblow to Sony byknocking itcompletely off fromthe much awaited‘digital convergence’remains to be seen.

With brisk sales of iPod, soon to hitthree hundred million worldwide,

making it the best-selling digital audio playerseries in history, and equally impressive salesof iPhone, Apple is riding high. This kindof cute ‘must-have’ electronic gadgets usedto be Sony’s game – the Japanese inventorof Walkman and Minidisc was synonymouswith electronic gadgets that were cute,portable, and of high quality. While one man,former CEO of Sony, Akio Morita, carriedthe company he co-founded to worldprominence in electronics, now, another man,the CEO and co-Founder of Apple, Steve Jobs,had come from a different direction tochallenge the king of electronics.

Though a direct comparison of late Moritawith Steve Jobs may not be proper, anexamination of how Apple reemerged from

the brink of extinction with the second-coming of its former CEO, to dominate themusic player industry once dominated bySony could have enormous significance froma strategy perspective.

iPod, iTunes and WalkmanTo set the stage, a good place to start is year2004. Following his return in 1997, Jobshad already launched iPod in the year 2001and two years later, in 2003, opened iTunesStore with 200,000 songs that could bedownloaded via the Internet at flat priceof 99-cents (US) a song. From day one iTunesStore became a hit; during the first five daysof opening, it sold more than one millionsongs. By end of year 2003, more than 25million songs sold, Time Magazine namediTunes Store the ‘Coolest Invention of 2003’.



Dr. Jay RajasekeraPhD, has been associated with the

International University of Japan,

Graduate School of International

Management (GSIM), since 1995.

He is currently the Director of

MBA Program and Professor of

Management Systems and IT

Strategy. Previously, he served as

Dean and as Associate Dean of

GSIM, considered the top ranked

Business School in Japan,

according to The Economist

ranking. His professional career

started in 1984 at AT&T Bell

Laboratories in New Jersey, USA.

Among the contributions he made

while at Bell Laboratories include

designing computer algorithms for

the world’s first Undersea Fiber

Optic Cable, TAT-8, between US

and Europe, winning two awards

from Bell Laboratories. His

patented algorithm has been in

use for designing the multibillion

dollar Undersea Fiber Optic Cable

systems, which carry a good

percentage of the Internet traffic

today, of major telecommunication

carriers. He is an advisor to

several IT companies in Japan and

overseas. He has published more

than 40 technical articles and co-

authored three books. His opinions

had appeared in Asian Wall Street

Journal, Japan Times, and

Japan’s top business newspaper,

Nihon Kezai Shimbun. He has

wide consulting experience with

top IT and telecommunication

companies, both in Japan and

outside, and with government

organizations in Japan and other

countries.

Why Apple, Not Sony?

The success of iTunes did not gounnoticed by Sony, which had a longassociation with the music industry. Sonyconsidered music as ‘software’, as opposedto ‘hardware’ which consisted ofentertainment equipment such as Walkman,Minidisc players, various high-fidelityequipment, and TV. In the 1980s and throughmuch of 1990s, Sony was clearly the‘hardware’ leader in the world. To bridgehardware and software, the strategy adoptedby Sony was to own music and movies sothat they could be marketed together withmusic players and TVs. In the 1990s, thecompany consolidated the focus byestablishing Sony Music Entertainment andSony Pictures Entertainment, by acquiringassets of various music and movie productioncompanies, such as CBS Records andColumbia Pictures.

It is said that co-founder of Sony, Ibuka,who used to travel often between New Yorkand Tokyo for business, was looking for somedevice to listen to orchestra music whilesitting in the airplane and limousines. Therewas nothing like that in the existing marketand nothing called the ‘headphone’ existed.And, Sony engineers created Walkman,mastering the engineering and design skillswhich Sony was known for at that time. Itwent on sale in Japan in 1979.

Though the initial reception was cool,it is said that Sony asked its own engineersand even fashionable girls to wear them inTokyo’s subways to hype up and create a coolimage to the device; and the sales exploded.Ten years after the launch, Sony had sold50 million of them worldwide; and, thendoubling that number three years later.

While initial walkmans were tape-based,the technology changes made it possible tolaunch CD-Walkmans. But they were bulkyand not recordable. Thus, Sony embarkedon extensive research to create Minidisc(MD), which could be fitted to a cigarette

size box. MD-Walkmans, which could store80 minutes of digital audio and introducedin 1992, were also a hit, especially in Japan.By 2004, 25 years from its initial launch in1979, Sony had sold about 350 millionWalkmans around the world; in the US aloneit had sold 150 million, thus making it oneof the most successful products in the world.

Sony Hitting Back at AppleJobs was focusing on iPod and finding waysto increase its sales through innovative iTunesStore, which was fast approaching 100 milliondownloads since its launch. In the summerof 2004, a 20-year youth bought the 100millionth iTunes song, prompting Jobs tomake a congratulatory call to the excitedbuyer. iPod and iTunes were a great concernsfor Sony, which initially created the portablemusic player industry. The technologychanges however opened up the space forstruggling Apple, which was trying to findsome way to resurrect the Mac computerswhich were hardly hit by Intel-Microsoftplatform.

What made iPod and iTunes were thetriumphant return of Steve Jobs to Applein 1996. One can recall that 1996 is almostthe beginning of Internet boom. Internetsites of all sorts were exploding and Jobsstrategy to make use of the Internet wasthrough the creation of candy-colored iMacs,where ‘i’ stood for Internet.

People give Jobs credit for realizing thevalue of the mouse-driven graphical userinterface. Indeed, the Windows type graphicalinterfaces were first introduced by Apple in1980s under Jobs when Macs were successfulin personal computers. The new iMacsbecame quite popular among writers andgraphic artists, but still PCs were dominatingthe market.

Trying to avoid a direct fight withMicrosoft, Jobs and his people noticed thesuccess of Napster where music loving people



were trading tunes over the Internetcreating havoc in the music CD industry.Though it was illegal, Napster sites wereexploding and music CD industry hadneither effective countermeasures nortechnology to control it. In fact, manymusic lovers preferred the convenienceof downloadable music over the Internet,but were very much concerned about theillegality of Napster type sites.

Jobs’ big breakthrough was to see theopportunity to create a legitimate businessmodel using the blueprint of Napster.This is where perhaps Job’s experiencewith user interface also played a key role.He noticed that the existing methods forarranging music files were highlydisorganized, and the result was iTunes,introduced in 2001.

iTunes allowed personal computerusers to arrange downloaded music andcreate playlists which could be played insound systems attached to a computer.But, around that time, portable musicplayers using flash memory sticks werealso coming out and music lovers coulddownload a few songs to such portabledevices and play on the run, just likeWalkmans. But, the popular MP3 formatused in Napster were not directly playablein Walkmans. While Sony was purifyingMinidisc to produce superior soundquality, Apple was working on a digitaldevice that could directly play the musicdownloaded from the Internet. IndeedApple was not the first to think of digitalplayer. The device from Creative, theSingapore electronic company, was indeedthe first to pose a challenge to Sony interms of recordable time. While Minidiscplayer could record about 80 minutes ofdigital sound, Creative’s player couldrecord up to 100 minutes.

The problem with portable digitalrecorders such as Creative’s was that they

were kind of bulky and user interfaceswere not very good. Apple, where Jobshad a great eye for user interface, sawthe opportunity and within a year cameout with iPod. Within two years oflaunching in 1979, Sony sold 1.5 millionWalkmans, worldwide. Within two yearsof launching in 2001, Apple sold 2 millioniPods. Given the time it happened, it isreasonable to say that Walkman had asolid start.

With iPod Jobs saw an opportunityto connect directly to music. In iTunes,he saw a dramatically simpler userinterface that had brought more peopleinto the digital music revolution. By 2004,Apple sold more iPods than Macs. And,iTunes Store had started bringing in goodmoney. Jobs’ strategy on digital devicesalso included staying away from Sony’smain business of home-based TVs andrecording equipment where Sony was doingwell at that time. While Apple was an $8bn a year business, Sony far exceeded itby raking in annual sales that were 10times more than Apple’s. In the summerof 2003, Fortune Magazine had namedNobuyuki Idei, the then Chairman of SonyCorporation the second most powerfulbusiness leader outside of the US.

Sony’s Computer Entertainmentbusiness, with booming PlayStation sales

of over 30 million units sold, were bringingin $8 bn a year. Sony had partnered withIBM to create a new computer chip topower PlayStation 3 and computers. Thecompany had also signed a deal withSamsung to create a new flat-panel LiquidCrystal Display (LCD) television. And,Sony Digital Creatures Laboratory wasdeveloping robots for the home market.Sony also had music business which wasselling songs in iTunes Store. By all sense,Sony was a well-diversified business.

But, Sony saw Apple’s iPod as a threatto its Minidisc-based Walkman business.By 2004, Sony was prepared to strike ablow to Apple. The company did not havea product that could be in the samecategory as hard drive-based iPod, but,it owned a vast collection of its own musicCDs. The iTunes Store was offeringdownloadable music over the Internet.Sony had thought that iTunes Store wasa major reason for iPod’s success. And,in order to compete or stop Apple, Sonyneeded a music store more appealingthan the one Apple had, Sony reasoned.

Indeed, with a long association withthe music industry, Sony itself, throughSony/ATV, owned a sizable collection ofsongs, including songs of top artists ofthe day like Stevie Wonder and MichaelJackson.

2004 Music Player Scene

Exhibit ISony’s Formidable Challenge to iTunes Store

Sony: Connect Apple: iTunes Store

Opening date May 2004 April 2003

Initial number of songs 500,000 200,000

Number of Compatible 2.5 million 3.5 million (iPods)Devices (by May 2004) (CD players, Minidiscs)

Walkmans in the market 330 million (worldwide)

150 million (US alone)

Company’s Revenue $85 bn $8.5 bn

Music business sales (2003) $4 bn $36 mn



Ext Ad 2



In May 2004, with much fanfare, Sonyopened ‘Sony Connect’ music downloadsite. The opening of Connect wasconsidered “setting the stage for a high-stakes battle” between Sony and Appleby the industry watchdogs and the media.They predicted that Apple may have meta worthy competitor in Sony. IndeedSony’s main field was electronics – TVs,audio, video, and recording business, whatthey called ‘hardware’. Almost two-thirdsof Sony revenue came from electronics.The ‘software’ for Sony was their musicand movie business which, in 2003brought in revenue exceeding $4 bn. ForApple, music business was rather new.The iTunes Store income in 2003 was amere $36 mn, but it was on a roll.

For Sony, partly due to music piracy,the income from music business wasdecreasing. The ‘Sony Connect’ musicdownload service had two intentions. One,to boost the sales of Minidisc and otherportable recording devices and stop iPod;and two, to cash in on the success of iTunesStore by outdoing it in the music businesswherein Sony clearly had a lead. The musicwas available in a proprietary format thatsuited Minidisc Walkmans. In an interview,the current CEO of Sony, Howard Stringer,disclosed Sony’s rationale for sticking toproprietary format by saying: “There wasa time when it made sense to divide themarket with closed technology, andmonopolize a divided market.”

Though Sony looked strong onpaper(see Exhibit I), it lacked experience onthe Internet. The ‘software’ business ithad an edge in was not the ‘computersoftware’ which could deal with Internet,websites, and user-interfaces the wayApple was adept at, but its vast collectionof music and movie recordings.

The ‘Sony Connect’ itself was mostlydone by an outside company because Sony

did not feel comfortable developing a high-profile web tool to challenge Apple.Though Sony’s challenge to oust Applefrom the music scene was dubbed a battlebetween two titans, both known for styleand electronic widget, Sony’s challengefailed miserably. There was no battle atall – Apple was too strongly positionedas it had vast resources.

The user-interface of Connect wasa major disaster that crashed or did notfunction at all. Despite having an initialcollection of more number of songs thatiTunes had, users could not downloadthem and manage properly with Connect.In fact, within three years of its launch,Sony announced the closing of Connectservice – Connect simply ‘did not’connect! (See Exhibit II)

By killing Sony Connect, Jobs notonly proved his technical savvy in digitalmusic but also the mastery of puttingtogether one of the most successfulbusiness models for the Internet age.Whether Jobs delivered a decisive blowto Sony by knocking it completely off fromthe much awaited ‘digital convergence’where a single device can navigateInternet, manage music and movies, playgames, and function as a homeentertainment center and telephoneremains to be seen.

Strategy: Sony vs. AppleFrom a strategic point of view, the battlebetween Sony and Apple has greaterimplications. Indeed, it exposes thedifferences between primary ways ofthinking in the Internet age. The digitalrevolution has merged many ofentertainment businesses along with thecomputer and the Internet. Theentertainment devices such as radios, TVs,and recorders have become very close tothe computers. The contents, what Sonycalled ‘software’, have been converted todigital formats. And, the delivery methodsof entertainment have rapidly moved onto Internet.

Though failure of Sony Connect canbe addressed in different perspectives bylooking at several strategic blunders bySony, it is more interesting to dig out howJobs established himself in a new turf anddefended it. In iTunes Store, it was clearlythe Internet interface that killed Connect.But, success of iTunes had more thaninterface – it was a combination of a fewstrategic moves and missteps by others,including Sony, not to properly understandthe digital convergence. By the time Sonygot into the act, it was too late. Sony’s firstmistake was perhaps dwelling too deepand too long in Minidisc while hard drivesoffered excellent opportunities to switch

Performance of Apple and Sony Music Business from 2003 to 2005

Exhibit IIiTunes Store Outdoing Sony

3000%

2500%

2000%

1500%

1000%

500%

0%

Apple

Sony

2003 2004 2005Perc

enta

ge G

row

th; B

ase

year

200

3



to high-storage recording. It is said thatone of the major breakthroughs for theoriginal iPod came when one of Appleengineers in iPod project under Jobs wasvisiting Tokyo and made a visit to Toshiba,one of Apple’s supplier of hard drives andsaw a 1.8 inches hard drive, just invented.The Toshiba guys had said that they “didnot know what to do” with it. But, theApple engineer immediately realized whathe could do and Jobs got a big chance tobreak into digital player business.

Sony’s trademark was making tinygadgets, but somehow never focusedmuch on the computer side. It is onlyrecently that Sony had been coming upwith notebook computers where it istrying to establish itself. Though Toshibawas in the backyard of Sony, in Tokyo,the Sony engineers were deeply dwellingon the success of Walkman and apparentlydid not see the seriousness and thepossibilities of digital convergence. WhileApple, under Jobs’ second arrival, hada focused strategy, Sony had diversifiedinto many different areas and was losingits competitiveness. By the time Jobs hadestablished himself with iPod, in year2003, Sony created the so-called ‘Sonyshock’ by announcing that it suffered aquarterly loss of $1 bn in April 2003 –something the business world did notexpect from a blue-chip company thathad delivered solid results for a long time,quarter after quarter.

The shock was too much that by early2004 BusinessWeek decided to name SonyCEO, Idei, one of the world’s worstmanagers. Though Jobs can be creditedwith coming up with iPod, Sony can beblamed for not staying vigilant tocompetition. Jobs also must get creditfor creating software-based strategicbusiness model, as opposed to a hardwarebased one.

Jobs’ Software ModelWhile the attractive design of a productalong with its functionality and qualityare important, how it could be operatedin a simple and user-friendly way, withminimum instructions, had become thenorm of the day. Using Internet, forexample, has become so simple that nobrowser maker distributes a user manual,yet attracts billions of users to navigatethe net at any given time. The end-usershave got accustomed to expecting thesame kind of high quality interfacewhether they use a TV, music player,mobile phone or a washing machine.

For manufacturers of any product,product variety is a major concern whenit comes to staying competitive. Withdigital devices such as mobile phones,computers, digital TVs, cameras, etc.,variety can be provided by coming up withan array of different colors/features, orby allowing changes to the user experiencevia software interfaces that differentiatesit from the competitors’.

A company which is good inmanufacturing technology, often dragstheir products – especially the successfulones – too far and too long. Manyelectronic companies in Japan are knownexamples; they are big on ‘hardwaredifferentiation’ (Exhibit III).

How many colors or styles doesiPhone, for example, come in? The firstiPhone came in just one style, a blackfront and silver back. iPhone 3G has twocolors for the back side, black and white.Now compare it to that of mobile phonedesigns of just one manufacturer offeredin ‘zillions’ of colors in a Tokyo electronicstore! Jobs’ software-based differentiationallows users to download user applicationsthat they prefer and easily install on iPodsor iPhones. A typical iPhone has tens ofsuch applications whose icons are spread

across its touch screen, as seen in theExhibit III, on the right side.

For iPhone, at present users have theoption to download and install whateverapplication they like from a selection of100,000. It provides much easier‘customized differentiation’ wherecustomer incurs almost all of the cost.

The hardware differentiation is verycostly, because each piece incurs amanufacturing cost, the manufacturersfollowing this strategy needs to sell theproduct at a high cost, but with thin profitmargins. The current problem of negativeprofits that the high-end mobile phonemanufacturers are facing in Japan hadbeen caused mostly because of this. Evenif one could manufacture differentdesigns, it would be impossible to make100,000 different designs and sell at aprofit. Jobs must clearly get credit forcoming up with iPhone type softwaredifferentiation model where he basicallyincurs no cost as thousands of developersdevelop applications on their own. Whenthey sell a downloadable application viaApple store, Apple picks up 30% of thesale. Since basically no distribution costis involved, applications can be sold atlow costs – often in the range of $2-$10apiece. In 2008, Apple raked in more than$2 bn from software business; and it wasgrowing at more than 40% a year!

Of course, Apple has a certificationprocess to make sure third partyapplications are virus free and of theexpected quality. It is said that Applereceives 10,000 submissions a week fromdevelopers around the world.

Jobs’ AdvantageIn a published interview in 2005, Jobsdescribed his way of thinking: “Apple hasdone what Apple does best,” he said, “makecomplex applications easy, and make them

Why Apple, Not Sony?



even more powerful in the process . . .and we hope its dramatically simpler userinterface will bring even more people intothe digital music revolution.”

Indeed, this is exactly what happenedwith iPod, iTunes, and iTunes Store. Jobs’experience in designing computers andgraphical user interfaces is hard to matchby any Fortune 500 executive of the day.This is perhaps one reason why Jobs wasjust named the ‘CEO of the Decade’ byFortune magazine. In another interview,Jobs said: “We realized that almost all –maybe all – of future consumer electronics,the primary technology was going to besoftware.”

Jobs’ hypothesis may be true, but howmany CEOs have what it takes toimplement it. Knowing what he knows,he could go to any audience, even onenot in his own sphere, for example, thetop music companies such as BMG, EMI,Sony, Universal and Warner, and convincethem that he could protect their musicfrom piracy with a legitimate downloadbusiness, where software provides theprotective gear. He could go to AT&T, atop mobile operator, and convince thatiPhone has the best software interfaceof any phone on earth. Jobs’ hypothesisis, however, good and bad news for manycompanies in consumer electronic andsoftware businesses.

Sony Problem – A JapaneseProblemSony lost to Apple’s iTunes because ofsoftware. Sony also lost to iPod becauseit could not think out of its own ‘hardware’box in time. But, lack of software skills,in general, is an inherent problem in Japan.This could be a traditional problem forJapanese who had gotten used toappreciating tangible products coming outof a production line. Software is not

produced on a production line. It is hardto see if someone really is productive in asoftware job until the final product comes.To complicate the things, almost allsoftware languages are using Englishscripts. Even when Japanese companieshire foreign Software programmers, thefirst priority goes to their knowledge ofJapanese. Now how many top progra-mmers from India would master Japanese,just to work for a Japanese company?

Though Japanese companies clearlyhave an edge in some industries, lack ofsoftware strategy is making them lesscompetitive in the world market. Evenin the new Tablet notebook that Jobs isplanning to bring out, Sony may havelost a great chance. Sony Vaio, for examplehad a great screen, good size, similar towhat Jobs is planning 7" screen. Vaio isalready out, for about two years now, butits software OS is clumsy and its batterylife is poor.

The model that Jobs puts out forapplication developers for iPhone andiPod is also a difficult one for theJapanese to apply because it needs tohave a superior developer kit that canbe used as a base for software interfacewith the hardware devices. In additionto Apple, American power players suchas Google and Amazon, have alsodeveloped their own developer kits andare relying on programmers around the

Exhibit III: Two Ways toDifferentiate Products

Hardware Differentiation Software Differentiation

world to make software applications. Itis interesting to note that Sony stillcharges $10,000 for the PlayStationdeveloper kit, while prospective Appleapplication developers could downloadthe Apple Software developer kit for free.The numbers tell the story; Apple’sapplication store opened with 500applications in July 2008. In one-and-a- half years, its number of downloadableapplications had grown to 100,000.Compare this to Sony’s game playerPlayStation’s third party applications.Play Station had been in the market muchlonger than either iPod or iPhone, butit’s got only 600 third party applications.

This could be bad news for PlayStation,which had been a bright spot in Sony sinceits launch 15 years ago. In fact, Apple’siPhone has been doing well in Japan andif it has good game software, it could affectPlayStation. Jobs’ software hypothesiscould be good news for emergingconsumer electronics makers fromdeveloping nations such as India andChina. As several computer parts suchas chips and memory have becomecommodities, consumer electronicsmakers could add software features andattractive user interfaces to attractcustomers away from traditional bigplayers such as Sony and Matsushita.The emphasis on software highlightedin Jobs’ hypothesis could also be goodopportunity for Indian softwarecompanies to approach Japanesemanufacturers by emphasizing thevirtues of developing excellent userinterfaces. Right now Indian softwarecompanies account only for about 1%of the Japanese IT market. Indiancompanies may have great potential inthat country.

Reference # 03M-2010-02-03-01

© 2010 Jay Rajasekera. All Rights Reserved.



Ext Ad 3



The Critical Moments

Embracing Innovationand Change

Innovation challengesmanagers andemployees to thinkabout solving internaland customerproblems in new andexciting ways. Toughtimes require thatfirms do both thingsbetter and dodifferent things – thisis essentially thedefinition ofinnovation.

Innovate or die. This mantra, attributedto an anonymous entrepreneur and later

popularized by management guru TomPeters, has been repeated many times – bythe media, governments, business leaders,business professors, and consultants.1 Atits core is the need to better understandthe organizational processes leading toinnovation and adaptability. As Apple’s SteveJobs puts it, “Innovate, that’s what we do!”2

In a recent Max Gladwell blog, theblogger observed that: “As the financial crisisrips across the economy, it’s forcinginnovation and adaptation on a scale thatshould make Darwin proud.”3 The challengeand opportunity for managers is to changefast enough in ways that delight customers,pay the bills, and at the same time allowthe organization to retain and develop its

best people. Yes, change takes care andeffort. But, given these tough times,managers need to ask themselves if therewill ever be a better time for operational,service, or product innovation than whenB2B and B2C customers are clearly stretchedthin. Across good times, and bad, the axiomremains true that if your customers find thefuture before you do, they won’t be yourcustomers!

Management guru, Peter Drucker, onceobserved that “business has only twofunctions—marketing and innovation” (he

1 Tom Peters (1999). The Circle of Innovation: YouCan’t Shrink Your Way to Greatness, NY: VintagePress.

2 http://www.fastcompany.com/magazine/78/jobs.html, accessed October 15, 2009.

3 http://www.maxgladwell.com/2008/11/innovation-or-extinction-the-new-economic-reality/ MaxGladwell, 11/21/2008, accessed 11/26/2008.



Mason A Carpenteris the M Keith Weikel Professor in

Leadership at the Wisconsin

School of Business, University of

Wisconsin-Madison. He received

his Ph.D. from the University of

Texas at Austin. His research

interests include corporate

governance, top management

teams, the strategic management

of global firms, and global new

ventures. His recent books include

Strategic Management: A

Dynamic Perspective (2009,

Pearson-Prentice Hall), Second

Edition (with W Gerry Sanders),

Managing Effectively Through

Tough Times (2009, Pearson-

Prentice Hall), and An

Executive’s Primer on the

Strategy of Social Networks

(2009, Business Expert Press). He

is an innovator and industry

disruptor himself, with most

recent experience as a founding

investor in Flat World Knowledge,

a venture-backed firm seeking to

rewrite the rules of competition in

the global textbook industry.

Embracing Innovation and Change

went on to cynically note that all otherbusiness functions are expenses).4 Whilethe current recession might suggest thatother functions such as finance, operations,and so on, might be important too, thenotion that innovation is a key source ofcompetitive advantage has some fairlystrong anecdotal support. For example,leading innovators like Apple, ArcelorMittal,Nintendo, Samsung Electronics, Tata Group,Research in Motion, Fiat, and RelianceIndustries, are experiencing strong revenuesin those areas where they have excitingproducts and services – even otherwisedowntrodden stock analysts are askingwhether such ‘creatives’ are perhapsrecession resistant. Other observers suggestthat innovations and the related risks takenin spaces characterized by great uncertainty,be that emerging economies or duringeconomic downturns, explain major shiftsin the competitive landscape.5 For example,Lakshmi Mittal, founder of Mittal Steel (nowArcelorMittal), built his fortune in the steelindustry, a sector seemingly trapped in aperpetual downturn (and he placed someof his largest bets in emerging economies,such as highly volatile Kazakhistan).

However, the knowledge that innovationis important is a far cry from having theability to create the innovative organization.As one set of experts has observed, “Likeshort skirts, innovation has traditionallyswung into and out of fashion: popular ingood times and tossed back into the closetin downturns. But as globalization tearsdown the geographic boundaries and market

barriers that once kept businesses fromachieving their potential, a company’s abilityto innovate – to tap the fresh value, creatingideas of its employees and those of itspartners, customers, suppliers, and otherparties beyond its own boundaries – isanything but faddish. Simply looking atBusinessWeek’s ‘50 Most InnovativeCompanies’ drives the fact home that nocountry has a lock on innovation –innovation leaders hail from the US, Japan,Canada, Finland, India, South Korea,Germany, Britain, Spain, Luxembourg,Switzerland, China, Italy, and theNetherlands.6 In fact, innovation hasbecome a core driver of growth,performance, and valuation.”7

Who Leads Innovation?Most company executives will tell you thatthey are always on the lookout for innovators;many of these same execs are working onways to better their own capacity. Intuitionmight tell you that behind the highlyinnovative firm – large or small – lies a leaderwith the spirit of entrepreneurship runningthrough his or her veins. Recent researchsuggests that your intuition may be right.Based on a detailed study of 25 innovativeentrepreneurs and surveys of more than 3000executives and 500 individuals who hadinvented new products and started innovativecompanies, my colleagues found twosurprising differences between the haves(have innovated), and the have-nots (havenot innovated).8 First, among the have-notsthere was a pretty strong tendency for topexecutives to delegate the responsibility forinnovation to lower levels in the organization– in other words, they expressed no personalresponsibility for generating key innovations(be it in product, service, or process). Second,among the haves, the leader refused todelegate creative work. Moreover, this lattergroup comprised but 15% of the 3000

4 P Drucker (1993). Management: Tasks,Responsibilities, and Practices, NY: Collins Business.

5 D Sull (2009). The Upside of Turbulence, NY: HarperBusiness.

6 http://www.businessweek.com/magazine/toc/09_16/B4127innovative_companies.htm, AccessedDecember 10, 2009.

7 J Barsh, M Capozzi and J Davidson (2008).Leadership and innovation. The McKinsey Quarterly,January, 37-47.

8 J Dyer, H Gregersen and C Christensen. 2009. TheInnovator’s DNA. Harvard Business Review,December, 2-8.



companies surveyed. It is also interestingto note that the innovator CEOs sharedthe ability to associate (successfullyconnect unrelated ideas), question(challenge common wisdom), observe(scrutinize common phenomena),experiment (construct interactiveexperiences to learn what is possible),and network (extend their knowledgedomain, not just their influence andcareer prospects, by meeting differentothers).

It is important to note that thisresearch concluded that innovation, andthe fierce drive to be innovative wassparked from the top but it did not stopthere. Indeed, even though we’d allgenerally agree that Steve Jobs, JeffBezos, and AG Lafley are innovative,most of the planet’s population wouldnot recognize their names until we alsomentioned that they lead Apple, Amazon,and P&G, respectively. While the passionfor innovation must be shared with thecorner office, such passion typicallypermeates the organization in asystematic way for it to offer the firmsome measure of sustainable competitiveadvantage.

What Does Innovation LookLike?While we like to think of innovationsas a product or service that is entirelynew to the planet, experience has shownthat timing plays a big role in innovationsuccess. For example, very few of usremember Apple’s Newton hand-heldcomputer – it was a dismal failure.However, just some ten years later, asimilar product – in the form of the PalmPilot, and today, the iPhone – seem tohave created an industry untothemselves.

What do great innovations have incommon? Innovations, and the newmarkets that often accompany them,seem to have five commoncharacteristics: Something is reduced Something is eliminated Something is created Something is raised, and Something stays the same.

These new market creation factorsare shown in Exhibit I.

The first four characteristics aresummarized in the Blue Ocean Strategyframework popularized by strategy

researchers Chan Kim and ReneeMauborgne.9 The fifth characteristicwas developed through the work of theircolleagues, Mason Carpenter and WGerry Sanders, authors of the best seller,Strategic Management: A DynamicPerspective.10 The general idea behindthe first four changes is that aninnovation will offer something new,but not necessarily because it is simplyadding more features or costs. Forinstance, Amazon.com becamesuccessful because it provided a greaterselection of books than any store on theplanet (increase), allowed greaterconvenience when shopping for books(reduced time needed), developed thelogistics and software infrastructure tomanage the process (create/add), andthreatened to make brick and mortarstores obsolete (eliminate).

New markets can be created wheninnovations orchestrate these fourcharacteristics alone. However,experience has shown that the more thatcustomers need to change theirbehaviors, the more slowly they willadopt the innovation. For this reason,the fifth characteristic – what stays thesame – becomes a differentiating factorbetween innovations that take hold andthose that do not, or only do so slowly.For instance, e-books have not reallytaken off, even though there is anincreasing number of ways for them tobe purchased and read. Similarly,innovations like Tivo have been slowto gain users because consumers haveto change their behaviors; Skype facessimilar obstacles (even though it is freeto make calls you still often have to call9 WC Kim and R Mauborgne (2005). Blue Ocean

Strategy. California Management Review, 47:3: 105-121.

10 MA Carpenter and WG Sanders (2009).Strategic Management: A Dynamic Perspective,NJ: Pearson-Prentice-Hall.

Exhibit I: Innovations that Create New Markets

Innovations that create

new markets

Reduce

What factors should be reduced well below the

industry standard?

Raise

What factors should be raised well above the

industry standard?

Create/Add

What factors that the industry has never offered should be created or added?

Eliminate

What factors that the industry has taken for

granted should be eliminated?

Kept the Same

What factors, from a customer’s perspective,

need to be unchanged for a customer to adopt the

innovation?



through a PC and also pay for high-speedcable connections). In contrast,Amazon’s strategy worked largelybecause the book – the basic product –remained unchanged (as has beenunchanged for the last 600 years, whichmeans that consumers are likely to feeluncomfortable abandoning that mediumvery quickly). Google was a great successas well because it let us use the samebrowser but offered a far superior ‘search’experience.

How Innovative Are You Now?We can use a short survey to determinehow innovative a company is now. Thefirst question simply asks whether thefirm has innovation processes in place,and provides an example of one – thestage-gate process. The second posesa series of questions about how aninnovation might survive anorganization’s internal climate.

Do you Have a Process forInnovation?Innovation is just a matter of spendingtime dreaming up new ideas, right?While giving employees free time todevelop product ideas is a good start (as3M and Google do by allowing employeesto spend 10% of their timeexperimenting with new products andservices), it is only a start.

Increasingly, experts suggest that themost innovative companies will take theprinciples and reasoned risk taking ofventure capital, private equity, and R&D,and bring those perspectives inside the

firm to create new products, services,and businesses.11 One of the key benefitsto this migration from external tointernal practice is that risk-takingbecomes a managed process – the notionof project chunking is very relevant hereand takes the form of what the best R&Dcompanies call a ‘stage-gate’ process. Thestage-gate process is a type of newproduct or service development thatseparates the innovation process intostages (typically 5 or 6) with each stagecontaining a set of parallel, cross-functional activities. Between stages aregates that open or close the door forprojects to move to the next stage. Gatesact as quality check points in the process.Moreover, gates have a common format: Deliverables

These are the inputs into the gatereview-what the project leader andteam propose to deliver. They arethe results of the actions of theprevious stage and are based on astandard menu of deliverables foreach stage.

CriteriaThese are questions or metrics onwhich the project is judged in orderto make the Go/Kill and prioritizationdecision.

OutputsThese are the results of the gatereview – a decision (Go/Kill/Hold/Recycle). An action plan is approvedand the date and deliverables for thenext gate are agreed on.

A Simple Test

Whether or not a firm has some typeof innovation process in place, it stillmay have internal roadblocks toinnovation. Managers can start byidentifying the number of new productsor services, or even process innovations,

that have been introduced in the currentyear. If the answer is ‘none,’ then thatis a pretty good clue about the firm’slevel of innovation. Even if the answeris something more than none, it is a goodexercise to identify the percentage ofrevenues that come from new productsor services.

The companies that aspire to beinnovative often set clear and specificnew product or service innovationtargets. For example, 3M states that30% of sales must come from productsthat are fewer than four years old.Similarly, the Gillette subsidiary of P&Gstates that 40% of sales every five yearsmust come from entirely new products.12

These firms have also learned howeverthat such sales must be profitable sales.Indeed, simply setting revenue targetsfor new products and rewardingemployees for that can lead to a slewof high-sale, but unprofitable products!The objective is not innovation for thesake of innovation, but innovation forthe sake of customer engagement andretention, and profitable growth. As acase in point, in 2004 critics pointedto Apple as “having issued 1300 patents,almost one-and-a-half time as many asDell” but with Dell showing over twiceApples level of profitability – “if Appleis so successful then why is it so small?”13

And yet, today Apple boasts a marketcapitalization of $174 bn, versus Dell’s$26 bn.

It is one thing to set high goals forinnovation, and another to achieve them.For innovation goals to be realized theremust be some pathway in theorganization for developing new ideasand moving them forward – even if itis just to the beginning of the stage-gateor similar process. The companies thatseem to do this best share a culture that

11 h t t p : / /www.mck i n seyqua r te r l y. com/Innovative_management_A_conversation_between_Gary_Hamel_and_Lowell_Bryan_2065, J.Burish, 11/2007, accessed 12/4/2008.

12 MA Carpenter and WG Sanders (2009).Strategic Management: A Dynamic Perspective,NJ: Pearson-Prentice-Hall.

13 http://www.fastcompany.com/magazine/78/jobs.html, accessed October 15, 2009.




Carol Bartz, past CEO of Autodesk andnow CEO of Yahoo, describes as fail-fast-forward. What she means is that the waywe learn is by making mistakes. So ifwe want to learn at a faster pace, we mustmake mistakes at a faster pace. The keyis that you must learn from the mistakesyou make so you don’t repeat them.Bartz’ goal is to have employeesunderstand that failure is very acceptablewithin an established organization – thekey is to identify it quickly, and moveforward with lessons learned. This isan attempt to break free from those whoare worried about risk-taking.

Beyond questions concerning yourinnovation culture, Gary Hamel, abusiness futurist and strategy guru,suggests that firms take this simple four-item test, based on responses from first-level employees, to see whether or notthey can walk the talk in terms ofinnovation capability:14

How have you been trained as abusiness innovator? Whatinvestment has the company madein teaching you how to innovate?

If you have a new idea, how muchbureaucracy do you have to gothrough to get a small increment ofexperimental capital? How long isit going to take you to get 20% ofyour time and $5,000 to test youridea? Is that a matter of months oris it very easy for that to happen?

Are you actually being measured onyour innovation performance or yourteam’s innovation? Does it influenceyour compensation?

As you look at the management14 h t t p : / /www.mck i n seyqua r te r l y. com/

Innovative_management_A_conversation_between_Gary_Hamel_and_Lowell_Bryan_2065, J.Burish, 11/2007, accessed 12/4/2008.

15 h t t p : / /www.mck i n seyqua r te r l y. com/Innovative_management_A_conversation_between_Gary_Hamel_and_Lowell_Bryan_2065, J.Burish, 11/2007, accessed 12/4/2008.

processes in your company, do theytend to help you work as an innovatoror get in the way?Hamel concludes this questioning

by observing that the answers will tellmanagement very quickly how big thegap is between a vision that preachesinnovation and the actual achievementof it. The questions themselves alsoprovide a pathway for beginning todevelop a culture that understands howinnovation comes about.

Why Now?Innovation challenges managers andemployees to think about solving internaland customer problems in new andexciting ways. Tough times require thatfirms do both things better and dodifferent things – this is essentially thedefinition of innovation. Tough timesare also the mother of invention. AsHamel notes, “to become inspiredmanagement innovators, today’sexecutives must learn how to thinkexplicitly about the managementorthodoxies that bound their thinking– the habits, dogmas, and conceits they’venever taken the trouble to challenge. Forexample, many people believe that it takesa crisis to change a large organization,and when we look at the evidence thisseems to be the case.”15 Moreover, theinnovative organization is one that is morelikely to attract and retain the humancapital that takes it farther when timesare good – thus, the capacity to innovateand accumulate the best human and socialcapital become self-reinforcing. Again,if your customers find the future beforeyou do, they will not be your customers,and will likely become the customer ofsomeone else.

Reference # 03M-2010-02-04-01

© 2010 Mason A Carpenter. All Rights Reserved.



Ext Ad 4



Leveraging theCorporate Ecosystemand The New InnovativeRole for HRM

This article discussesthe possibilities andopportunities that existfor further exploringthe corporate eco-system. It is based on anew work that iscurrently in progress. Itelaborates on the needto innovate inmanagement and morespecifically in peoplemanagement. It is a callfor HR managers to beproactive in assumingnew roles connected tothe leveraging of thecorporate ecosystem. Itis argued that by doingso, they will add valueto corporate sustain-ability as well as to theirown HR sustainability.

This special issue is dedicated to thepioneering efforts of Steve Jobs. There

is no doubt that Steven is a unique andinnovative leader. His ingenuity in additionto the impact that his products have hadon the world, lies in his ability to find thefine route of a leader that “wants to bothchange the game and stay in the game forthe long haul”1. This is a nice concept toappreciate, but very hard to follow.

In this article, we will try to extend thelogic of change and innovation in peoplemanagement and at the same time stay inthe game, by tying together the tripleconcepts of: business ecosystem,sustainability and emerging new driversrole for human resource management inorganizations. In 1996 James F Mooreoriginated the concept of “strategic planning

applied to the business ecosystem2”. Inhis book, The Death of Competition:Leadership and Strategy in the Age ofBusiness Ecosystems, he did not suspectthat he was talking about one of the mostformidable value creation potentials ofthe corporation. The concept wasintroduced earlier by Moore in theHarvard Business Review in May/June1993 and won the McKinsey Award forthe article of the year.

All companies exist within a specificcorporate ecosystem which aresimultaneously connected to and

1 See: Bill Taylor’s Blog: “Decoding Steve Jobs:Trust the art, not the artist. Harvard BusinessReview, June 23, 2009 (http://blogs.harvardbusiness.org/taylor/2009/06/decoding_steve_jobs_trust_the.html)

2 We prefer to use the term “corporateecosystem” because the values created may gofar beyond business values.



Dr. Mario Raichhis a progressive thinker, a pioneer

and a creative mind. Today he

coaches and consults many

industries about strategic

innovation. He is Chairman of

Learnità LTD, a London based

company – “The Innovation

Enabler” with a worldwide

network focusing on strategic

innovation. He teaches in many

business schools throughout the

world and is the co-author of the

popular book, Beyond (Palgrave-

Macmillan, 2008).

Dr. Simon L Dolanis Ramon Llull University Chair in

HRM, and the scientific Director

of the Institute for Labor Studies

in ESADE business School. He had

co-authored more than 40 books,

and over 120 scholarly papers

published in academic journals.

He is the chief Editor of Cross

Cultural Management: An

International Journal. He

innovates and consults via his

Montreal-based firm in the field of

culture reengineering and

coaching for values.

Dr. Riane Eisleris a social scientist, attorney, and

author whose work on cultural

transformation has inspired both

scholars and social activists. She

has been a leader in the movement

for peace, sustainability, and

economic equity. Her bestselling

books, The Chalice and the

Blade, and the more recently the

Real Wealth of Nations is being

read and hailed all over the

world. Dr. Eisler has published

over 300 articles and currently

she is dedicated to education via

her role as President of the Center

for Partnership Studies.

Leveraging the Corporate Ecosystem

subsumed within many other ecosystems.Some have a very extensive ecosystemlike post offices, telecommunicationcompanies, universal banks and manyof the insurance companies; but so farwe do not have many examples ofcompanies which have tried to leveragethe wealth of their ecosystem.

Cisco Systems has widely used theecosystem concept throughout the worldby leveraging partners for all businessfunctions except the development oftheir core patented functions andbusiness strategy. Roy Hanif, whofounded the Cisco’s EMEA ServicesEcosystem in 1999, managed to quicklyattract over 200 international serviceproviders to embrace this concept.Trading was estimated at over $ 10 bnin services. The Cisco “locally globalmodel” became the most respectedbusiness model in the communicationsindustry in the 1990s. Many othercompanies followed this example andcopied Cisco’s highly successful model.Companies to follow suit included HP,IBM, Intel and Microsoft, to name a few.3

Marco Iansiti, a Harvard UniversityProfessor, pointed out that despite thecurrent strength and promise of theinternet software market, the future paceof growth and innovation are notassured; the principles of choice,opportunity and interoperability areimportant factors determining thegrowth of PC software and the overallhealth of the information technology

ecosystem, and these same principleswill shape competition in the Internetsoftware. He further adds in anotherpaperwith his colleague Roy Levien, thatit is all about creating value within theecosystem itself and sharing the valuewith the participating partners in theecosystem.4 & 5

The changing technologicalenvironment is another issue thatrequires new ways of thinking andmanaging. Riane Eisler in The Real Wealthof Nations points to the shift from theindustrial to the post-industrial era asboth a challenge and an opportunity.The primacy of service and knowledgeas the criteria for success in a rapidlyshifting global environment calls forlong-term, rather than merely short-term thinking and planning thatconsiders what will benefit allstakeholders.6

Leveraging the EcosystemA corporate ecosystem has a wealth ofuntapped talents, experience, expertise,knowledge and know-how. It has a wealthof processes, systems and organizationalforms. This is a huge potential for valuecreation; but the creation of socialnetworks and of real and virtualrelationships can multiply this potentialtenfold. The corporate ecosystem istherefore an untapped treasury!

The corporate ecosystem can be le-veraged in different ways:

The number of entities that formthe corporate ecosystem involvedin the process – entities such asprivate and corporate customers,providers, strategic partners andother stakeholders

The number of assets used: Assetscould include talent, knowledge,know-how, expertise, experiences,

3 Marco Iansiti and Roy Levien have extensivelytreated the Cisco concept in their book: TheKeystone Advantage: What the New Dynamicsof Business Systems Mean for Strategy,Innovation and Sustainability, HBS Press, 2004.

4 M Iansiti, Principles that Matter: SustainingSoftware Innovation from the Client to the Web,July 16, 2009 HBR working knowledge (http://hbswk.hbs.edu/item/6237.html)

5 Marco Iansiti and Roy Levien, Creating Value inYour Ecosystem, http://hbs.edu/item/3967.html

6 Riane Eisler, The Real Wealth of Nations, SanFrancisco: Berret-Koeler, 2007.



intellectual rights, brands, potentialfor the creation of smart solutions,techniques and methods masteredcommunication ability etc.

The purpose: The purpose could bethe creation of new business ventures,creation of new markets, developmentof innovations, increasing theemployee and customer loyalty,leveraging the available talents, jointdevelopment projects, creation of anew industry, etc.In contemporary practice, primary

focus is given to entities representingthe customer base which are managedactively through marketing and sales.Some companies are able to managewhole business communities. At times,we can see companies engaged in jointinitiatives directed at specific supportfunctions: e.g., purchase, HR, IT etc.,but rarely do those initiatives engage alarge number of entities, several assetsand more that one purpose.

The value created by themanagement of the corporate ecosystemis directly related to the number of waysin which it is leveraged and the amountof entities, assets and purposes involved.The more the entities involved, assetsleveraged and common purposesestablished, the higher is the valuecreated. In addition, the creation ofunique values is dependent on the abilityto orchestrate the coordination of largeparts of the corporate ecosystem.

An actively managed network of

entities focusing on one or multiplemutually beneficial purposes can bemanaged in a classical way up to a certainsize and scope, but very soon a form ofsystem support is needed to be able toleverage all the possible values7. Learnita,a London-based consulting firm,together with a group of associatedcompanies has undertaken the endeavorto develop such a system.

Is the Corporate Ecosystem anUntapped Treasury?8

We argue that the corporate ecosystemis indeed an untapped treasury. Thus,it can be leveraged in different ways.Two excellent examples of globalInternet platforms harnessing openinnovation are provided by Innocentive9

and Ninesigma10. We argue that a similarplatform conceived for the corporateecosystem is thinkable and necessary.It will include a collaborative socialnetwork for the creation and

development of creative solutions andinnovations leading towards newproducts, services, solutions, start-upsand joint ventures. This is a way toenable companies to leverage the assetsof their corporate ecosystem. We callit the Solutions and Innovations ThinkTank (SITT) (Exhibit I).

During the last couple of years, wehave developed a technique calledAdvanced Key Issue Management(AKIM) through which participants ina new innovative program or processfind and develop smart new solutionsto solve a complex problem. Thisprogram was used successfully tofacilitate global experts to help defineand redefine major problems facing thecorporate world in the next 20 yearsand also to identify the seeds of thesolutions of the current and upcomingbusiness transformation. The resultsof the implementation of this techniquewere the basis for the recently publishedbook, Beyond11. In the same vein, theinnovation process of a SITT can beleveraged to address the corporateecosystem. This means bringingtogether talent management expertise,IT technology (data management, datamining, virtual management ofrelationships and teams), in order to

Exhibit I: Solutions and Innovations Think Tank

Key Issues from the corporate ecosystem

Talents from the corporate ecosystem and beyond

Expertise and Know-how- Talent Management- Innovation- Creative Problem Solving

IT: Data Management, Data Mining, Idea ManagementManaging Virtual Teams, Virtual Relationship Management

Info and Communication: Social NetworksInnovative system for neighborhood marketing and communication

- Advanced Key Issue ManagementSITT

- Creative Solutions- Innovation

New- Products- Services- Solutions- Start-ups- Joint Ventures

7 In future, the artificial intelligence entities will be the perfect mangers of such networks.8 These concepts have been developed by Learnità Ltd (http://www.learnita.com), where they are

developing tailor-made innovative solutions for our corporate clients leading to high performance,rapid growth, strategic innovation and lasting competitive advantage.

9 Founded in 2001, InnoCentive (http://www.innocentive.com) connects companies, academic institutions,public sector and non-profit organizations, all hungry for breakthrough innovation, with a global networkof more than 160,000 of the world’s brightest minds on the world’s first Open Innovation Marketplace™.

10 NineSigma(http://www.ninesigma.com) was founded in 2000 by Dr. Mehran Mehregany, Goodrich Professorof Engineering Innovation at Case Western Reserve University. The company’s core mission is to work onbehalf of their clients to source innovative ideas, technologies, products and services from outside theirorganization quickly and effectively by connecting them with the best innovators from around the world.NineSigma was launched in 2000 to leverage the revolution in open innovation.

11 See: Mario Raich & Simon L Dolan (2008) Beyond: Business and Society in Transformation, Palgrave-Macmillan.



Tool, Instrument Driver Expected Outcomes

Talent Innovation Board HRM - Talent Management InnovationA group of companies developing - Innovative Leadership DevelopmentTalent Management innovations - Leveraging talents

- Continuous access to a large base of talents,expertise, know-how and experience

Smart Solutions HRM - High quality solutions and decisions

A new method leading in an easy - Transformation towards a high performance cultureway towards smart solutions - Smart solutions for key issues

- Cases for innovation

Expanding people management beyond HRM - People Advisory Boardthe traditional boundaries - Increased motivation and commitment

- More possibilities for meaningfulness on the job

Smart Clustering Sales - Smart Target MarketingClustering based on the value - Higher quality products and servicescreation framework

Smart Solutions Sales and - Increased customer loyaltyA new method leading in an easy way Marketing - Higher quality products and servicestowards smart solutions - Innovation

Customer Advisory Board Sales and - Increased customer qualityMarketing - Customer oriented innovation

- Increased loyalty of customers

Systemic Finance Finance - Financial savingsNew ways and new instruments of - Higher stability of the Corporate ecosystemfinancing based on the Corporate Ecosystem - New financial instruments, e.g. CES securities

Advanced IT IT - Shared developmentIT approaches shared by members of - Higher stability of systemsthe Corporate Ecosystem - Better leverage of IT

Reinventing the corporate value Business - Fast enhancement of the value creationcreation Development process

Corporate - Higher value creationDevelopment - Strategic innovations

CEO Circle CEO - Increased development speedA platform for CEO’s of the Corporate - Increased corporate strategic andEcosystem for communication operational agilityand cooperation - Higher agility

- CEO development- Improved partnerships

Exhibit II: Synopsis of Proposed Initiatives to Leverage theCorporate Ecosystem

develop the capabilities necessary tocreate corporate social networks andinnovative techniques for“neighborhood communication” withinlarge networks.12

Another possibility includes thebundling of initiatives to be deployed bydifferent functional units of theorganization, as exhibited in Exhibit II.These kinds of initiatives can eventuallyencompass all activities of the organization.

The proposed initiatives can lead tohigher performance and increasedsustainability and eventually lead to

higher market value of the corporateecosystem. Once these differentinitiatives show sustainable positiveresults, they can be developed into a SITT.

Who Should Be the Driver?Looking at the large array of possibleinitiatives, it is clear that themanagement team has to be the driverof the entire process of leveraging thecorporate ecosystem. Nonetheless, thehuman resources manager who normallypossesses generalist business experiencecan be the facilitator. In some situations,

it would make sense to create a newposition within the management teamdedicated to this purpose. In any case,there have been many recent calls in thehuman resource management arena fornew roles to be given to the HR position,especially during times when many ofthe traditional HR activities are beingoutsourced. Dave Ulrich, one of theleading HR scholars, proposed in themid-1990s that the new core role of theHR professional in modern organizationsis to be a champion of change13. SimonDolan and his colleagues call for the HRmanager to become the driver for culturereengineering.14 This is a uniqueopportunity for HR professionals tofacilitate and to drive the creation of asignificant new value for the corporation.Some of these initiatives include theimplementation of a talent innovationboard, expanded people managementand smart solutions – these are allmethodologies than can be used by thisnew generation of HR professionals.15

HR professionals are also becominga principal voice encouraging companiesto take into account issues ofsustainability. There is growing evidencethat companies whose policies andproducts are in accord with standardsof sustainability, i.e., consideration ofthe effects on our natural environmentas well as on people, both locally andglobally, are gaining a larger and more12 For example, the solutions developed by

Beabloo (http://www.beabloo.com). Beablooproposes offering the closest link betweencitizens and their surroundings, creating a newmethod of being connected and experiencingthe city.

13 David Ulrich (1996) Human ResourceChampions, Harvard Business Press.

14 See for example: Simon L Dolan, Salvador Garciaand Bonnie Richlie: (2006) Managing by Values:Corporate Guide to Living, Being Alive and Makinga Living in the 21st Century, Palgrave Macmillan.

15 For more information on the emerging HR roles,see: Simon Dolan, Tania Saba, Susan Jacksonand Randall Schuller (2008), La gestion desResources Humaines: Tendences, enjeux etpratiques actuelles, 4th ed, Pearson Education.



loyal customer base. Also notable arethe more loyal and energetic workforcethat is produced by organizations thatdemonstrate care for employees and theirfamilies. Indeed, taking into accountissues related to sustainability isincreasingly becoming a key to innovativeand successful management.

Recent writings predict thatsustainability will become the next bigtopic for human resource managementafter internationalization andglobalization. In a recently publishedbook, Ina Ehnert explains how a paradoxperspective contributes to understandingand coping with paradoxical tensionsand how sustainability can be used asa ‘deliberate strategy’ for HRM. Sheargues that the notion of sustainabilityopens up a new strategic role for HR.She further examines how 50 Europeanmultinationals communicate theirunderstanding of sustainability andHRM, and which HR issues and practicesthey are linking to the topic.16

All the above may suggest that newways to manage people will emerge inthe 21st century. For example,organizations could see the creation ofa people advisory board comprised ofrepresentatives from different groupsof people relevant to the company.Perhaps, even customer representativeswill be invited to sit on the companyboard. This more participatoryorganizational structure is actually, asEisler shows, extremely successful byencouraging innovation and building the

mutuality that makes for trust andenduring relationships.17

The Organization of theFuture is Being ExploredWhy Not?Looking at the potential of the corporateecosystem, one can ask why companiesare not further exploring more adaptiveand innovative management approaches.The answer is perhaps connected withthe legacy of our management thinkingand the way we have learned to managean organization. The business schoolsprefer to research cases and to conveybest practices learned from priorexperiences instead of developing newways to manage and create value. Otherreasons could include all of the following: Companies are too internally focused

and are not used to thinking andacting beyond the corporateboundaries

Executives are absorbed with internalpolitics, restructuration andreorganizations

Management action is only appliedin areas where they have directcontrol

Executives do not know how tomanage people outside theirstructure

Fear to open-up and to go beyond Customers are considered to be

beyond the corporate firewall Companies are focused towards the

top, i.e., inside The old paradigm equated managing

to control whereas, the new oneimplies that managing equals toachieving. 18

ConclusionWe need to go beyond the existingprinciples and paradigms in management

in order to find new ways and newsolutions as we have argued in our bookBeyond which describes the ongoingtransformation of business and society.19

In his book, The Future of Management,20

Gary Hamel argues that organizationsneed management innovation now morethan ever. To thrive in the future,companies must reinvent management.He rightfully claims that we are becomingthe prisoners of our paradigms21 andinnovations are being curbed because ofthis. Perhaps the growing inability oforganizations to independently solve theirmanagement challenges (which is the coreconcept of the ecosystem) will unleasha wave of innovations. Several newmethodologies have been proposed inthis short paper and more structuredmethodologies can be made available forcorporate managers to proactively developstrategies for managing business risksand opportunities arising from theircompany’s dependence and impact onecosystems.

We need entrepreneurial managerswho dare to go beyond the establishedand accepted rules, principles andparadigms. They run the risk that theywill find themselves outside the acceptedeconomic frameworks, but they may alsoreap the rewards of pioneers. All businessschools that wish to contribute to thedevelopment of the field and thesustainable global economy should createmanagement innovation labs where newways of management are researched,designed, developed and tested.22

Note: If you or your company is interested in theseconcepts, kindly contact [email protected] andwe will be happy to make you part of this innovativesocial laboratory.

16 Ina Ehnert (2009) Sustainable Human ResourceManagement. Springer science.

17 Riane Eisler, Op. Cit. 200718 In the Real Wealth of Nations, Eisler explains

the concept of hierarchies of actualization wherethe knowledge and talents of all members ofthe group are supported and used. Ibid.

20 Raich & Dolan, Beyond, Op. Cit. 200821 The Future of Management, Gary Hamel.

Harvard Business School Press, 200722 Ibid, p.12 Reference # 03M-2010-02-05-01

© 2010 Dr. Mario Raich, Dr. Simon L Dolan,

Dr. Riane Eisler. All Rights Reserved.



Ext Ad 5



Steve Jobs and The K.I.S.S. Theory

The Moral of theMoment

I’ve never been much of an “Apple Man.”When it comes to computing, I guess

you could say I’m a “Microsoft Man.” Whatmakes me a “Microsoft Man” you mightask? That I can answer in one word;simplicity. I happened to go to school inthe late 70’s and remember taking acomputer science class. I can rememberbeing told about Fortran and COBOL, andother computer languages. I can alsoremember punching holes in IBM cardsto teach my computer how to execute mycommands. Oh, and I can remember oneother thing. I remember never wantingto take another computer science class orget near the university’s computer sciencebuilding with a ten foot pole.

Want to really go on a trip down memorylane? Start your computer and move outof your cozy windows environment and seewhat you can do with the “C prompt” thatawaits you. I’m willing to guess one of thebad dreams you may have had in the pastthat you could not quite remember mayhave had something to do with you havingto fix something on your computer in theland of “Dos.”

Meanwhile Steve Jobs and Apple werebusy working on one simple theory – the“K.I.S.S. theory” as we’ll call it. We neededa better way to navigate around ourcomputer. Apple came up with a way towork with icons on a screen, pull down

menus to get even more information andinserted this revolutionary approach intosome of its first computers. I should know;I owned one. It was a Mac Classic, and itran like a top. No more Dos prompts. Nomore programming headaches. It was sogood and Bill Gates liked it so much, aftervisiting with his friend Steve Jobs he builtone of his own using the same “K.I.S.S.theory” and called it windows… and we allknow how well that went for Mr. Gates.

We also needed to be able to interfacewith the computer more effectively. SteveJobs came to our rescue again, and presto;we were introduced to the “mouse.” If youthink the mouse was born and raised asan Apple invention you would be wrong.Xerox was working with a version of themouse well before Apple. However, usingthe “K.I.S.S. theory”, Steve Jobs made iteasy to use, affordable and brought it tomarket. That went pretty well too.

No, I’ve never been an “Apple Man,”- that is until about a year ago when Ihad to purchase a new phone. I was kindof old fashioned about my phones. I justwanted the phone to be, well, a phone.I had seen the other devices with all theirbells and whistles, but I came from theXerox school of selling. I guess you couldsay Xerox believed in the “K.I.S.S. theory”as well. We were taught, what good is afeature if no one knows how to use it?



The Moral of the Moment

No, my phone was a phone! Steve Jobsand Apple came to the rescue onceagain. Not only does my so-calledphone answer calls, it gets my mail,coordinates my calendar, maintainsmy contacts, syncs up with my othercomputers, keeps my flight schedules,tells me the weather, lets me text, keepsstray notes, acts as a tape recorder,provides me directions, tells me thetraffic, provides me with an alarmclock, provides me with anyinformation I need from the Internet,takes pictures, lets me listen to music,and effortlessly connects me toFacebook, Tweeter, and the Internet.And that’s just my first page of freeapps. What’s more, none of this wouldmatter if Steve Jobs and Apple did not Reference # 03M-2010-02-06-10

© 2010 Rob Jolles. All Rights Reserved.

Rob JollesThe founder and president of

Jolles Associates, Inc., Rob Jolles

is one of the most sought-after

speakers in the US. Author of two

Best-selling books, Rob inspires

and demonstrates proven

repeatable and predictable

methods to improving sales-

oriented businesses. A 15-year

professional speaking veteran, it’s

not hard to tell why Rob’s personal

client list reads like a “Who’s-

Who” of Fortune 500 Companies.

Rob provides valuable, experience-

based sales training to his clients,

in an informative, and enjoyable

fashion.

make their product incredibly easy touse.

The moral of the moment is thatSteve Jobs reminds us of one of the mostimportant ingredients of success thatremains a constant in business. Hereminds us that utilizing the “K.I.S.S.theory” can not only improve our wayof life, it can make you a very wealthyperson. What does “K.I.S.S.” stand foryou ask? It’s an old theory that someof us know and need to be remindedof, and others might be hearing it forthe first time. K.I.S.S. stands for, “KeepIt Simple Stupid.” Words to live by.



Building a New Competency

The Need for Managersto Have GreaterCultural Intelligence

Cultural Intelligencefocuses specifically onindividual differencesin the ability todiscern and effectivelyrespond to dissimilarcultures. This skill isvital for globalmanagers,organizations andbusinesses so as toacculturate tomultiethnicinstitutionalenvironments. Shifting patterns of globalization,

internationalization and politicalenvironments can make intercultural workmuch more the norm for manyorganizations. Today’s managers andorganizations will be required to work indiverse (even multiple) contexts ofmulticultural, multiracial and multilingualenvironments. These render ethnocentrismin business even less relevant. Interculturaldifferences have long been a challengeconfronting multinational organizations(Hofstede, 1991). In the face of new globalchallenges and cultural adaptation issues,Earley and Ang (2003) propose a model ofcultural adaptation called ‘CulturalIntelligence’ (CQ). This is an area ofincreasing interest in relation to work,1 alongwith the linked concepts of ‘Emotional

Intelligence’ (EQ) and ‘Social Intelligence’(SQ).

Cultural Intelligence (CQ)According to Earley (2003), CQ refers to aperson’s capability to adapt effectively tonew cultural contexts. This adaptationrequires skills and capabilities quite differentfrom those used by people within their owncultural context. Three general componentscapture these skills and capabilities, theseare: metacognitive/cognitive; motivational;and behavioral (see Exhibit I).

The first component of CQ ,metacognitive/cognitive CQ refers to aperson’s cognitive processing to recognizeand understand expectations that are

1 see, inter alia, Hooker, 2003; Peterson, 2004; Tanet al 2006



Professor Chris Rowleyis the Director of the Centre for

Research on Asian Management

and Professor of Human Resource

Management at City University.

He is Editor of the leading journal

Asia Pacific Business Review,

Series Editor of the Working in

Asia and Asian Studies book

series and Technical Advisor

(Research and Publications) for

the HEAD Foundation, Singapore.

He has visiting appointments at

leading Asian universities and

several journal editorial boards.

He has given a series of talks and

lectures to universities and

companies internationally and has

research and consultancy

experience with unions, business

and government. His previous

employment includes varied work

in both the public and private

sectors. He researches in a wide

range of areas, including

international human resource

management and Asia Pacific

management and business. He

publishes widely, including in

leading American and British

journals with over 330 articles,

books and chapters and other

contributions.

The Need For Managers To Have Greater Cultural Intelligence

Exhibit I: Key Components and Characteristics of CQ

Source: Developed from: Earley (2003)

CQ

Metacognitive/Congnitive- Knowledge- Experience

Behavioral- Communication- Behavior

Motivational- Intrinsic motivation- Self-efficacy

appropriate for cultural situations. It canbe further broken down into twocomplementary elements – knowledge andexperience. The first component,metacognitive knowledge, refers to whatand how to deal with knowledge gainedin a variety of circumstances and reflectsthree general categories of knowledge(Flavell, 1987). First, it reflects the ‘personaspects’ of knowledge. Second, it reflects‘task variables’, or the nature of theinformation acquired by a person. Third,it refers to the strategy variables or theprocedures used to achieve some desiredgoals (Earley, 2003). The second componentof CQ, metacognitive experience, refers toconscious experience about what arerelevant experiences and how to incorporatethem as a general guide for futureinteraction.

People from certain cultures possessmetacognitive characteristics that differ fromthose of people from elsewhere. Studies oftenconfirm that differences in the pattern andstyle of decision making of western and non-western cultures relate to distinctivemetacognitive experience. For example, deep-rooted differences in experience, culture andvalues in Asian economies may imply diversemanagement practices than those in the West(Rowley and Poon, 2008), hence requiring

different CQ from managers and businesses.The second component of CQ ,

motivational CQ, is a self-concept whichdirects and motivates oneself to adapt tonew cultural surroundings. Knowing oneselfis not sufficient for high CQ becauseawareness does not guarantee flexibility.A certain level of cognitive flexibility iscritical to CQ since new cultural situationsrequire constant reshaping and people andmanagers must be motivated to use thisknowledge and produce a culturallyappropriate response. According to ‘culturalself-representation theory’ (Erez and Earley,1993), the ‘self ’ can be thought of asembedded within a general system ofcultural context, management practices,self-concept and work outcomes. Early(2003) conceptualizes motivational CQ as:intrinsic motivation – the drivers ofperformance that originate from within anindividual; and self-efficacy – people’s beliefthat they can be effective on a given task.These are both key aspects for organizations,management and performance, of course.The third component of CQ, behavioral CQ,reflects the ability to utilize culturallysensitive communication and behaviorwhen interacting with people from culturesdifferent from one’s own. This CQcomponent reflects a person’s/manager’s



Exhibit II: Examples of Cultural Competences

Source: Developed from: O’Sullivan (1999); Taylor (1994).

Ability in Multipleand Diverse

Environments

CulturalKnowledge

Positive Attitudesto Learning

Focus on BothTasks and

Relationships

Ability to Adopt toDual Foci

Flexibility

EmotionalStability

Tolerance forAmbiguity

Communica-tion Skills

CulturalCompetencies

Irene Hon-fun Poon,

has been a human capital

consultant for many years.

She has extensive experience

of consulting in the Asia

Pacific, including the

People's Republic of China,

Japan, Hong Kong,

Philippines and Southeast

Asia. Her experience has

covered a wide range of

business environments from

specialized compensation

program to strategy

management, from

government to financial

markets and entertainment.

Key projects include

corporatization of the first

government department,

design of compensation

schemes for first Disney

theme park in the Greater

China, harmonization of

organizational culture for

merged entities,

development of performance

scheme for central bank, and

so on.

ability to acquire or adapt behaviorsappropriate for a new culture. Thus, theneed for this for management andorganizations is clear.

Cross-Cultural Competencies,Skills and AbilitiesFor organizations and management, thespread of global economic interactions andhighly competitive marketplacesincreasingly requires sophisticatedcompetencies necessary to work with peoplewith different values, assumptions, beliefsand traditions. A competency refers to areasof personal capability that enable managersand employees to successfully perform theirjobs and achieve outcomes. Numerousauthors have sought to describecompetencies. Some portray competenciesas motives, traits, self-concepts, attributes,

values, content knowledge, and cognitiveor behavioral skills. Others describecompetencies as any individualcharacteristics that can be measured orcounted reliably and that can be shown todifferentiate significantly between superiorand average performers or between effectiveand ineffective performers (Spencer et al.,1994).

Furthermore, there are perennial issuesconcerning the competencies of successfulmanagers. These include whether they areuniversal or organization-specific, whetherthey actually ‘evolve’ (Katz, 1955) andwhether the absence of one can becompensated for by the presence of another.These areas are related to the training anddevelopment (T&D) of competencies.

Competency models are useful for T&Din several ways. First, models identify



Exhibit III: Dimensions in Cross-Cultural Competency

Source: Developed from: Chen and Starosta (1996).

Cross-CulturalCompetency

Cultural AwarenessMore self-awareness

Cultural SensitivityValues and attitudes of:openness; non-judge-

mental attitudessocial relaxation

Cultural AdroitnessWhat to do and not to do

Exhibit IV: Definitions and Dimensions of CQ, EQ and SQ

Source: Developed from: Earley (2003); Thorndike (1920); Walker and Fry (1973); Ciarrachie (2006).

CQCapacity to adapt effectively to new cultural contexts

EQRecognize meanings and emotions

and their relationships

SQUnderstand and manage people and

act wisely in human relations

Skills: Intrapersonal; Interpersonal;Adaptability; Stress Management;

General mood

Approaches: 1.Cognitive: react tointerpersonal stimuli;

2. Behavioral: effectiveness/adaptivenessof performance;

3. Cognitive and behavioral orientations

behaviors needed for effective jobperformance and provide a tool fordetermining the skills needed to meettoday’s needs as well as the organization’sfuture skill needs. Second, models canprovide a framework for ongoingcoaching and feedback to developemployees and managers for current andfuture roles. By comparing their owncurrent personal competencies to thoserequired for a job, managers andemployees can identify competenciesthat need development and choosecommensurate actions to develop thosecompetencies further.

While general competencies areimportant, there are also unique cross-cultural competencies, skills andabilities required to respondeffectively to people of variouscultures, languages, classes, races,ethnic backgrounds, religions andother diversity factors (Rowley et al,2010). Operationally defined, culturalcompetence is the integration andtransformation of knowledge aboutindividuals and groups of people intospecific standards, policies, practicesand attitudes used in appropriatecultural settings to increase the qualityof service, thereby producing betteroutcomes.

Importantly, cultural competence isnot static, nor does it come naturally,but it requires re-learning and un-learning about cultural diversity. Aninventory of cross-cultural competenciesidentified by researchers andpractitioners (e.g. O’Sullivan, 1999;Taylor, 1994) includes, among others,aspects such as: communication skills;tolerance for ambiguity; emotionalstability; flexibility; ability to adapt todual foci; focusing on both tasks andrelationships; positive attitudes tolearning; cultural knowledge; and abilityto succeed in multiple and diverseenvironments (see Exhibit II).

Borrowing from Chen and Starosta(1996), cross-cultural competency canbe presented as a three-part process thatleads to ‘cultural awareness’, ‘culturalsensitivity’ and ‘cultural adroitness’.This can be seen diagrammatically inExhibit III. First, cultural awareness,wherein once people become more self-aware they tend to be better atpredicting the effects of their behavioron others. After people learn somethingabout other cultures, they know howto adjust their behavior to better meetthe expectations of the new institution.Second, cultural sensitivity, includesvalues and attitudes such as open-mindedness, non-judgmental attitudesand social relaxation, in order tounderstand the value of different culturesand become more sensitive to the verbaland non-verbal cues of people from othercultures. Third, cultural adroitness, whenpeople know what to do and what notto do, they will be able to communicatemore effectively without offending anyparties.

CQ vs EQ vs SQTwo concepts closely related to CQ are

The Need For Managers To Have Greater Cultural Intelligence



EQ and SQ. EQ refers to a person’s abilityto recognize the meanings of emotionsand their relationship and to reasonand solve the problem basis of them(Ciarrachie et al, 2006). It involves aperson’s capacity to perceive emotions,assimilate emotion-related feelings,understand the information of thoseemotions and manage them (Mayer andSalovey, 1997). According to Goleman(1995), two processes demonstrate EQ.First, a person must be able to respondto the arousal from an external stimulus.Second, this person, within a shortperiod of ‘reflection’ time, must assessthe meaning and quality of theiremotional response and act on thatunderstanding in an adaptive fashion.For Bar-On (2000), EQ is conceptualizedas a set of non-cognitive capabilities,competencies and skills that influencea person’s ability to successfully copewith environmental demands andpressures. These capabilities andcompetencies comprise skills thatinclude: intrapersonal, such asemotional self-awareness;interpersonal, such as empathy,adaptability, f lexibility; stressmanagement, such as stress toleranceand impulse control; general mood, suchas happiness and optimism.

The second related concept is SQ.Earlier theorists, such as Thorndike(1920), conceptualize SQ as the abilityto understand and manage people andact wisely in human relations. Walkerand Foley (1973) further elaborate SQin three approaches. First, it is the abilityto react cognitively to an interpersonalstimulus. Second, it is defined in termsof behavioral outcomes and is conceivedas the effectiveness or adaptiveness ofone’s social performance. Third, itincludes both cognitive and behavioral

orientations. These concepts and mainelements can be seen in Exhibit IV.

ConclusionClearly CQ is important, becoming evenmore so, for management with theinternationalization of business. CQ isclosely related to both EQ and SQ.However, an emotionally intelligent orsocially intelligent person or manageris not necessarily then automaticallyculturally then intelligent. Theemotionally intelligent manager is ableto effectively separate out two featuresof a person’s behavior: those that areuniversally human; and those that arepersonal and idiosyncratic. The culturallyintelligent manager, in contrast, is ableto separate out three features of aperson’s behavior: those that areuniversally human, those that are Reference # 03M-2010-02-07-01

© 2009, Professor Rowley, All Rights Reserved.

idiosyncratically personal; and those thatare rooted in culture. In other cases, somemanagers can be highly sociallyintelligent within their own culturalsetting, but rather culturally unintelligentand, therefore, ineffective in novelcultural settings. The implications formanagement and business are obvious.

In sum, CQ focuses specifically onindividual differences in the ability todiscern and effectively respond todissimilar cultures. This skill is vital forglobal managers, organizations andbusinesses so as to acculturate tomultiethnic institutional environments.The lazy, more ethnocentric views andapproaches to management and businessthat have all too often been seen, needto be updated.



Ext Ad 6



For Better Service

Competing withCustomer Value Added

Strategies that aresuccessful againstcompetitors shouldfocus on creatingCVA® that is greaterthan those producedby competitors. To doso, one must firstregularly measure andmonitor CVA® byexamining itscomponents,perceived value andvariable costs per unit.Next, one mustdevelop strategiesand tactics to increaseCVA® effectively andefficiently. In the longrun, the organizationthat succeeds inachieving andmaintaining thehighest CVA® wins.

Well-known management consultantsand authors have often tried to

simplify competitive strategy by suggestingthat winning strategies need to be focusedeither on customer value or on costs. Sucha premise is false and potentially dangerous.Successful strategies must simultaneouslybalance both customer value and costs.Managers can achieve strategic success byfocusing on customer value added – anobjective that combines both customer valueand cost. 1

Customer Value AddedCustomer value added for a unit of a productor service is the difference between theperceived value and cost per unit (ExhibitI). Perceived value is the maximum acustomer will pay for the product or service.

Perceived value is not price – it is the ceilingon the price of the product or service. Costper unit is variable cost per unit, not averageprice per unit. Average price can distortdecisions by masking the incremental profitfor a product or service.

Customer Value Added (CVA®) is thenet value per unit that an organizationprovides to the society – as perceived bymembers of that society. If CVA is high,then an organization is adding substantialvalue to society because perceived valueexceeds costs. However, if CVA is low, thenan organization is not adding substantialvalue to society but rather adding only asmall amount in excess of their costs. At1 For more discussion of these ideas, see Donald E.

Sexton, Value Above Cost: Driving SuperiorFinancial Performance with CVA®, The MostImportant Metric You’ve Never Used, Upper SaddleRiver, NJ: Wharton School Publishing, 2009.



Donald E Sextonis Professor of Business and

Director of Jerome A Chazen

Institute of International

Business, Columbia University.

Don received his PhD and MBA

from the University of Chicago,

has been teaching for more than

forty years at Columbia in the

areas of marketing and

quantitative methods, and is a

recipient of the Business School’s

Distinguished Teaching Award.

Don is a visiting professor at the

China Europe International

Business School in Shanghai and

has also taught at the University

of California-Berkeley, INSEAD,

the Indian School of Business,

Skolkovo – the Moscow School of

Management, the Australian

Graduate School of Management,

the US Business School in Prague,

and the Hong Kong University of

Science and Technology. His

articles have appeared in

numerous publications such as the

Harvard Business Review,

Journal of Marketing, and

Management Science. He is

frequently quoted in media such as

The New York Times,

BusinessWeek, Advertising Age,

WCBS, and Beijing’s China

Economic Daily.

Competing with Customer Value Added

the extreme, if CVA is negative, anorganization is destroying value to societysince the value of their outputs is then lessthan the cost of their inputs. When CVAis negative, in a free market, an organizationwill cease to exist.

Price divides CVA® between the marginper unit earned by the organization andthe incentive per unit (perceived value lesscost) obtained by the customer. Skimmingpricing strategies – high prices – arecharacterized by high margin per unit butlow unit sales volume since there is littleincentive for most customers to purchase.Penetration pricing strategies – low prices– are characterized by low margins and highunit volume due to the large incentive forcustomers to purchase.

Measuring CVAPerceived value can be measured inmonetary units with a variety of approachessuch as value-in-use, constrained choicemodels, econometrics, and judgment.2 Byestimating perceived value in monetaryterms, it can be compared directly to costs.

Costs should be separated betweenvariable and fixed costs. The variable costsper unit consist of the incremental costsrequired to provide the customer with aunit of the product or the service. Such costs

are the costs relevant to CVA since thevariable costs are directly comparable toperceived value per unit. Fixed costs arenot ignored in CVA analyses; they areconsidered later when profit is calculated.

CVA and StrategyBusiness strategies can be classified withthe Strategic Themes Matrix (Exhibit II).In the author’s formulation of this matrix,the vertical axis represents the perceivedvalue and the horizontal axis, theincremental cost per unit, so in the samematrix it is possible to see both thecustomer value theme and the cost theme.

The most powerful strategic positionis in the upper right – highest perceivedvalue and lowest cost per unit – whichcorresponds to the highest value of CVA®.An organization in that position will winagainst any other organization (ExhibitIII). The organization can lower price andstill have higher contribution per unitagainst another with an equally highperceived value. Against an organizationwith equally low cost per unit, theorganization can provide the customerwith higher value over price. It should beapparent that the strategy in the upperright cell – the cell corresponding to thehighest CVA® – is the most powerful.However, studies have corroborated thestrength of that position.3 Few companiesachieve that position but, for example,at present the very successful SouthwestAirlines occupies that position in the USairline industry.

If no organization occupies the upperright hand cell in an industry, then thestrategies corresponding to the middlecell in the top row – highest perceived value

2 See Value Above Cost for discussion of variousways to estimate perceived value.

3 See, for example, William K. Hall, “SurvivalStrategies in a Hostile Environment,” HarvardBusiness Review, September, 1980, pp. 74-85.

Exhibit I

Source: Donald E. Sexton, “Pricing, Perceived Value, andCommunications,” The Advertiser, April, 2006, pp. 56-58..Used with permission.

CVA®

(Range ofPossiblePrices)

Perceived ValuePer Unit

Incentive Per Unit

Price

Variable MarginPer UnitVariable DeliveredCost Per Unit

0



and acceptable cost – and the middlecell in the right-hand column – lowestcost per unit and acceptable perceivedvalue – can also be winning strategies.

The Problems with GenericCompetitive StrategiesSome management gurus havesuggested generic strategies basedeither on customer value or cost.4

Either type of generic strategy hasweaknesses (Exhibit 4).

A cost-based generic strategy single-mindedly places lowering costs as the maingoal. Decreasing costs can certainly bedesirable but not if the process ofdecreasing costs results in a loss of valueas perceived by the customers. If customervalue falls more than the decreasedcosts,then CVA® declines and value producedfor society is diminished. Depending onwhere the price is set, either the customeris worse off (due to a lower differencebetween perceived value and price) orthe organization is worse off (due to alower margin per unit) or both are worseoff.

A customer value-based genericstrategy is preoccupied with ‘delighting’customers. However, if no expense isspared in making customers happy, thencosts may increase so that they morethan offset any value increase. Again,depending on the price, either thecustomer is worse off due to a lowerincentive or the organization is worseoff with a lower margin per unit or bothare worse off.

CVA® oriented strategies are focusedon the relationship between perceived valueand cost. Actions are taken which maximizeCVA® as opposed to minimizing costswithout regard to the impact on customervalue or maximizing customer valuewithout regard to the impact on costs.

Sexton’s Contribution LawIncreasing CVA® increases contribution.However, the impact of changes in CVA®is non-linear. More precisely:

The change in contribution due toa change in CVA® is in proportion tothe square of the relative change in CVA®.

Sexton’s Contribution Law can beproved with basic economics and thecalculus.5 The law is also consistent withcommon sense. Any increase in CVA®leads to an increase in both variablemargin per unit and unit demand.Because contribution is the product ofvariable margin per unit and unitdemand, contribution increases with thesquare of the relative change in CVA®.The reverse is also true – any decreasein CVA® leads to a decrease in variablemargin per unit and unit demand whichaffects contribution in proportion to thesquare of the relative decrease in CVA®.

Increasing CVA®To manage CVA®, one manages its twocomponents, perceived value and unit cost.

Perceived value can be increased by: Understanding customer needs and

designing products and services tosatisfy those needs at reasonablecosts. The on-line retailer Zapposprovides a wide product selection andunsurpassed service to its customers.The added costs of providing theseservices are more than offset by theadditional value given to thecustomers.

Ensuring that customers know thebenefits provided to them. EastmanChemical has effectivelycommunicated the flexibility of itsSpectar plastic to potential customersby using advertisements showing theplastic tied into knots.

Identifying gaps between whatcustomers perceive to be theperformance on a benefit and theactual benefit and then developingcommunications to close those gaps.Early FedEx ads dramaticallydemonstrated their consistency infulfilling their overnight deliverypromise by showing the percentageof FedEx packages that arrivedovernight versus the percentage fortheir main competitor.

Increasing the actual performance ona benefit of high priority to customersand communicating thatimprovement to the customers. AfterFord had enlisted the help of famedquality expert Dr. W EdwardsDeming, they informed customersof their quality improvements withthe ad tagline, “Have you driven aFord lately?”

Adding desirable benefits to a productor service and communicating thosechanges to customers. In the US beerindustry, Coors and Budweiser haveemployed ads showing how their new

4 See, for example, Michael E Porter, CompetitiveStrategy, New York: Free Press, 1980; MichaelTreacy and Fred Wiersama, The Discipline ofMarket Leaders, New York: Addison-Wesley,1995; and Jack Trout, Differentiate or Die, NewYork: Wiley, 2000.

5 see Sexton, Value Above Cost.

Exhibit IIStrategic Themes

Perc

eive

d Va

lue

Per U

nit

Incremental Delivered Cost Per Unit

High

Medium

Low

High Medium Low

Source: Donald E. Sexton, “Keys to Strategic Success,”Effective Executive, January, 2007, pp. 32-34. Usedwith permission.



packaging ideas have improved thetaste of their products.

Making customers aware of whycertain benefits are important tothem. Land Rover has focused onfeatures such as seating capacity tosell automobiles to families so that“no one would be left behind.”

Building associations with strongbrands. Over many years, Foster’sbeer in the US has been describedas “Foster’s – Australian for beer,”building a strong association betweenFoster’s and the country brand‘Australia’ which has a very positiveconnotations in the US.

Bundling benefits. Lenovo hasfocused on their many product

innovations to develop a bundledbenefit connected to designengineering.

Per unit costs can be decreased by: Removing benefits that the

customers do not want or need. DowCorning developed their Xiameterbrand for customers who were ableto purchase it on the Internet anddid not wish to pay for technicalexpertise they did not require.

Lowering performance on benefitsof relatively less importance tocustomers.One telecommunicationscompany saved money by cuttingback on telephone customer serviceresponse time when researchshowed customers were indifferent

to response time within a broadinterval.

No longer communicating benefitsof little or no importance tocustomers. Most airlines no longertout the quality of their food, drink,and entertainment – most focus onbenefits of higher priority to theirpassengers such as courtesy orreliability.

Employing value-engineeringthinking to change product or servicedesign so that costs are decreasedwith little impact on perceived value.Marriott utilized constrained choicemodeling to optimize the customervalue for guests in their Courtyardchain of hotels.

Evaluating brand communicationexpenditures and decreasing thosewith little or no impact on customerperceived value. Decisions, such aswhether or not to place a companyname on a sports stadium shouldbe subject to rigorous financialevaluations.

ConclusionStrategies that are successful againstcompetitors should focus on creatingCVA® that is greater than thoseproduced by competitors. To do so, onemust first regularly measure andmonitor CVA® by examining itscomponents, perceived value andvariable costs per unit. Next, one mustdevelop strategies and tactics to increaseCVA® effectively and efficiently. In thelong run, the organization that succeedsin achieving and maintaining thehighest CVA® wins.

Reference # 03M-2010-02-08-01

© Copyright 2009, Donald E Sexton. All Rights

Reserved.

Competing with Customer Value Added

Exhibit III: Strategic Positions

VariableDelivered CostPer Unit

CVA®



Variable DeliveredCost Per Unit

00

Variable DeliveredCost Per Unit


Lowest Cost Highest Percevied Value Winning Strategy: Highest PerceivedValue and Lowest Cost

CVA®

CVA®

Source: How Marketing Affects Shareholder Value, The Arrow Group, Ltd.®, New York, NY, 2008. Used here withpermission

Exhibit IV: Orientations

?

VariableDelivered CostPer Unit

0

?

PerceivedValue Per unit

0

CVA® Orientaton: Value andCost Managed

Value Orientation: CostNot managed

Cost Orientation:Value Not Managed

Source: How Marketing Affects Shareholder Value, The Arrow Group, Ltd.®, New York, NY, 2008. Used withpermission.

CVA®CVA® CVA®

0



Lessons for 2010

Why 2009 was theMost ExtraordinaryYear of My Life

2009 was the most extraordinary yearof my life not because of what I earned

but rather because of what I learned. Theyear was filled with more learningexperiences on more areas of my life thanany other. My hope is that some of theselessons will be of value to you in 2010.

The Value of LifeThe single biggest lesson for me was to valuethe value of life to a greater degree.

From July 2008 to May 2009 siximportant people in my life died: AuntLoretta, Aunt Marie, Aunt Helen, my cousinLarry, my good friend Kevin Wade, and mydad. The hardest of all of these was losingmy dad. Dad was an encourager. Even thoughI don’t think he ever really fully understoodwhat I do for a living, he always keptencouraging me and showing interest inmy work. Dad died six weeks before his 80th

birthday.Next to my desk I have a letter I wrote

to him on his 75th birthday. It summarizedmany of the main events and routinehappenings in our lives together. Dad madea copy of it, wrote a note on it, and gaveme that copy. I never understood why hedid that since the letter was from me tohim. Now I’m so thankful he did. At theend of the note he wrote, “Dan, I love youforever, Dad.”

On his 75th birthday I took him to a St.

Louis Cardinals baseball game. We sat andtalked all night. He told me about hisvolunteer efforts with the Hibernians andwith Mother Theresa’s Soup Kitchen. I said,“Where do you find the energy for all ofthat?” He said, “You never know how longyou’re going to live. You have to make themost of your time while you can.” Two yearslater he was in stage two of a terrible diseasecalled Dementia with Lewey Bodies. A littlemore than two years later he was dead.

I’m so grateful that for the last eightdays of his life I got to kneel by his side,hold his hand, kiss his forehead, and tellhim over and over how much I appreciatedwhat he did for me and how much I lovedhim. His last three words to me a few daysbefore he died were, “…love you, too.” Afew hours before he died almost everythingshut down for him. His eyes glazed over,his mind was gone, his muscles stoppedworking, and the blood was leaving his feetand hands. However, his heart was pumpingas strong as ever. I’ll never forget that. Thestrongest part of Dad until his very lastsecond was his heart. I NEVER let a daygo by without hugging my wife, Barb, andour children, Sarah and Ben, multiple times.Remember the value of life.

A few months ago members of my churchhelped to organize a special fundraiser forour good friend, Shannon, who lost herhusband to cancer in 2008. It was an awesome



Dan Coughlinis a student and teacher of

practical processes that improve

business performance. His purpose

is to work with executives and

managers so they achieve great

performances. He is a business

keynote speaker, management

consultant, executive coach, and

author of three books on

management performance,

including his newest, The

Management 500: A High-

Octane Formula for Business

Success (AMACOM 2009), which

has been endorsed by Jason

Jennings, Marshall Goldsmith,

and Brian Tracy. Dan’s clients

include Coca-Cola, Abbott, Toyota,

Prudential, Shell, Boeing,

Marriott, McDonald’s, Denny’s,

and the St. Louis Cardinals.

Why 2009 was the Most Extraordinary Year of My Life

night. 600 people showed up and we raisednearly $30,000. As Shannon stood behindthe podium with her three young childrenand celebrated her husband Scott’s life, I wasreminded again of the value of life.

These are tough economic times forthe world. I know you’re busy trying yourbest to create and deliver value for yourcustomers and to take care of your family.However, in the end life is aboutrelationships. Life is about making timefor our family and friends and reallyinvesting ourselves in their lives. In theend our lives are not that long and we neverknow how much time we have left withanyone. Focus your attention on people,not things and not honors and not rewards.

The Value of TimeThis is connected to the value of life. I can’timagine wasting time anymore. There issimply too much to do: my family, my work,my friends, my workouts, my volunteerefforts, my reading time, and so much more.Every month I have lunch and recess witheach of my two children. Total investment:100 minutes a month. That’s priceless timeto me. Every day I read for 30-60 minutes.Again, priceless. My wife, Barb, and I havefour to five television shows a week welike to watch together by ourselves. That’sour fun time. I write blogs, twitters, andarticles almost every day. That’s time wellspent. I exercise for 60-90 minutes everyday. Valuable. I have lunch with my momat least every other week. That’s time thatcan’t be replaced. Every pocket of time canbe filled with value or used to create value.See the value of time.

The Value of a DollarAs with many businesses around the world,my revenues were down significantly in2009. From that came something verygood. I finally realized the wisdom of my

two parents who were both born duringthe Great Depression. They always talkedabout the value of a dollar, and I alwaysignored them. If I had money, I almostalways found a way to spend it. This yearI finally learned the empowering feelingof not spending money. I realized the utterfoolishness of advisors who suggested youhave to drive a certain car or wear certainclothes or use a certain pen in order tobe seen as credible. My value added is inthe user-friendliness of my practical ideason improving business performance, notin what car I drive or what clothes I wearor what I write with. 2009 has been thebeginning of what I hope is a life-longrespect for every single dollar that I amresponsible for.

The Value of ValueOn May 30, Barb, Sarah, Ben, and I wentto see the film, Up, by Disney/PixarAnimation Studios. I loved it. And I gainedanother lesson from this year.

Pixar Animation Studios has now made14 films since their first one, Toy Story, in1995, and all 14 films have gone to #1 atthe box office.

Apple’s iPhone came out in 2007 and itsells faster now than ever before. It didn’teven exist three years ago, and now in themidst of a terrible recession everybody hasto have it and they find a way to get it.

Mitch Albom and Malcolm Gladwellcame out with books within the past 12months and they both shot to #1 on thebestseller lists.

Lesson learned: Even in the midst of aterrible recession, companies and individualswho create great value generateextraordinary results. The absolute key forany business or any individual to prosperin bad economic times is to create and deliverincredible value that other people will feelthey absolutely must have. What value can



you deliver and what value can you helpyour organization to deliver that willhelp you to rise above this recession andbe in greater demand than ever before?

The Value of Tough TimesPeople talk about 2009 as though it werethe worst year of their lives. Ironically,one day we will all look back and realizethat 2009 caused significant changesin behavior that led to incredible results.Let’s step back in time and look at twoexamples of where greatness found itsstarting point in the ‘worst of times’.

In her book, The Definitive Drucker,Elizabeth Haas Edersheim, does a greatjob of describing what Toyota MotorCompany went through in its early daysafter it was founded in 1930. I admireToyota as much as any company in theworld. From Corolla to Camry to Avalonto Lexus, Toyota has managed to createmagnificent cars at every price pointfrom economy to luxury. They all ridebeautifully and require very, very littlemaintenance. However, I think theirreal greatness can be traced to theirearliest days.

The founder of Toyota was SakichiToyoda. The global business economywas so bad in 1930, that he changed thespelling of his last name to Toyota,according to Edersheim “because inJapanese the letter ‘t’ has one fewerstroke than ‘d’ – thus saving time onprinting signs and advertisements – anearly indication of the ceaseless focuson efficiency that would come tocharacterize the organization.” She goeson to say, “The car market in Japan atthat time was small. Because thecompetition was so stiff and capital sohard to accumulate, Toyota had to doeverything possible to minimize the timebetween when it purchased parts and

assembled vehicles and when it receivedpayment – hence, the birth of thecompany’s vaunted ‘ just-in-time’production methods.”

She then explains that the extremelydifficult economic period of the 1930scaused the Toyota management teamto discuss every decision in detail andonly to move forward when everymember had an opportunity to offer theirperspective in group consideration. Theysimply could not waste any money. Thissame careful, collaborative approach todecision making has been carried on tothis day.

Would these highly effectivemanagement approaches been developedif they had not been faced with a verytough economic situation? My hunchis that it probably would not havehappened. Only when trapped in a verytough situation do most humans beginto scramble mentally and physically tofigure a way out.

In 1997 Apple Computer hadreached nearly to the end of its rope.They had managed to lose one billiondollars in the previous quarter, and theywere perhaps six months away frombankruptcy. Steve Jobs came back asthe interim CEO and the rest is history.He quickly moved the company fromhaving 80 different computers andvariations of computers to just four.He then carefully introduced two newconcepts in 2001: a digital music player,the iPod, and the iTunes music store.By staying remarkably focused on doinga great job with a few products, Appletransformed itself into one of theworld’s greatest companies and SteveJobs was recently named the CEO ofthe Decade by Fortune magazine.

These extremely tough economictimes can have a very big upside. What

is it forcing your organization to do thatcan ultimately lead to generatingsustainable, profitable growth? Whatcould it be forcing your organization todo that can improve its futuredramatically?

The Value of DetoxingA few weeks ago my computer had aterrible virus. I would enter websites andthe Internet would take me to the wrongsites. I quickly shut down my computerand called a terrific computer consultant.He worked his magic, removed the virus,and installed a much better anti-virussoftware than the one I had.

This reminded me of my majorpersonal theme for 2009. I wanted to‘detox my system’ of a lot of bad habits.I define a toxic habit as anything a persondoes, thinks, or says that keeps them fromperforming at their best. I identified anumber of toxic habits that I needed tofocus on including eating, spending,emotions, language, immediacy,impulsiveness, and playing old mentaltapes. Each day I reviewed how I didrelative to these toxic habits. Like mycomputer consultant did for my computer,I was able to reduce the impact of thesetoxic habits little by little. I dropped 18pounds and kept if off, realized theimportance of not expecting an immediatepositive result for every effort I made,and let go of some frustrations I havebeen carrying around for years. The lessonI learned is success is not just aboutlearning new things and achieving newheights of achievement. Sometimes it’sabout removing the viruses we build upinside of ourselves.

The Value of PrayerThis was another major learning forme. This is only the second time I’ve



ever written about prayer in one of mybusiness articles. If spirituality is notyour thing, then you can skip this part.I’ve always prayed, but usually it wasvery sporadic and done onlyoccasionally. This year I prayedconsistently two to three times a week.I never pray for results. I never prayfor health or safety or any type ofoutcome. Essentially, I pray for adviceon what to do. My prayer is basicallythe same one over and over. I ask Godfour questions: How am I doing? Whatam I doing well? What am I not doingwell? What should I be doing differently?Usually I hear something I don’t wantto hear, and it causes me to reflect onwhat adjustments I need to make. Ithink prayer helps me to be a betterperson, and I think it helps me to bemore genuinely who I really am in all

situations. Praying has helped me tobe more comfortable in every setting.I don’t ask God for money or materialthings. I ask for insights. Based on thoseinsights, I try to figure out what to donext.

The Value of ReadingThis really isn’t a new lesson. It’ssomething I’ve known for 25 years.However, I thought you might like tosee my reading list from 2009. I foundvalue in every one of these books:

Outliers by Malcolm Gladwell;Uncommon by Tony Dungy; Battlefieldof the Mind by Joyce Meyer; Enough byJack Bogle; Have a Little Faith by MitchAlbom; Leading, Living, and the AmericanDream by John Gardner; The Score TakesCare of Itself by Bill Walsh and SteveJamison; It’s Not What You Sell, It’s What Reference # 03M-2010-02-09-10

© 2010 Dan Coughlin. All Rights Reserved.

Author’s Note: To receive the MP3 Recording of this

article send an e-mail to [email protected]

with “Lessons for 2010” in the subject heading.

You Stand For by Roy Spence and HaleyRushing; Hit the Ground Running byJason Jennings; The Shack by WilliamYoung, Development of ProfessionalExpertise edited by Anders Ericsson;Broken Trust by Patrick Fleming, SueLauber-Fleming and Mark Matousek;Take the Risk by Ben Carson; ShootingStars by Lebron James and BuzzBissinger; and Obstacles Welcome byRalph de la Vega; Greater Than Yourselfby Steve Farber; The Definitive Druckerby Elizabeth Haas Edersheim;Mockingbird by Charles Shield; To Killa Mockingbird by Harper Lee; and DutchTotal Football by Terry Michler.



An Empirical Investigation

Stewardship asLeadership

This article examinesthe factors thatstymie contemporaryleaders in their questto practicalize theconcepts ofstewardship as analternative form ofleadership.Stewardship is hereinargued to be a moreviable form ofleadership thancurrent leadershipconcepts, and ninedimensions have beenidentified aspersonifications of thestewardship concept.The results show thatstewardship, as aleadership alternative,has not yet begun tosupplant traditionalforms of leadership.

The concept of leadership and thepromises – and failures – that it has

held for humankind over the centuries isa well-researched area. Burns (1978) assertsthat leadership is one of the most observed,but the least understood phenomena.Goodwin (1998) asserts that there are asmany different leadership styles as thereare leaders. Consequently, the theories ofleadership are many and they originate fromdiverse sources. Various leadership theorists,in defense of their leadership models, havesuggested various definitions of leadership.Burns (1978: 43-44) asserts that: “Theessence of leadership in any polity is therecognition of real need, the uncoveringand exploiting of contradictions amongvalues and between values and practice, therealigning of values, the reorganization of

institutions where necessary, and thegovernance of change.” Bennis and Nanus(1985: 225) describe leaders as individualswho “lead by pulling rather than by pushing,by inspiring rather than ordering, by creatingchallenging, but achievable, expectationsand rewarding progress towards them ratherthan by manipulating, and by enablingpeople to use their own initiatives andexperiences rather than by denying orconstraining their experiences and actions.”

The theories and models of leadershipthat have been mentioned supra have incommon their focus on the leader as apedestal personality who is separate fromthe people being led. However, as Zaleznik(1996: 2) points out: “Leadership is notrestricted to the occupants of formalpositions.” Therefore, we must begin to



Kurt Aprilis a Professor of leadership,

diversity and inclusion at the

University of Cape Town (South

Africa), and a Research Fellow of

Ashridge Business School (UK).

He is also the Managing Partner

of LICM Consulting (South

Africa), Non-Executive Director of

Achievement Awards Group

(South Africa), and Member of the

International D&I Advisory

Council to Novartis International

(Switzerland), among others.

Kurt is a Fellow of the Royal

Society of Arts, Manufactures &

Commerce (UK), is an Advisory

Board Member of the Knowledge

Management Professional Society

(USA), and is on the editorial

board of several international

journals like Academy of Taiwan

Business Management Review

(China), Annual Review of High

Performance Coaching &

Consulting (UK), Journal of

Management Education (USA),

International Journal of

Information Systems & Social

Change (USA), and The South

African Journal of Business

Management (South Africa), and

was placed on the ‘Top 100

Educators in the Globe’ list

(International Biographical

Centre, Cambridge, UK) in 2009.

Stewardship as Leadership

refocus our leadership lenses to recognizenot only the appointed leaders but also theirfollowers and the nature of the relationshipthat exists between the two groups.

April, MacDonald, and Vriesendorp(2000) submit that an alternative leadershipidea, which boosts personal growth andreciprocal care through teamwork, totalinvolvement, and a strong sense of ethics,is supplanting traditional and hierarchicalleadership principles. Spears (2002: 2)asserts: “In these early years of the 21st

century, we are beginning to see thattraditional, autocratic, and hierarchicalmodes of leadership are yielding to a newermodel that is based on teamwork andcommunity, one that seeks to involve othersin decision-making, one strongly based inethical and caring behavior, and one thatis attempting to enhance the personalgrowth of workers while improving thecaring and quality of our many institutions.”This new wind of change, which has gatheredtremendous momentum on the leadershiplandscape over the last four decades, is theconcept of stewardship. Admittedly,stewardship is a hoary concept, theantecedents of which are replete throughoutthe Christian Bible (Matthew 25:15-30;Matthew 10:8; Genesis 2:15-20; Luke 16;Mark 12:41-44). As a form and alternativeto traditional leadership understanding,however, the idea (in business) owes itsorigin to Robert Greenleaf who firstenvisioned, in 1970, the potentiallybenefitting concept of the leader as a servant,which he termed servant-leadership. SinceGreenleaf laid the premise for stewardshipas an alternative form of leadership, severalother prominent theorists (Covey, 1989;Autry, 1992; Depree, 1992) have writtenabout, and buttressed, the concept fromdifferent perspectives. Macnamara (2004)perhaps best captures the crux ofstewardship when he describes it as passing

the present on to future generations in asgood a shape as, or better than, when itwas received. This concept is the most viablealternative to current leadership.

However diverse the sources ofcompeting leadership models and theoriesare, there is a common denominator thatconnects them all. They all seem to befocused primarily on the underlying theneed for, and the qualities of, goodleadership. These authors (Kotter, 1996;Kouzes and Posner, 1987; Rost, 1993) areall basically saying that leadership is anindispensable factor of any institution andthey all seem to be in agreement as to thequalities that leaders must have in orderto have a viable organization. The same istrue for the writers who propoundstewardship as an alternative to leadership(Spears, 1998; Macnamara, 2004; Block,1993; Covey, 1989). They have all listed andexpounded on the factors that distinguishstewardship from traditional modes ofleadership and the factors that makestewardship a more acceptable, indeed morerealistic, approach to leadership. Thequestion, then, is why has stewardship not,to any extent, supplanted these traditionalmodes of leadership in practice? Block (1993:10) highlights this concern when he states:“What is troubling about ideas likestewardship is that even though they areintuitively appealing, they seem far removedfrom the heart of the way we run ourorganizations.” This is an outrightadmission, from as authoritative a sourceas you can ever hope for, that stewardshiphas not begun to substitute for currentleadership methods in practice. What arethose factors that are inhibitingcontemporary leaders from subjugatingthemselves to the dictates of the stewardshipconcept?

In order to investigate reasons whystewardship is not as prevalent a concept



Kai Petersis Dean/Director of Ashridge, the

business school located in

Berkhamsted, near London, in the

UK. Ashridge is one of the world’s

leading and largest providers of

executive education, including

open programs, tailored programs

and consultancy.

Prior to joining Ashridge, Peters

was Dean, and previously

Director of MBA programs, of the

Rotterdam School of

Management (RSM) at Erasmus

University in the Netherlands.

Peters serves on the supervisory

and advisory boards of a number

of organizations in the

technology, (represented private

equity in a mobile

communications company) and

health care sectors. He is a board

member of Centrepoint, a

London-based charity for

homeless youth. He also serves in

various capacities for several

educational. He is owner and was

managing director (89-93) of a

company in the German

publishing sector and has worked

for both IBM and Volkswagen in

organizational development.

Peters writes and lectures on

strategy, leadership and

management education for

government, business and

academic audiences. He has been

twice selected for HR magazine’s

top 100 HR professionals in the

UK.

He holds degrees from York

University, Toronto and

University of Quebec in

Chicoutimi (Canada) and

Erasmus University

(Netherlands).

as it should be with contemporary leaders,this research makes use of a StewardshipFramework first developed by April,Hendrikz and Peters (2010 forthcoming),which proposes nine dimensions aroundwhich stewardship revolves.

The Stewardship FrameworkThe nine dimensions of the AprilStewardship Framework—(1) PersonalMastery, (2) Personal Vision, (3) Mentoring,(4) Valuing Diversity, (5) Shared Vision, (6)Risk-taking and Experimentation, (7)Vulnerability and Maturity, (8) DeliveringResults, and (9) Raising Awareness—represent factors that this research arguesare the attributes that an individual mustpossess in order to be an effective stewardof his or her organization, group, orcommunity. Each of the nine is discussedbelow, providing a basis for its inclusionin the framework.

1. Personal MasterySenge (1990) describes personal masteryas being about creating what one wants inlife and in work. He asserts that personalmastery is based on personal vision andpurpose, maintaining a creative balancebetween vision and reality, minimizing theimpact of beliefs that run contrary topersonal mastery, commitment to truth,and developing an understanding of thesubconscious. Covey (1989) views personalmastery as having the ability to identifyobjective reality and align one’s subjectivevalues with principles, as this leads to aninward strength of character and genuinecaring and serving.

However way it is described by theexperts and theorists of leadership concepts,the common thread that runs through alltheir descriptions is that personal masteryis a personal journey to continually improveone’s ability and continually grow by learning

and being willing to supplant old conceptswith new and better ones. What then tiespersonal mastery to stewardship?Throughout much of the literature,stewardship has been touted as a conceptwhose primary consideration is a focus onthe community, the group, or theorganization—rather than the individual.Personal mastery, on the other hand,advocates self development and a continualimprovement of one’s personal abilities.Because of this, personal mastery andstewardship seem to be antitheticalconcepts, two extreme ends of a continuum.What bridges these two ends of the gamutand aligns them into one coherent structureis the fact that the concept of stewardshippresupposes a social contract between theindividual and the community, group, ororganization. A further presupposition isthat both parties to this social contract bringto the union the best of their personalabilities. Stewardship requires an individualwho is the master of his/her game, someonewho is confident enough in his/her abilityto allow others to achieve self-actualization.Essentially, stewardship is about trust—trust from both the individual and thegroup—and, unless a person is a masterof his/her own abilities, s/he is not goingto inspire the trust in others that is necessaryto make stewardship a reality.

Giuliani and Kurson (2002) assert thata person’s ability to get people to performdepends largely on what they perceive whenthey look at, and listen, to him/her. Theystate that people need to see someone whois human, but is stronger than they are,and such leadership strength is acquiredthrough personal mastery, which is a lifelongjourney. This is the link right here. Peopleseek an effective leader, but they need totrust that person enough to bestow uponhim/her the mantle of leadership. Trust is– has to be –earned, and the quickest way



Christian N Allison Jr.is the Assistant Director of the

Supervision & Surveillance

Section of the Supervision

Department of the Central Bank

of Liberia. Before joining the

Central Bank of Liberia, he served

as Special Assistant/Research

Officer in the chambers of one of

the Associate Justices of the

Supreme Court of Liberia.

Christian holds an MBA from the

Graduate School of Business of the

University of Cape Town and a

BBA (magna cum laude) with

emphasis in Accounting and

Economics from the University of

Liberia. Currently, he is a senior

student at the Louis Arthur

Grimes School of Law of the

University of Liberia. In addition

to this, he also has specialized

training in various aspects of bank

supervision.

Christian is as a part-time lecturer

of Financial Management at the

AMEU University and is an

occasional motivational speaker to

university and church audiences.

Additionally, he is an executive

member of the West African Youth

Network (WAYN), a West African

regional youth empowerment

organization that seeks to serve as

an advocacy mechanism and

public policy voice for the cause of

young people in West Africa and to

empower young people to get

involved in practical projects

geared towards peace building,

human rights, conflict resolution,

good governance and HIV/AIDS

awareness and prevention.

of achieving that is by demonstrating thatone is the master of his/her own abilitiesand that s/he is continually seeking waysto improve these abilities. Senge (1990)uncovers the link between personal masteryand effective leadership – stewardship, forexample – when he postulates that the coreleadership strategy is to be a role modeland commit oneself to one’s own personalmastery. Personal mastery, therefore, allowsan individual to discover him/herself andmaster his/her capabilities, which, in turn,stimulates trust in others that allows themto unquestionably follow him/her as aneffective leader. Because of the vital rolethat personal mastery plays in a person’sleadership ability, it is, needless to say,indispensable to any form of leadership –stewardship included; hence, its inclusionas one of the fundamental dimensions ofstewardship.

2. Personal VisionSenge (1990) describes vision as what onewants to create for him/herself and the worldaround him/her. Hickman & Silva (1984:155) describe it as “a mental journey fromthe known to the unknown, creating thefuture from a montage of current facts,hopes, dreams, dangers, and opportunities.”People tend to judge you by what yourepresent, and what you represent is yourpersonal vision. Therefore, people will judgeyou by your personal vision. What, therefore,is the link between personal vision andleadership in general and stewardship inparticular?

Various leadership theorists (Covey,1989; Senge, 1990) have underlined theimportance of developing a personal vision,emphasizing that it engenders success andinspires others to achieve their dreams. Manytheorists (Doz and Prahalad, 1987; Hunt,1991; Kotter, 1990; Robbins and Duncan,1988; Sashkin, 1988) describe a definite

and indispensable link between personalvision and leadership. Some (Hunt, 1991;Sashkin, 1988) even go as far ascharacterizing vision as a form of leadership,an assertion which we find a little farfetched,but which serves to underline the importantrole that vision plays in a leadershipframework. Others (Pearson, 1989; Phillipsand Hunt, 1992) describe vision as one ofthe most critical tasks that a leader has toperform.

The importance, therefore, of havinga personal vision in one’s quest to be aneffective leader cannot be overemphasized.It is simply impossible to lead others whenyou yourself have no idea where you wantto go, or how you want to get there. Effectiveleaders have a vision of making a difference,of what might be (the possibility), and theybelieve they can make it happen (Kouzesand Posner, 1984; Zander and Zander,2000). Covey (1989: 106) asserts thateffective people “begin with the end in mind.”In other words, they have a vision at thebeginning of a journey about what theyexpect of the journey at the end. With thismentality, the strategy for implementingthe vision is much more practicable. Manasse(1985) asserts that it is through personalvision that leaders identify their ownpersonal resources and position themselvesto play to their strengths. Personal visionis a reflection of one’s outlook of thecommunity or organization in which s/helives or operates. This is the connectionbetween personal vision and leadershipconcepts such as stewardship.

3. MentoringOver the last 30 years or so, the conceptof mentoring has drawn tremendousattention from a wide range of researchers(Kram, 1980, 1983, 1985; Bova and Phillips,1982; Hunt and Michael, 1983; Phillips,1977). Gregson (1994) describes the




mentoring process as an attempt totransfer experience and expertise fromexperienced individuals in anorganization to the less experienced.

However it is described or defined,the inescapable fact is that mentoringis, first of all, a social relationship thatexists between two persons that isexpected to accrue benefits to either orboth parties. The question is: What isthe essence of this relationship knownas mentoring? What are the benefits thatare to be accrued by the parties to therelationship? To answer this question,let us point out that a mentoringrelationship involves a mentor and aprotégé. A third distinct, but subtle, partyto this relationship is the group,organization, or community to whichthe first two parties belong. The processof mentoring, if properly implemented,creates, according to Scandura, Tejeda,Werther & Lankau (1996: 53), a “three-way reciprocal context where the mentorgives, the protégé gets, and theorganization benefits.”

Beginning with the benefits receivedby the protégé, Kram (1985) providesempirical evidence that the processenhances work effectiveness, and severalother researchers (Roche, 1979; Stumpfand London, 1981; Hunt and Michael,1983; Fagenson, 1989) argue thatmentoring engenders success on the jobor assigned task. The bottom line is thatthere are tremendous benefits to begained by a protégé in a mentoringrelationship.

From the perspective of the mentor,it is not entirely a give-give situationas some very subtle benefits also accrueto him/her. The benefit derived by thementor, according to Levinson, Darrow,Klein, Levinson, and Mckee (1978) andKram (1983), is that the mentoring

relationship can serve as a source ofreinvigoration of the mentor’s career.Levinson et al. (1978: 253) perhaps putit more succinctly when they assert: “Thementor is doing something for himself.He is making productive use of his ownknowledge and skills in middle age.”

From the organizational, group, orcommunity perspective, Wilson andElman (1990) suggest that theredefinitely are gains from mentoringrelationships. The benefit that derivesto the organization is corollary to thebenefits that accrue to the mentor andthe protégé. On the one hand, theorganization benefits when thementoring relationship enhances theprotégé’s contribution to theorganization (Scandura et al., 1996).Similarly, the rejuvenation in thementor’s career, as alluded to by Levinsonet al. (1978) and Kram (1983) increaseshis/her overall value and contributionsto the organization.

The insinuation of all of this is thata properly structured and wellimplemented mentoring relationshipis the perfect recipe for the creationof a sustainable, vibrant, andcompetitive organization. Given thatan effective leader is someone whoensures the sustainability of theorganization and that mentoringenhances that sustainability, it isobvious why mentoring is one of theparamount skills needed bycontemporary leaders. Mentoring is,therefore, inextricably connected tosustainable leadership. Stewardship, asa form of leadership, is a sustainableconcept by its very nature of advocatingservice over self-interest. Mentoringoffers a conduit for ensuring thesustainability that stewardshippreaches; hence, the inclusion of

mentoring as one of the dimensionsin the Stewardship Framework.

4. Valuing DiversityChurch (1995: 3) defines diversity as“a collection of individuals who differfrom each other on one or any numberof dimensions including culture, values,education, gender, marital status andage.” Theorists (Guzzo, 1986; Hoffman,1979; Hoffman and Maier, 1961; Janis,1962) argue that diversity engenderscreative decision-making characterizedby innovative and high-quality solutions.Valuing diversity has been linked tolearning by some researchers (Lee,Macdermid and Buck, 2000) and others(April and Shockley, 2007; Milliken andMartins, 1996; Robinson and Dechant,1997; Thomas and Ely, 1996) haveidentified it as being crucial toorganizational performance. Improperlymanaged and undervalued diversity cannegatively affect how group membersare able to identify with one another(Brewer, 1996; Tajfel, 1982; Tajfel andTurner, 1979). Additionally, it has beenempirically determined that poorlymanaged diversity in groups cannegatively affect cohesion, as well ashinder performance and communication(Zenger and Lawrence, 1989).

The implication of all this fororganizations, groups and communitiesis that, depending on their approach,diversity could serve either as a steppingstone or as a hindrance. It, therefore,makes it incumbent upon contemporaryleaders to attain a position of being ableto value and leverage diversity in theirgroups or organizations for the good ofthe organization. Valuing diversity isabout building an inclusive communityor group in which members are able toput aside their differences, perceived or



Ext Ad 7



real, and work for the advancement ofthe ideals of the organization. Essentially,this is the pillar of stewardship—serviceover self-interest, community overindividual. This is why being able to value,manage and appreciate diversity is keyto being able to implement the conceptsof stewardship; hence its inclusion inthe Framework.

5. Shared VisionIf individuals in a group, community,or organization each had their separatevision, or a separate notion of what theshared vision was, they would be actingagainst each other and the net resultwould be that the group, community,or organization would stagnate. Sharedvision serves as guidance for membersof the organization who need tounderstand what the organization is andwhere it intends to go (Nanus, 1992)and it is “a view of a realistic, credible,attractive future for the organization,a condition that is better in someimportant ways than what now exists”(Bennis & Nanus, 1985: 89).

The implication, therefore, is thatan organization’s shared vision has tobe one that inspires the members of theorganization to actualize and perpetuateit. It has to be right, and it has to bereflective of the collective vision of themembers. The important thing is thateveryone must be sold on the vision togive it a decent chance of survival orimplementation. This is thetransformation of personal vision intoshared vision, and it is a veryindispensable hallmark of any leadershipconcept. A leader who has a greatpersonal vision, but lacks the ability torecruit disciples in the organization tojoin the vision bandwagon is not aneffective leader. Transforming the vision

into reality means “involving the heartsand minds of those who have to executeand deliver, and these are not the peopleat the top of the organization, but thoseat the bottom” (Jones, 1998: 65).

Shared vision, like the concept ofstewardship, advocates the interest ofthe group, community, or organizationover those of the individual members ofthe organization. It, like stewardship,promotes collectivity and commonality,and shuns individualism. It puts unityof purpose, and oneness of goal, aheadof personal achievements and self-aggrandizement, and so does the conceptof stewardship. The parallel, therefore,between the mentality that drives sharedvision and that which fuels stewardshipis very striking almost to the point ofbeing synonymous. Hence, the inclusionof shared vision as one of the ninedimensions of the Stewardship Framework.

6. Risk-taking and ExperimentationThe term ‘Risk-taking andExperimentation’, as it has been usedin the Stewardship Framework, refers tothe ability to be open to new ideas andways of doing things and not just beingstuck in routine procedures. It also refersto the ability of being able to allow othersin the organization the space, freedom,and flexibility to express themselvesthrough their capabilities. Covey (2002:30-31) claims that: “The greatest giftyou can give to other people is themselvesand you do this when you affirm in peopletheir basic gifts and talents andcapacities. When you do that, you showreverence for people, you show humility,you show respect, and you show caring.”

One of the truest marks of aneffective leader is the ability to engendertrust in the members of the organizationand empower the members to operate

with flexibility to achieve the goals ofthe organization. The implication,therefore, is that experimenting withnew ideas and allowing others in theorganization or community to becomemore expressive through theircontributions promotes a culture oflearning. The main ideas to be gleanedhere is that a leader who encourages newideas, and gives others in theorganization the space to explore newconcepts and ideas, develops a two-prongdistinct competitive advantage for theorganization – individual empowermentand mutual trust.

Empowerment means encouragingrisk-taking, within guidelines, andemployees need to feel free to askquestions and risk failure withoutworrying about appearing to beunintelligent (Coleman, 1996).Contemporary leaders must encouragetheir followers to take initiative and toact without having been told to do so.This means that leaders have torelinquish some of their control to obtainresults. Empowerment is corollary tohaving a sense of influence and choice(Thomas and Velthouse, 1990) and theempowered person ultimately acts likeone who is self-employed, withresponsibility for both results and career(Bridges, 1994). This is achieved by givingothers the belief that they can makemeaningful contributions to theorganization (Coffey, Cook andHunsaker, 1994) because mutualaccountability dissipates boundaries andthey assume responsibility beyond theirjob specifications (Connors, Smith andHickman, 1994).

7. Vulnerability and MaturityModern organizations, as has alreadybeen alluded to, are increasingly being



characterized by diversity. This meansthat today’s workplace is a melting potof different orientations, styles, andexperiences. “There is a diverse rangeof people that we learn from at work,very few of whom are recognized bythe employing organization as peoplewith a role in promoting learning – thatis, people designated as supervisors ortrainers” (Boud and Middleton, 2003:2001). Therefore, contemporary leadersmust strive at all times to maintain alevel of maturity and authenticity thatallows them to engender anorganizational atmosphere thatpromotes learning in the organizationat all levels of the organization.Stewardship, from an organizationalperspective, implies teamwork andunity of purpose. It implies an all-for-one one-for-all mentality so that theorganization, group, or community isdriven forward for the general good ofall. However, for this to happen, peoplein the organization, especially theleaders, have to be open to the conceptof learning from the experiences andknowledge of each other. Leaders mustbe mature enough to actively seek helpand counsel from others, unlearn someof their old notions (April, April andWabbels, 2006) especially if it meanscrossing traditional hierarchicalboundaries or even social categories/castes. In order to be able to respondto changes, constant learning is needed(Tissen, Ardriessen and Deprez, 1998)and learning principles are realizedthrough knowledge sharing withcolleagues, clients, and others (Hongand Kuo, 1999).

This level of maturity, the one thatallows a person to be humble enoughto submit to a learning experience fromothers in the organization leads to

individual empowerment because as youopen up yourself to learn from others,they too get an opportunity to learnfrom you. The end result is that a bondof camaraderie, based on mutual respectand shared purpose, is developed andthere is a greater level of trust withinthe organization as people become moreaware of each other’s capabilities. Theseoutcomes—trust, mutual respect,humility, and oneness of purpose—areunique features of the stewardshipconcept, underlying the importance ofmaturity and vulnerability to theStewardship Framework.

8. Delivering ResultsThe stewardship concept advocatesservice over self-interest andcommunity over self. In order topracticalize stewardship, therefore, itis very crucial that the leader in theorganization is at the forefront ofactivities, making sure that s/hepractices what s/he preaches. The leaderhas to be seen as being involvedpersonally in seeking to broadenstewardship throughout theorganization. The leader must becommitted to delivering concrete resultsso that others in the organization canbe led by practical example. Unlesscontemporary leaders are thoroughlycommitted to delivering results throughtheir stewardship actions, the conceptof stewardship stands no chance ofbeing anything more than a concept/theory. The ability to deliver result is,therefore, the ultimate measurementand determinant of a leader ’scommitment to making theorganization achieve its goals. Havinga personal vision, selling and sharingthis vision to others in theorganization, being a master of one’s

abilities, and engendering a learning– and empowered organizationthrough mentoring, risk-taking, andvulnerability and maturity, would allamount to nothing if these were notdirected at achieving concrete resultsto uplift the organization. Stewardshipemphasizes service, but this servicehas to be directed at achieving results– which includes rewarding people forachieving results through the ‘lens ofstewardship’ (so it is not results-at-all-costs, but rather, results-through-stewardship). When the leader iscommitted to delivering results, othersin the organization are also driventowards producing results, and theimplication is that the organizationis characterized by individuals who areresult-focused and united in trying toaccomplish the goals of theorganization.

Everything else that has beendiscussed so far about stewardship andthe other dimensions of stewardshipwould be considered meaningless, andwithout substance, without the abilityto transform them into action throughthe delivery of concrete and measurableresults. The ability to deliver results isthe ultimate measure of performance.Therefore, delivering results isparamount to the success of any concept,stewardship being no exception.

9. Raising Awareness‘Raising Awareness’, as it has been usedin the Stewardship Framework, relatesto one’s ability to champion and heraldstewardship and the growth of asustainable civil society. This dimensionof stewardship is similar in importanceas the delivering results dimension.Unless a leader can be seen to be activelyseeking to promote governance and a




sustainable society, i.e., practicing whats/he preaches, the concept of stewardshipis defeated from the very beginning.

As a leadership alternative,stewardship is relatively new and hasbeen around (in business) for only aboutfour decades. However, it was only inthe last couple of decades that the conceptbegan to gather momentum as alegitimate form of leadership. Even atthat, stewardship has not yet attaineda pre-eminent status and is still a longway from doing so. Spears (2002)postulates that the number ofpractitioners of servant leadership hasincreased from a trickle to a river onthe global scale, but it is not yet a mightyriver. Therefore, proponents of thestewardship concept have a responsibilityto herald and raise awareness of whatthe following part of leading, asadvocated by stewardship, entails.

Leaders must take an active interestin attracting more disciples to stewardshipthrough active and constant awareness.This has to be achieved by accomplishingorganizational results throughstewardship behavior, also encouraging,and sometimes demanding, responsiblebehavior from all stakeholders. Peoplemust be made aware of the benefits ofethical behavior and behaving responsibly,as this is one sure way of promoting thesustainable society and organizations thatstewardship advocates. It is, therefore,incumbent upon contemporary leadersto sound the trumpet of good corporategovernance through constantly raisingawareness about a sustainable civil society,characterized by service to society ratherthan self-advancement.

Connecting the Dots and Creatingthe Stewardship FrameworkEach of the nine dimensions has been

demonstrated to have strong links withat least one of the central themes ofstewardship—trust, communityoutlook, responsible behavior,community building, and inclusivecommunity. On the basis of these, thelink between each of the nine dimensionsand stewardship is established and theirinclusion in the Stewardship Frameworkis vouched for, which leads to the researchhypothesis and the questions based onthese dimensions.

Research Hypothesis andQuestionsAs a precursor to the exploration intothe dimensions of stewardship, thehypothesis for this research is as follows:

That, generally, the concept ofstewardship as a leadership alternative isnot being implemented on a regular andsustained basis by contemporary leaders—that is, stewardship has not substitutedtraditional forms of leadership in ourgovernments and organizations.

The primary question is:

“Why has stewardship, in all itsacknowledged superiority overtraditional forms of leadership, not takena more appreciable role in our lives?Alternatively, what are the stumblingblocks for taking stewardship forwardas a legitimate form of leadership andgaining greater acceptance in themainstream?”

Additionally, the investigationintends to further determine whetherspecific inhibiting factors, or groupsof factors, can be delineated alongdemographic lines like race, gender, age,profession, geographic location, andlevel of education. Therefore, thesecondary question is:

Can the factors that have preventedstewardship from supplanting traditional

forms of leadership be delineated alongthe following lines? Gender Age Position Industry; and Nationality.

Addressing the HypothesisA cursory glance at the responses thatwere obtained for all the questions undereach of the nine identified dimensionsof stewardship, while not conclusive byitself, suggests that the answer to theresearch hypothesis is in the affirmative.To determine how each respondentscored along individual dimensions, theresponses to all of the questions withina particular dimension were averaged,with the average score representing arespondent’s personal assessment forthat dimension. The nine averages acrossall the dimensions were then averagedto determine a respondent’s final resultfor the entire framework, therebygauging the respondent’s level ofStewardship orientation. The result wasthat the highest average response forall the respondents was 2.9(Vulnerability and Maturity) and thelowest responses were 2.0 each (SharedVision and Delivering Results). Theaverage across all nine dimensions forall the Respondents was 2.4. For thepurpose of this research, averages of 1and 2 have been classified as “low”applications of stewardship concepts;an average of 3 has been classified as a“moderate” application of stewardshipconcepts; and averages of 4 and 5 havebeen classified as “high” application ofstewardship concepts. To the nearestwhole number, therefore, the averageresponse of all Respondents across thenine dimensions was 2, an indication



of a low application of stewardshipconcepts by contemporary leaders anda confirmation of the researchhypothesis.

In order to determine whether ornot the mean responses from the dataset could be employed to make aninference about the population mean,a t-test of mean was performed withthe following pair of hypotheses:

H0 : = 2.5H1 : < 2.5The test was performed at a 95%

significance level and the hypothesizedmean of 2.5 represents the least meanbefore a response can be said to be lowin stewardship application. The resultof the test was a p-value of 0.0028, a t-statistic of -2.8139, and a t-critical valueof 1.6557. The very low p-value, lessthan 0.05, provided strong statisticalevidence to infer that the alternativehypothesis was true – i.e. to infer thatthe mean response of the populationwas less than 2.5, thereby falling intothe region of low application ofstewardship concepts. This is a furthervalidation of the original researchhypothesis that stewardship is not beingimplemented on a sustained basis bycontemporary leaders.

Addressing the PrimaryQuestionAn affirmative answer to the researchhypothesis provides a basis for theevaluation of the primary researchquestion. The first step was to testwhether or not there were significantdifferences between the mean responsesof all the Respondents across the ninedimensions. To do this, a single factorANOVA was performed between themean responses for each dimension withthe following pair of hypotheses:

H0 : 1= 2=3= 4=5=6=7=8=9

H1 : At least two of the means differThe test was performed at a 95%

significance level and it derived an F-statof 31.6768, a p-value of 1.28 X 10-45,and an F-critical of 1.9456. In view ofthe extremely low p-value, there was verycompelling statistical evidence to inferthat the alternative hypothesis was trueand to conclude that there existedsignificant differences between at leasttwo of the mean responses of the ninedimensions. However, a furtherinterrogation of the data, to determineexactly which set of means differ, wouldprovide directional focus in the questto answer the primary question.

Therefore, a Tukey and Fisher LSDtest with Bonferroni adjustment wasperformed to pinpoint which sets ofmeans exhibited significant differences.The LSD test results, with alpha () of0.05, return a hurdle amount of 0.26for the Fisher Test with the BonferroniAdjustment and an omega () of 0.25.This means that for the differencebetween two sets of means to beconsidered statistically significant,they must exceed 0.26 by Fisher andBonferroni’s standard and 0.25 byTukey’s standard. On the basis of this,it was discovered that out of the 36relationships that exist between thedimensions, 24 or 67% of theseexhibited significant differences.

Seeing that there were many pairs ofsignificant differences between the meanresponses for the nine dimensions, it wasfirmly established that some of thedimensions inhibit contemporary leadersmore so than others. The next logical stepwas to determine the magnitude of eachdimension’s effect on contemporaryleaders and their ability to practicestewardship in the mainstream.

Starting with the customary cursoryinspection of the average response ofeach dimension, it was clear that at thevery best respondents were moderatein their application of stewardshipprinciples in five of the nine dimensions(Personal Vision, Personal Mastery,Vulnerability and Maturity, Risk Takingand Experimentation, and ValuingDiversity) and low in the remainingdimensions. Therefore, an initial rankingof the dimensions, pending a moredetailed review of the responses, fromleast inhibiting to most inhibiting is seenin Exhibit I.

To determine if this initial rankingof the dimensions was the right one, amore detailed inspection of thedistribution of responses by theRespondents was performed. The firststep (hereinafter referred to as Step1) towards confirming the aboverankings was to rank each dimensionon the basis of the number ofRespondents that had responded in eachcategory of response , i.e., 1, 2, 3, and4. Given that there were only two outof 143 instances where the mean was5, this category was not included so asto not compromise the rankings. Theresultant table is shown in Exhibit II.

In the Exhibit II, the orders in thesecond and third columns were derived

Exhibit I: Initial Ranking ofDimensions (Entire Data Set)

Ranking Dimensions

1 Vulnerability and Maturity

2 Personal Vision

3 Personal Mastery

4 Risk-Taking and Experimentation

5 Valuing Diversity

6 Raising Awareness

7 Mentoring

8 Shared Vision

9 Delivering Results




by ranking, in ascending order, thedimensions based on the number of 1’sand 2’s per dimension. For example,Vulnerability and Maturity, PersonalVision, and Personal Mastery receivedthe least number of 1’s, respectively.Therefore, they have been ranked first,second, and third, respectively, asdepicted by the second column. On theother hand, Delivering Results, SharedVision and Mentoring received the mostnumber of 1’s, respectively, leading totheir being ranked ninth, eighth, andseventh, respectively, in column two.In the fourth and fifth columns, theorders were derived by ranking, indescending order, the dimensions basedon the number of 3’s and 4’s perdimension. For example, Personal

Mastery, Personal Vision, andVulnerability and Maturity received themost number of 3’s, respectively.Therefore, they have been ranked first,second, and third, respectively, asdepicted by the fourth column. SharedVision, Mentoring, and DeliveringResults, on the other end, received theleast number of 3’s, respectively; hencetheir respective ninth, eighth, andseventh rankings in the fourth column.The average rank column was derivedby averaging the rankings for eachdimension for each category ofresponse. Thus, the 1.5 average rankingfor Vulnerability and Maturityrepresents the average of its firstpositions in the second, third, and fifthcolumns and its third position in the

fourth column. Based on this averageranking across responses, thedimensions were ranked according tothe last column of Exhibit I, which showsVulnerability and Maturity as leastinhibiting and Shared Vision as mostinhibiting.

The second step (hereinafterreferred to as Step 2) in theinterrogation of the data was done byranking each dimension on the basisof the number of respondents that hadresponded in each category of responseclassification – i.e. low, moderate, andhigh. The result is shown in ExhibitIII.

In the Exhibit III, the order in thesecond column was derived by ranking,in ascending order, the dimensions basedon the percentage of “lows” perdimension. For example, PersonalMastery, Vulnerability and Maturity, andPersonal Vision received the leastpercentage of “lows”, respectively.Therefore, they have been ranked first,second, and third, respectively, as shownin the second column. On the other hand,Mentoring, Valuing Diversity andDelivering Results received the highestpercentage of “lows”, respectively,leading to their respective rankings ofninth, eighth, and seventh in the samecolumn. In the third and fourth columns,the orders were derived by ranking, indescending order, the dimensions basedon the percentage of “moderate” and“high” per dimension. For example,Personal Vision, Vulnerability andMaturity, and Personal Mastery receivedthe highest percentage of “moderate,”respectively. Therefore, they have beenranked first, second, and third,respectively, in the third column.Mentoring, Valuing Diversity, andDelivering Results, on the other hand,

Exhibit IIFirst-Tier Ranking of Dimensions (Entire Data Set)

Responses 1 2 3 4 Ave. Rank Rank

Dimensions R a n k i n g s

VM1 1 3 1 1.50 1

PV 2 2 2 2 2.00 2

PM3 5 1 5 3.50 3

RTE 4 6 4 4 4.50 5

VD 5 4 5 3 4.25 4

RA 6 8 6 6 6.50 6

MEN 7 7 8 7 7.25 8

SV 8 9 9 8 8.50 9

DR 9 3 7 9 7.00 7

Exhibit IIISecond-Tier Ranking of Dimensions (Entire Data Set)

Responses Low Moderate High Ave. Rank Rank

Dimensions R a n k i n g s

PM1 3 1 1.7 1

VM2 2 2 2.0 2

PV 3 1 5 3.0 3

RTE 4 4 4 4.0 4

SV 5 5 3 4.3 5

RA 6 6 6 6.0 6

DR 7 7 7 7.0 7

VD 8 8 8 8.0 8

MEN 9 9 9 9.0 9



received the least percentage of“moderate,” respectively, leading to theirninth, eighth, and seventh respectiverankings. The average rank column wasthen derived as was done in Exhibit II.Based on this average ranking acrossresponse classification, the dimensionswere ranked as indicated in the lastcolumn of Exhibit III, which showsPersonal Mastery as least inhibiting andMentoring as most inhibiting.

The third step (hereinafterreferred to as Step 3) in order to obtaina final ranking of the dimensions, whichwould then serve as an indication ofthe factors that most inhibit thestewards in contemporary leaders – thusanswering the primary question, wasto find the average of the final rankingsof each dimension derived from Steps1 and 2 in the last columns of ExhibitVII & VIII. Thus, the final ranking ofthe dimensions for all Respondents,in order of least to most inhibiting, isshown in Exhibit IV.

This final list, more or less, conformsto the original ranking except thatMentoring, rather than DeliveringResults, is the factor that most precludestaking stewardship forward as alegitimate alternative to traditionalforms of leadership. The pattern thathas emerged is that respondents, except

for one dimension – Valuing Diversity,were moderate in their application ofthose dimensions that tend to focusinward on their personal goals andabilities. On the other hand, they were,with one exception – Delivering Results,low in the dimensions that have anoutward or community/group focus. Thegeneral implication, therefore, is thatpeople are more inhibited by the aspectsof stewardship that dictate communitybuilding and sharing and are lessinhibited by those aspects that dictateself-development.

Addressing the SecondaryQuestion – the GenderQuestionThe first gender issue to be addressedwas whether or not there were significantdifferences between the averageresponses of male and femalerespondents. In order to make thisdetermination, a single factor ANOVAwas performed on the combined meanresponses for all nine dimensions forboth sexes. The ANOVA was performedat a 95% significant level with thefollowing pair of hypotheses:

H0 : 1= 2

H1 : The two means differFrom this test, a p-value of 0.79, an

F-stat of 31.6768, and an F-critical of1.9456 was obtained. The p-value ledto the conclusion that there was notenough statistical evidence to infer thatthe alternative hypothesis was true;hence the null hypothesis was acceptedand the conclusion was that there wereno differences between male and femalerespondents’ abilities to practicalizestewardship concepts.

With the initial conclusion that therewas no evidence to infer that there weresignificant differences between male andfemale responses, the data was furthersubjected to a stringent examination todetermine as much as possible theinfluence of gender on one’s ability tobe a steward. To do this, a chi-squaredtest was performed at a 95% significancelevel between gender and the overallmean responses across the ninedimensions. The hypotheses for this testwere:H0 : The two variables are independentH1 : The two variables are dependant

The p-value from this test was0.5146 and the chi-squared stat was2.2894. In view of the high p-value, therewas no compelling statistical evidenceto infer that the alternative hypothesiswas true and, therefore, it was concludedthat there was no connection between

Exhibit IV: Final Ranking ofDimensions (Entire Data Set)

Ranking Dimensions

1 Vulnerability and Maturity

2 Personal Mastery

3 Personal Vision

4 Risk-Taking and Experimentation

5 Valuing Diversity

6 Raising Awareness

7 Shared Vision

8 Delivering Results

9 Mentoring

Exhibit VFinal Ranking of Dimensions by Gender

Dimensions Male Ranking Female Ranking Difference

Vulnerability and Maturity 1 1 0

Personal Vision 2 3 1

Risk Taking &Experimentation 3 4 1

Valuing Diversity 4 5 1

Personal Mastery 5 2 3

Delivering Results 6 6 0

Raising Awareness 7 7 0

Mentoring 8 8 0

Shared Vision 9 9 0




gender and how people responded.After having established that gender

was not a significant determinant of aperson’s ability to practicalize stewardshipand take it into the mainstream as analternative form of leadership, the nextstep was to see if male and femalerespondents were inhibited by the samefactors in more or less the same way.To do this, Steps 1, 2, and 3 from theprimary question were repeated and afinal ranking of the dimensions ongender lines, which would serve as anindication of whether males and femaleswere affected differently by the factorsthat inhibit their ability to practicalizestewardship as a form of leadership –thus answering the first subsection ofthe secondary question – was obtainedand the result, in order of least to mostinhibiting, is shown in Exhibit V.

The Age FactorAs was the case with the gender questionabove, the first step in responding tothe age question was to determinewhether or not there were significantdifferences between the mean responsesacross the dimensions for various agegroups. For this purpose, therespondents were partitioned into thethree age categories that provided themost equal spread possible and, at thesame time, provided a clear chronologicaldemarcation – 24 to 29 year olds, 30 to34 year olds, and those who were 35 yearsand older. A single factor ANOVA wasthen performed on the combined meanresponses for all the dimensions on eachof these categories. The test wasperformed under the following pair ofhypotheses:H0 : 1=2=3

H1 : At least two of the means differPerformed at a 95% statistical

significance level, the test resulted intoa p-value of 0.002358, an F-stat of6.321118, and an F-critical of3.061234. This low p-value led to theconclusion that there was enoughstatistical evidence to infer that thealternative hypothesis was true andthat there were significant differencesbetween at least two of the meanresponses of the three age groups.

The next issue to address, therefore,was to determine exactly which agegroups exhibited significant differencesin their responses. This was accomplishedby performing a Tukey and Fisher withBonferroni adjustment LSD test. TheLSD test results, with alpha () of 0.05,returned a hurdle amount of 0.26 forthe Fisher Test with the BonferroniAdjustment and an omega () of 0.27.The result of this test was that differencesexisted only between the first agecategory (24 to 29 year olds) and thethird age category (those 35 years andolder) and between the second agecategory (30 to 34 year olds) and thethird age category. This means thatrespondents who were 35 years and olderresponded significantly different fromtheir younger counterparts.

Seeing that there were significantdifferences between the mean responsesof the third age category and the firstcategory on the one hand and the thirdcategory and the second category on theother, the data was then subjected tofurther testing to determine whetheror not age was a factor in determiningone’s ability to practicalize the conceptsof stewardship. To do this, a chi-squaredtest was performed at a 95% significancelevel between age and the overall meanresponses for the nine dimensions. Thehypotheses for this test were:H0 : The two variables are independent

H1 : The two variables are dependantThe p-value from this test was

0.0047 and the chi-squared stat was18.7127. In view of the low p-value, therewas compelling statistical evidence toinfer that the alternative hypothesis wastrue and, therefore, the conclusion wasthat age affects a person’s ability topracticalize stewardship.

The next step in this progression wasto see, on an individual dimension level,if there was any relationship betweenage and any of the dimensions. As waswith the chi-squared test performedbetween age and the overall meanresponses, the hypotheses for each ofthese nine tests were:H0 : The two variables are independentH1 : The two variables are dependant

From these tests, the following resultswere obtained; Age vs. Personal Vision,p=0.1078; Age vs. Personal Mastery,p=0.1352; Age vs. Vulnerability andMaturity, p=0.0405; Age vs. Risk Takingand Experimentation, p=0.1863; Age vs.Mentoring, p=0.225; Age vs. RaisingAwareness, p=0.4336; Age vs. SharedVision, p=0.029; Age vs. Valuing Diversity,p=0.0019; and Age vs. Delivering Results,p=0.6932. These results indicate that,though the chi-Squared test between ageand the overall mean responses suggestedthat age had a significant influence onpeople’s ability to practice stewardship,only three of the nine dimensions –Vulnerability and Maturity (p=0.0405),Shared Vision (p=0.029), and ValuingDiversity (p=0.0019) – were affected byage.

After having established that age hadan influence on a person’s ability topracticalize stewardship in general andon Vulnerability and Maturity, SharedVision, and Valuing Diversity in particular,the next step was to see if individual age



categories were inhibited by the samefactors in more or less the same way. Todo this, Steps 1, 2, and 3 from the primaryquestion were replicated here in orderto obtain a final ranking of thedimensions, which would serve as anindicator of whether the various agecategories are affected similarly ordifferently by the factors that inhibit theirability to practicalize stewardship - thusanswering the second subsection of thesecondary question. The final rankingwas, thus, obtained and the result, in orderof least to most inhibiting, is shown inExhibit VI.

The Hierarchy (Position) FactorAgain, the first step here was todetermine if there were significantdifferences between the means responsesof respondents based on their relativepositions in their organizationalhierarchy. In order to do this, the reportedorganizational positions weresubjectively grouped into three maincategories: Senior Managers, MiddleManagers, and Junior Managers. A singlefactor ANOVA was then performed onthe overall mean responses for alldimensions among the three hierarchicallevels to see if there were significantdifferences between any two of the levels.The test, performed at the usual 95%

significance level, was conducted underthe following pair of hypotheses:H0 : 1= 2=3

H1 : At least two of the means differThe resulting p-value of 0.173395

and F-stat of 1.77462 did not providesufficient statistical evidence to inferthat the alternative hypothesis was true.Hence, the null hypothesis was acceptedand the conclusion was that there wereno differences in the mean responsesfor each of the defined hierarchical levels.

The next step to answer the hierarchyquestion was to determine if a person’sposition in the hierarchy of hisorganization affected his ability toimplement the dimensions ofstewardship. To accomplish this, a Chi-Squared test was performed on theoverall mean responses at a 95%significance level under the followingpair of hypothesis:H0 : The two variables are independentH1 : The two variables are dependant

This test turned out a p-value of0.3249 and a chi-squared stat of 6.9561,which demonstrated that there was notenough statistical evidence to infer thatthe alternative hypothesis was true.Therefore, the null hypothesis wasaccepted and the conclusion was thata person’s position in the hierarchy didnot influence his ability to implement

stewardship concepts.In order to be convinced that

hierarchical position does not factor intoone’s stewardship ability in anydimension, further chi-square analysesfor independence were performed tomeasure the relationship betweenposition and each of the nine dimensions.Again, these tests were conducted at a95% significance level under thefollowing pair of hypotheses:H0 : The two variables are independentH1 : The two variables are dependant

From these tests, the followingresults were obtained; Position vs.Personal Vision, p=0.1189; Position vs.Personal Mastery, p=0.0303; Positionvs. Vulnerability & Maturity, p=0.1428;Position vs. Risk Taking andExperimentation, p=0.1074; Positionvs. Mentoring, p=0.3208; Position vs.Raising Awareness, p=0.5662; Positionvs. Shared Vision, p=0.6089; Positionvs. Valuing Diversity, p=0.1109; andPosition vs. Delivering Results,p=0.7152. The p-value of the test forindependence between position andPersonal Mastery, p=0.0303, providedsufficient statistical evidence to inferthat the alternative hypothesis was truein that instant. Therefore, the conclusionwas that though, on the average, one’shierarchical position did not have anyinfluence on his ability to implementstewardship concept, it did have aninfluence on Personal Mastery.

Having established that there wasno significant difference between theabilities of various hierarchy levels toimplement stewardship and that one’sposition did not, on the average,influence his stewardship abilities exceptwith one of the nine dimensions,Personal Mastery, a replication of Steps1, 2, and 3 from the primary question

Exhibit VIFinal Ranking of Dimensions by Age

Dimensions 24-29 Ranking 30-34 Ranking 35 + Ranking

Vulnerability & Maturity 1 1 1


Risk Taking & Experimentation 4 4 3





Mentoring 6 6 6

Shared Vision 9 9 9




was done here and the final ranking,answering the third subsection of thesecondary question, is seen in ExhibitVII.

The Industry QuestionThe initial point of contention here, asbefore, was whether or not there weresignificant differences between theabilities of persons working in differentindustries to implement stewardshipprinciples. To do this, the respondentswere subjectively grouped into fourindustry categories – the Service Sector,the Financial Sector, the IndustrialSector, and the Professional Sector. Thena single factor ANOVA was performedon the overall mean responses acrossthe nine dimensions for these fourindustry sectors to see if there were anydiscernible differences in their responses.The ANOVA was performed at a 95%significance level under the followingpair of hypotheses:H0 : 1= 2= 3=4

H1 : At least two of the means differThe results from this test were a p-

value of 0.746253, an F-stat of0.409791, and an F-critical of2.680811. From this high p-value, therewas not sufficient statistical evidenceto infer that the alternative hypothesiswas true. Thus, the null hypothesis was

accepted and the conclusion was thatthere was no significant differencebetween the abilities of persons invarious industries to implementstewardship principles.

The data was then further examinedto determine if a person’s industry hadany influence on his stewardship abilities.To do this, a Chi-Squared test wasperformed between the variouscategories of industries and the overallmean responses for the nine dimensions.The test was performed under thefollowing pair of hypotheses:H0 : The two variables are independentH1 : The two variables are dependant

The results from this test were a p-value of 0.3857, a chi-squared stat of9.5785 and chi-squared critical of16.919. These results led to theconclusion that there was not sufficient

statistical evidence to infer that thealternative hypothesis was true.Therefore, the null hypothesis wasaccepted that one’s employment categoryplays no role in his stewardshipcapabilities. With the empiricalestablishment that industry had noinfluence on any of the nine dimensions,a final ranking of the dimensions alongthe various industries using Steps 1,2, and 3, used to determine the finalranking from earlier sections wasobtained and the result is shown inExhibit VIII.

The Question of NationalityHere again, the first issue to be resolvedwas whether or not there were significantdifferences between the stewardshipabilities of individuals based on theirnationalities. The data set containedrespondents primarily from the Republicof South Africa and, secondly, from theNetherlands. There was a variety, thoughnot much, of other respondents fromother parts of Europe, other parts ofAfrica, Asia, and the Americas. It wasdetermined that besides South Africaand the Netherlands, other countrieswere not sufficiently represented towarrant their being place in separatecategories for analysis. Therefore, thedata set was demarcated along two lines

Exhibit VIIFinal Ranking of Dimensions by Position

Dimensions Sr. Man Rankings Mid. Man. Rankings Jr. Man.Rankings

Vulnerability and Maturity 1 1 1


Risk Taking and Experimentation 3 4 3





Mentoring 8 8 7

Shared Vision 9 9 9

Exhibit VIII: Final Ranking of Dimensions by Industry

Dimensions Service Financial Sector Industrial Sector ProfessionalSector Sector

Vulnerability and Maturity 1 1 1 1

Personal Vision 2 2 2 2

Risk Taking and Experimentation 4 4 6 5

Valuing Diversity 5 6 4 4

Personal Mastery 3 3 3 3

Delivering Results 9 5 5 6

Raising Awareness 7 7 7 7

Mentoring 6 8 8 9

Shared Vision 8 9 9 8



to obtain almost similar distributions– South Africans and non-SouthAfricans. Based on this classification,a single factor ANOVA was performedon the overall mean responses of thesetwo categories to see if they exhibitedsignificant differences. The test wasconducted at a 95% significant levelunder the following hypotheses:H0 : 1= 2

H1 : The two means differThis test returned a p-value of

0.619676, an F-stat of 0.247415, andan F-critical of 3.908258. Based on thisresult, the conclusion was that there wasnot enough statistical evidence to inferthat the alternative hypothesis was true.Hence, the null hypothesis was acceptedand the conclusion was that there wasno difference between South Africansand non-South Africans in their abilitiesto implement stewardship principles.

Seeing that there were no differences,the next step was a Chi-Squared test ofindependence to determine if there wasany relationship between nationality andstewardship. The test was run at a 95%significance level under the followingpair of hypotheses:H0 : The two variables are independentH1 : The two variables are dependant

The result from this test was a p-value of 0.9089, and chi-squared stat

of 0.5451, and a chi-squared critical of7.8147. These results indicated thatthere was not enough statistical evidenceto infer that the alternative hypothesiswas true. Hence, the null hypothesis wasaccepted and the conclusion was thatnationality and stewardship wereindependent variables.

Furthermore, chi-square analyses forindependence were used to measure therelationships between nationality andeach of the nine dimensions. Again, thesetests were conducted at a 95%significance level under the followingpair of hypotheses:H0 : The two variables are independentH1 : The two variables are dependant

In order to see which factor mostinhibited South Africans and non-SouthAfricans, the usual replication of Steps1, 2, and 3 from earlier procedures wasdone here. The Exhibit IX, therefore,represents the final rankings of inhibitingfactors – from least to most inhibiting– for South Africans and non-SouthAfricans.

Discussion of Results andImplications for StakeholdersThe research underpinning this articlebegan with the quest to empiricallydetermine factors that stunt thedevelopment of stewardship amongst

contemporary leaders. In order to dothis, the Stewardship Framework withnine dimensions of stewardship wasintroduced and the inclusion of eachdimension in the framework wasjustified. These are the nine dimensionsalong which respondents werequestioned to determine which mostinhibited their implementation of thestewardship concept, as argued for bythis article.

To recap, the hypothesis under whichthe investigation was conducted was thatstewardship, as an alternative form ofleadership, has not yet begun to supplanttraditional forms of leadership in ourorganizations and communities. Basedon the overall mean response of allrespondents across all nine dimensionsof the Stewardship Framework, whichwas 2 (rounded to the nearest wholenumber), and the classification that meanresponses of 1 and 2 are indications oflow application of stewardship, thehypothesis was answered in theaffirmative. Furthermore, a t-test of thismean confirmed that this result wasrepresentative of the population, leadingto the conclusion that, indeed,stewardship is not being practiced onan appreciable level.

The next quest was to determinewhich of the nine dimensions mostinhibited contemporary leaders frompracticing stewardship. The resultsshowed that all of the respondents weregenerally most inhibited by thedimensions that focused on externalor group factors, except for ValuingDiversity, and were generally lessinhibited by the factors that wereinternally focused on their ownabilities, except for Delivering Results.Valuing Diversity, which is an externalor group-focused dimension, was

Exhibit IXFinal Ranking of Dimensions by Nationality

Dimensions South Africans Non South Africans

Vulnerability and Maturity 1 1

Personal Vision 2 2

Risk Taking and Experimentation 3 4

Valuing Diversity 5 5

Personal Mastery 4 3

Delivering Results 6 8

Raising Awareness 8 6

Mentoring 7 7

Shared Vision 9 9




neither in the top third or the bottomthird of the rankings for allrespondents – it was in the middlethird. This means that, although peoplewere more challenged by external orcommunity oriented dimensions,Valuing Diversity was an exception tothe general finding of externally-focused dimensions being at thebottom of the rankings. Another

exception, this time more extreme, tothe finding of internal dimensionsbeing less inhibiting, was people’sability to Deliver Results. Thisdimension fell in the bottom third ofthe rankings, along with Shared Visionand Mentoring. On the other end, thetop third, Vulnerability and Maturity,Personal Mastery, and Personal Vision– in that order, were the factors thatwere least challenging to Respondents’ability to implement stewardshipconcepts. The presence of SharedVision in the bottom third of therankings and Personal Vision in thetop third demonstrates thatcontemporary leaders lack the abilityto transform their personal visions intothe collective vision of theirorganizations, thereby failing toengender the group-centered conceptthat is so crucial to stewardship.

Then, the investigation sought todetermine if the factors that inhibitedrespondents were still present in similarmanner along demographic lines, suchas gender, age, position, industry, and

nationality. The results from all of thesetests were, with minor variations in therelative ranking of the dimensions,remarkably similar. It was againdetermined that people, irrespective oftheir gender, age, position, industry, ornationality, were generally moreinhibited by externally-focuseddimensions and generally less inhibitedby internally-focused dimensions.

From the gender perspective, malesand females were generally similar in theirability to practicalize stewardshipconcepts. There were no significantdifferences between males and femaleson the average across the nine dimensions.Here, again, both demographic categories,with the usual exceptions, were similarlyaffected by the dimensions – internally-focused dimensions at the top of therankings and externally-focused ones atthe bottom. The notable features herewere that men were less inhibited, thoughslightly, by Risk-Taking andExperimentation than women and, moresignificantly, were more inhibited byPersonal Mastery than women. PersonalMastery, for women, was the second leastinhibiting factor and the fifth for men –an indication that women are more in-tune with their personal abilities thanmen are. Both men and women were leastinhibited by Vulnerability and Maturityand Personal Vision and were mostinhibited by Raising Awareness,Mentoring, and Shared Vision, in thatorder.

From the age perspective, differenceswere found between the abilities acrosseach of the nine dimensions of personsolder than 35 years old on the one hand,and persons younger than 35 on theother hand. Again the general pattern,with the usual exceptions, whereininternally-focused dimensions were atthe top and externally-focused ones wereat the bottom, was observed. Though

different age categories were similarlyinhibited by the dimensions, persons35 years old and older generally wereless inhibited than their youngercounterparts for each of the ninedimensions, as they had higher meanresponses. Again, Vulnerability andMaturity and Personal Vision were atthe top of the ranking for each agecategory. However, where PersonalMastery was the third least inhibitingfactor for people under 35 years of age,it was the fifth most inhibiting factorfor persons older than 35 years. Similarly,people older than 35 were less inhibitedby Risk-Taking than their youngercounterparts, as this dimension fell inthe top third for the older generationand in the middle third for the youngergeneration. Finally, with minorvariations, all age categories were mostinhibited by Delivering Results, RaisingAwareness, and Shared Vision.

From the hierarchical point of view,all levels of the organization were affectedby the dimensions in the usual pattern.Vulnerability and Maturity and Personal

Although people were more challenged by external orcommunity oriented dimensions, Valuing Diversity wasan exception to the general finding



Vision, in that order, were the two leastinhibiting factors for all levels of theorganization while Raising Awareness,Mentoring, Delivering Results andShared Vision were the factors that mostinhibited all levels of the organization.It was, however, discovered that personsin junior manager capacities were, byfar, less tolerant and less capable ofdealing with diversity in the workplacethan persons in middle manager andsenior manager capacities. For juniormanagers, Valuing Diversity was thesecond most inhibiting factor, comparedto being the fifth most inhibiting factorfor middle- and senior managers. Also,it was discovered that junior and seniormanagers were more open to Risk-Takingand experimentation than middlemanagers, as this dimension fell in thetop third for the former two categoriesand in the middle third for the lattercategory.

From the industry angle, again nosignificant differences between personsworking in the various industrycategories were found. The generalpattern of internal dimensions beingless inhibiting than external ones wasref lected for each of the industrycategories. In fact, all categories wereleast inhibited by the same factors inthe same order – Vulnerability andMaturity, Personal Vision, and PersonalMastery – and were most inhibited byRaising Awareness, Shared Vision, andMentoring. However, some veryinteresting patterns were uncovered here.First, persons in the industrial andprofessional industry categories wereless inclined to take risk, signifying theirrigidity when it comes to establishedprocedures in the organization, thanpersons in the service and financialsectors. Secondly, Delivering Results, for

persons in the service sector, representedthe most inhibiting factor while it wasin the middle third of the rankings foreach of the other industry classifications.Finally, it was found that persons in theservice sector were more appreciativeof the concept of Mentoring than theother categories. For the other categories,Mentoring was either the most, or thesecond most, inhibiting factors, whileit fell in the middle third of the rankingfor the service sector.

From the nationality standpoint,again it was discovered that there wereno significant differences between SouthAfrican and non-South Africans in theirrespective abilities to implementstewardship concepts. Both categorieswere generally less inhibited by internalfactors than they were by externalfactors, with Vulnerability and Maturityand Personal Vision at the top andMentoring and Shared Vision at thebottom of both rankings. The only pointof interest along nationality lines is thefact that South Africans appear to beless inhibited by Delivering Results –in the middle third – than non-SouthAfricans – the second most inhibitingfactor.

Further to these tests, it was alsodetermined that, on the average acrossall nine dimensions, factors like gender,position, industry, and nationality hadno influence over respondents’ abilityto practice or implement the conceptsof stewardship. Age, on the other hand,was found to have, on the average acrossthe nine dimensions, an impact onpeople’s ability to practice stewardship.A more detailed examination of theinfluence of these demographic factorson one’s ability to practice stewardshiprevealed that, though people’s genderwas a non-factor in the determination Reference # 03M-2010-02-10-01

of stewardship abilities, it did, in fact,have an influence on respondents’ abilityto Value and Manage Diversity, albeitslightly; age, though found to beinfluential on the average on people’sstewardship abilities, actually had aninfluence on only three of the ninedimensions – Vulnerability and Maturity,Shared Vision, and Valuing Diversity;and position, also found not to beinfluential on the average, actually hadan influence on Personal Mastery.

The implication of all of this forstakeholders is the fact that results fromthese tests provide a road map, so tospeak, considering the limitations of thedata mentioned above, by whichcontemporary leaders can be guided intodeveloping their stewardship abilities.The case for stewardship as a viable and,indeed, better alternative to traditionalleadership has been made by renownedleadership theorists (Greenleaf, Senge,Spears, Drucker) and is being reinforcedby the research on which this article ispremised. A Stewardship Framework hasbeen offered and substantiated and ourresearch revealed that, on the whole,people are, at best, average in theirstewardship abilities and, at worst,dismal. This article, hopefully, has startedthe ball rolling on examining reasonswhy people are still archaic in theirstewardship development, and hasprovided empirical evidence of whichfactors inhibit people most and whetherthese factors are influenced by peoples’demography. These results could,therefore, serve as the basis of furtherresearch in the quest of makingcontemporary leaders more acceptableof the stewardship concept for a moreliberal application.




The Case of Dr Beat Richner

One Good TurnDeserves Another

Dr. Richner hasestablished a solidstructure andempowered the veryfoundation of thiswork, namely, thehospitals, theirdistinctive policiesand the way theywork sansbureaucracy. Thus thebasic line of action issubscribed, so thatthis great team ofexperts would notnecessarily have toface trouble incontinuing with thiswork.

75% of domestic animals and rice crops, whichconstituted the backbone of the country’seconomy.

In 1975 the Khmer Rouge regime underthe command of Pol Pot, and stronglyinfluenced by China, took power. A greatpart of the population was forced to leavethe cities to work on rural projects. Acampaign against Western culture followed,causing the destruction of everythingregarded as western. It is believed thatnearly 8 million Cambodians died duringthe period due to cruel executions, diseases,starvation and unhygienic work conditions.The regime chased medics, teachers, andprofessionals in general. In 1978 Vietnamsaw a serious offensive that aimed to stopKhmer Rouge border incursions and stopthe genocide.

The war between Vietnam and the KhmerRouge persisted till late 1980s. In 1991 acomprehensive peace settlement wasestablished and the UN took care of thedisarmament process and rehabilitation ofthe refugees. The situation is no better eventoday, as the country still reels under theyoke of political instability.

A Helping HandBeatocello is Dr Richner, or at least the namehe is known by in Cambodia, where he hasworked as a paediatrician since 1991. Heis a burly 62 year-old Swiss who also playsthe cello wonderfully well.

Cambodian children frequently fall illand die due to the lack of proper health

care and hospital facilities. A 62 year-old Swisspaediatrician, Dr Beat Richner, managesseveral Children’s Hospitals in Phnom Penhand Siem Reap, in Cambodia. He carries outa bold task and the cornerstone of his crusadeis to save as many children’s lives as possible.His activities are grounded on this cause,dedication to the well-being of the hospitalshe runs and his staff, and a solid reputationin the country. “Without our hospitals about90 thousand children would die”, he says.

Kantha Bopha Children’sHospitals in CambodiaChildren are perhaps the most unprotectedwhen it comes to health care, particularlyin those countries where the after-effectsof civil wars are still present in some shapeor form, not to mention the added burdenof poverty. Such people are at the mercy ofthose who can help them to keep going withtheir lives.

This is the case of Cambodia, an Asiancountry with a population of about 14.8million inhabitants, of whom 1.3 million livein the capital city of Phnom Penh. The cruelcivil war that devastated the country whenthe government of Lon Nol was overthrownby King Norodom Sihanuk, ultimately cameto an end in 1973, leaving behind a famine-stricken populace who were forced to facethe aftermath of the destruction of about



Dr. Kimio Kase’sinterests lie in the area of

corporate-level strategy, viz., the

creation of value from the

corporate parent. His recent

research focuses on the

transformational leadership from

the viewpoint of leaders’ mental

scheme. He is a visiting professor

at CEIBS in Shanghai;

International Christian University

in Tokyo, and Yonsei University,

PAD at Piura University in Lima,

etc. Kase holds an MBA degree

from IESE, and a doctor’s degree

in Business Administration from

Manchester University. He is a

member of the editorial board of

Cross Cultural Management: An

International Journal.

Christian Duarte Varelahas been working as a researcher

initially at the University of La

Laguna in the Canary Islands and

presently at Antonio de Nebrija

University in Madrid, Spain. His

area of study comprises both

Management Strategy and

Corporate Social Responsibility.

Trained as a biologist with an MSc

from the University of La Laguna

in Tenerife in ethology and

molecular biology, he combines

knowledge of science and

socioeconomic interests to pursue

studies focusing on the success of

companies with regard to their

strategies and the resultant social

implications. He conducted and

published on the investigations at

the Canary Islands University

Hospital Research Unit (HUC) in

collaboration with Altus

Pharmaceuticals, Boston, USA.

One Good Turn Deserves Another

Dr Beat Richner was born in Zurich,Switzerland, where he graduated frommedical school in 1973, and later on majoredin paediatrics. He joined the Swiss Red Crossin 1974 and was assigned to Cambodia, towork at the Kantha Bopha’s Children’sHospital.

During these years in Europe, Dr Richneropened his own practice and also gave someconcerts in Switzerland and abroad, playingas Beatocello, an entertaining character hecreated.

Time went by and, in 1991, KingNorodom Sihanouk asked him to go backto Cambodia to rebuild the Kantha Bopha’sChildren Hospital. He did so, and since thenhas headed a magnificent and productiveendeavor that helped to rebuild and expandseveral hospitals, both in Phnom Penh andSiem Reap.

In 1992 he created the Kantha BophaFoundation in Zurich for raising funds tobuild new hospitals in Viet Nam. By 1995the hospital had provided medical aid to 1000outpatients and 350 inpatients. KingNorodom Sihanouk and Primer Minister HunSen contributed to the building of newhospitals by granting a plot of land in PhnomPenh and Siem Reap respectively. ThusKantha Bopha II and a Health EducationCentre were built, the last focusing onproviding health education and adequatemedical facilities for the treatment of childrenin need of hospitalization.

All in all, Kantha Bopha’s ChildrenHospital was getting too small, exceedingits capacity, just around the time when a plotof land was granted in Wat Phnom to builda new hospital. Thus, Kantha Bopha IV wasinaugurated in December 2005. It was worthUS$ 15 mn and could hold 555 beds, 4 surgicaloperating theatres, two intensive care units,a laboratory with a blood bank, an X-rayimaging lab, 4 ultrasound scanners and aCT scanner. It also had a complete pharmacy,

an outpatient station and a prevention centre.Two years later, in December 2007,

Kantha Bopha V was inaugurated, with 300beds, a prevention station, X-ray, fluoroscopyfacility, ultrasound scanner , 9 units with34 beds, a laboratory, a conference room anda library.

A year later, in December 2008, Dr Richnerinaugurated along with King NorodomSihamoni and the Prime Minister SamdechHun Sen, the extension of the HospitalJayavarman VII with 200 beds, laboratory,pharmacy and radiology services.

All these years, thanks to Dr Richner’sunceasing work, Kantha Bopha’s Hospitalshave achieved a high and prestigiousreputation both within the country andabroad. As on date, nearly 8.2 millionoutpatients and 650 inpatients have beenassisted in these hospitals and 90 thousandsurgical operations performed in the past18 years of unflagging work, saving morethan 500 thousand children’s lives.

Dr Richner profits from his cello playingtalent, and offers benefit concerts in PhnomPenh every Saturday for a mostly Europeanaudience, to raise funds for Hospitals bothin Phnom Penh and Siem Reap (whichneighbours the ruins of Angkor, north ofCambodia). All these iform an integral partof a titanic crusade carried out in one of thepoorest countries in Asia. At the end of eachconcert, he addresses the public, greets andthanks them for attending, and exhorts themto help out in this cause. He tells his audience:“Without our hospitals, nearly 90 thousandchildren would die”.

His concerts collect about US$6 mn ayear, plus a 7% and 8% input from Cambodianand Swiss governments respectively paiddirectly to his foundation, bypassing theministry, and also private donations procuredthrough Dr Richner’s personal efforts,totalling US$ 22 mn a year. Kantha BophaChildren’s Hospitals owe their success to their



excellent management and businessmodel.

Successful Business ModelThere are several people and organizationsin the world that work for the bettermentof the poor, and wish to lend a helpinghand to the underdeveloped countries.But success stories of this nature are fewand far between. Microcredit schemeinvented by Yunus is one of the few thatlight the path of aid agents.

In the year 2000, an internationalteam of experts was sent to Cambodiaby the Swiss Federal Agency forDevelopment and Cooperation (DEZA)to evaluate the hospitals in the country.Kantha Bopha was rated as a primeexample of a project for the Third World.After inspecting the three hospitals inperson, the director of DEZA fullyacknowledged the final result of theexperts: ‘Care of patients, organizationand hygiene are excellent. Kantha Bophahas an optimal expense-to-use relation.’1

Dr Richner’s example, therefore,merits a close scrutiny so that we cananalyse it and draw some useful lesson.

Our Analysis Points to the FollowingConclusions1. The use of a clear and well-defined

business model that aims to save thesick children in Cambodia instead ofembracing an all-comprehensiveobjective of fighting against poverty.

2. Therefore the pursuit of efficiencyrather than the effectiveness istargeted.

3. The use of a well-designed controlsystem – the external control systembased on the foundation and its

supervisory board, and the externalaudit firm (PricewaterhouseCoopers)on the one hand, and on the other,the internal control system built totake into account the medical andsupport staff to allow the alignmentof the hospitals’ interests with thoseof the staff. It is worth mentioningthat the salaries paid are higher thanthe market, which also importantlysignifies that Dr Richner does notexpect the transcendental motivationfrom his staff but makes use oftangible motivation instead by wayof higher salaries.

4. An entrepreneurial business modelcan be extrapolated from Richner’swork.

These four points can be elaborated as:Clear and Well-definedObjectiveThe international aid activities, bothmultilateral aid organizations and NGOs/NPOs, tend to set too wide and unfocusedpurposes as their objective, such aseradicating the poverty in theunderdeveloped countries and, hence,tend to take up the whole issue of povertyfrom the angle of systemic approach.Conversely, Dr Richner focuses on oneunique clear objective – to save as manychildren’s lives as possible – rather thanaiming at all-embracing purposes such

as ameliorating the living environment;improving the education; eliminatingpoverty; or centring on governmental/macroeconomic frames, among others.Exhibit I shows the graphic representationof Dr Richner’s basic scheme.

The success of this endeavour residesin the application of a clear and well-defined business strategy. In Dr Richner’sown words: ‘All treatment in the KanthaBopha Hospitals is free. There is justicefor all. There is no corruption. We givecorrect salaries….there are facilities andmedicines and drugs of the same standardbeing used in Europe and the US. That’swhy the hospitals are a huge success. Itis recognized by the internationalevaluations as a centre of excellence.’2

To sum up, the action policies in theKantha Bopha Children’s Hospitals followthese patterns: Medical Care is Free. The charge

of extra fees is avoided. As a result,the medical treatment doesn’t leavethe poor families any poorer. Severalunnecessary deaths are avoided byproviding medical care to thosefamilies who do not have the necessarymeans to afford a private one. As DrRichner says: “Over the years, millionsof children have been treated free ofcharge and 850,000 have beenhospitalized free of charge within our

Exhibit I: Basic Scheme of Dr Richner’s Aid Work

PopulationControl

FightingPoverty

Increase LiteracyLevel

Improve SanitaryConditions

Enhance Living Environment

Out of Dr Richner’sControl

Dr Richner’sPrioritary Aim:

Save Sick Children

Efficient HospitalManagement

(Motivated Staff And SuitableWork Conditions)

1 h t t p : / /www.be a t - r i chn e r. ch /As se t s /richner_present.html accessed on December 7,2009

2 Dr Richner’s inauguration speech of the KanthaBopha V on December 28, 2007.



Ext Ad 8



five Kantha Bopha hospitals. Theseare places of justice. There is nocorruption. The poor, that is to say80% of the people, and the rich areboth entitled to be cured (...) The creedof the international community is thatthe patient or the patient’s parentshould pay for treatment. 80% ofCambodians, however, have nomoney. (…) without theseinfrastructures of justice, there wouldbe 90,000 deaths per year (…)”3

Dr Richner imports all the medicinesand medical supplies used in KanthaBopha Hospitals mainly fromThailand, thus averting the boguspharmaceutical products that delugeCambodia. This is an outstandingachievement in a country wheresmuggling of medicines is an everydayoccurrence. These medicines are thenresold in the black market, most ofthe times adulterated, and of course,without medical prescription, withthe consequent health risks.

The medical staff are well-trained instate-of-the-art medical technology.The medical personnel are constantlybeing trained in front-line diagnosistechniques and the latest technologythrough seminars, workshops andconferences wherein they are coachedby medical doctors from abroad.Furthermore, the hospital staff aremotivated by fair and decent salaries.This gives place to an alignment ofinterests between those of the hospitaland the staff. The salaries offered arehigher than those offered at the state-run Hospitals. The average salary paidin Kantha Bopha Hospitals is US$

1000 a month, compared to US$40a month in the state-run hospitals.The use of staff ’s transcendental

motivation would not be a good choicein this case as this would neither rendertangible results, nor would it amelioratethe medical care. On the contrary, DrRichner, appeals directly to the extrinsicmotivational factors, namely, fair wagesthat help meet the vital needs of theemployees which in turn, has a verypositive feedback – content and gratefulemployees, who are also motivated toaccomplish an honest and efficient job,having in mind a unique clear and well-defined objective: to save lives.

This creates an increased interest forperfecting the activity within thehospitals, by keeping up hygienicstandards; giving the best and mostefficient care to patients; showing awillingness to get trained and learn thefront-line techniques; and above all,showing an affection in day-to-day workas it is the bread and butter of all thestaff. This is, in fact, a fail-safe strategy.

The hospitals have currently 2100employees, around 180 physicians whoalong with Dr Richner, also govern themanagement of the hospitals; raise funds;establish relationships with donors; andcoordinate the construction of newchildren’s hospitals and the expansionactivities in general, among many othertasks.

The evaluation tests offer positive andtangible results such as the decrease ofHIV transmission in newborns throughbreastfeeding by HIV-infected mothers.The HIV is a scourge for underdevelopedcountries, but thanks to these hospitals,

the rate has decreased dramatically from40% to 5%. This has been conquered byre-educating mothers not to breastfeedtheir newborn babies. This simple facthas saved thousand of infant’s lives.

Efficiency More thanEffectivenessAid organizations such as WHO andUNICEF try to ensure efficiency andeffectiveness in their operations. DrRichner focuses on efficiency and makesuse of effectiveness, the latter being anambitious objective, a motivationalstarting point. Otherwise, it would bewill-o’-the-wisp to base all efforts oneffectiveness, as at the time of investingin resources, it is cumbersome to visualizepalpable aid outcomes and efforts at thatoften turns out to be of little use. ExhibitII illustrates the comparison ofeffectiveness and efficiency.

Dr Richner has criticized some NGOsbasing his anger on the fact that theseorganizations misleadingly try to palliatepoverty, instead of centering on thepractical and attainable aspects, namely,to save lives. Dr Richner remarks: “Overthe past years the attitude of the healthsector of the Swiss Department forDevelopment and Cooperation in Bern,of WHO in Geneva and of various NGOshas been disappointing. They allmonopolize the pity for the poor theworld. However, the mandate is not pity,but fight for and implementation ofjustice… Our activity is not aid, butreinstallation of justice.”4

Such a comprehensive strategycannot be efficient. Efficiency standsfor the accomplishment of clear and well-defined goals through the maximizationof the inputs and outputs of theorganization, whilst effectiveness, in thiscase, embraces a wider spectrum such

3 www.beatrichner.ch/pdf/Richner_Rede175JRGZEngl.pdf accessed on December 7, 2009. Excerpt from:“Doctor Beat Richner: Celebration Address to the 175th Anniversary of Real-Gymnasium Zürichberg”;given on the stage of Schauspielhaus Zürich (main theatre) on September 4, 2008.

4 Excerpt from: “Doctor Beat Richner: Celebration address to the 175th Anniversary of Real-GymnasiumZürichberg”; given on the stage of Schauspielhaus Zürich (main theatre) on September 4, 2008(www.beatrichner.ch/pdf/Richner_Rede175JRGZEngl.pdf accessed on December 7, 2009)



as the eradication of poverty, amongothers. In this way, it could be said thatNGOs have a more idealistic approachand have thus grabbed the attention asentities that aid the poor, eclipsing otherorganizations that are actually gettingtangible outputs, such as Kantha BophaChildren’s Hospitals.

As it has been previouslyhighlighted, at Kantha Bopha Hospitals,the priority is to save lives, and mostof the time, technology is a necessaryevil, namely, it is costly and oftenconsidered a luxury and a waste ofmoney by some NGOs. This has beenthe object of a lot of criticism of KanthaBopha Hospitals. Dr Richner mentionsas an example that it is indispensableto have a CT scanner, a costlytechnological device, in order todiagnose tuberculosis properly. In theview of some, such facilities areunnecessary luxuries for a hospital inan underdeveloped country. It is,however, a serious mistake to believethat the medical situation of a givencountry must be directly correlated to

its economic status. This is a global beliefwhich dictates that hospital facilities,as well as technology, supplies andtechnical equipment must be alignedto the country’s economic reality. Theintroduction of front-line technologyis not accepted and rather disapprovedof. From Dr Richner’s point of view: ‘Inhealth matters it is my daily experiencethat the wealthy world, indeed, does notuse measures of justice in dealing withpolitics of health and the question ofsurvival of the poor in poor countries.The international community, includingofficial Switzerland, promotes the creedthat medical facilities, medicalprocedures and therapeutic means mustconform to the economical reality of agiven country. To 80% of Cambodia’spopulation the economical “reality” iszero. If we would follow that creed, wewould be unable to cure any child withthe dengue fever and any child withtuberculosis (…)5’

It is basically about a totally differentway of looking at things. For Dr Richner,the transcendental motivation (the

motivation that transcends self-interestto do things for others), represents thestimulus to pitch in.

System Supervision: Intrinsicand Extrinsic motivationDr Richner in his inner self has conceiveda way of effectively helping poor ailingchildren. Such an accomplishment is basedboth on intrinsic motivation (motivationassociated with activities that are theirown reward, which stems from your innerfeelings and views and feed your desiresto accomplish and perform)6 and extrinsicmotivation (created from external factorssuch as rewards and punishments) morethan on the transcendental (a motivationgreater in scope or size than somestandard)7. Dr Richner understands thenature of human beings very well. Heknows that he can depend on the goodwill, humanistic feeling, and transcendentalimpulse to help the needy, when workingwith a handful of people. But if his staffis in excess of two-digit number, thencertainly he is aware that he will have todesign an internal control system thatallows the alignment of the staff’s interestswith those of the hospitals. Therefore hemakes use of the extrinsic motivationaldriver concretely, by offering a higher salarythan the market. In the fear of losing suchwell-paid positions the staff also work hardand treat their patients well.

The internal and external supervisionis a necessary requisite to ensure reliability,responsibility and efficiency in anyorganization (see Exhibit III). The hospitalsare audited by PricewaterhouseCoopersto confirm compliance to Art. 728 ff. OR2plus a supervisory board. Such monitoringmechanisms allow the rise of the hospitals’reputation in the public health sector.During all these years of ceaseless activity,the Kantha Bopha Hospitals have actually

5 “Doctor Beat Richner: Celebration address to the 175th anniversary of Real-Gymnasium Zürichberg;given on the stage of Schauspielhaus Zürich (main theatre) on September 4, 2008” (www.beatrichner.ch/pdf/Richner_Rede175JRGZEngl.pdf as accessed on December 7, 2009.)

6 http://www.en.articlesgratuits.com/external-motivation-id2283.php accessed on December 8, 2009.7 http://www.en.articlesgratuits.com/external-motivation-id2283.php accessed on December 8, 2009.

Exhibit II: Effectiveness vs. Efficiency

Effectiveness

Poverty Elimination Systemic Improvement Governmental,

Macroeconomic Frames Education Environment

Efficiency The Achievement of Clearly

Defined Objectives

The Maximization of Outputsfrom Inputs

Aid organizations such as WHO, UNICEF and NGOs attempt to cover both the effectiveness and the efficiency and do notcall into question the usefulness of the transcendental motivation. Dr Richner centers on the efficiency, namely, the savingof children, and does not take for granted that the transcendental motivation is the all-embracing measure.

DrRichner’sStrategy

NGOs

One Good Turn Deserves Another



earned a good reputation and prestige bothwithin the country and abroad. This facthas allowed it to regain some of the lostconfidence in the public health systemamong people.

As a consequence, from very early inthe morning you can see long queues ofaround 2000 to 3000 childrenaccompanied by their parents outside theKantha Hospitals. They come from thevillages in the surrounding areas to tryto get a place on the waiting list8. Forthese children this might mean the onlychance of getting medical assistance,something that might also save their lives.On an average, the Kantha BophaHospitals admit 300 inpatients daily,perform about 60 surgical operations,assist about 3000 outpatients andvaccinate 1500 children. Till 2008, around8.8 million children, 850 of whom wereseriously ill, have been administeredproper health care in the hospitals, whichconstitute 85% of the total of hospitalizedchildren in Cambodia.

Alter all these years of hard, thoughtful,honest and efficient work, we arrive atthe point of putting forward thesustainability and continuity issues. Can

Exhibit III: Dual Control

External

Kantha Bopha Foundation

PricewaterhouseCoopers Audit

Supervisory Board

Reputation Among Hospitalsin the World

The Media

Internal

Alignment of Interests(Higher Wages - Training)

Hospital Reputation(by International Assessment)

Most Modern Premises

Learning of Best Practicesand Technology

Deontology

There is a dual monitoring in the Kantha Bopha Hospitals, both external and internal control systems, the first comprisingsupervision by audits and monitoring and the second based on the alignment of interests of the staff and the hospital bymeans of higher wages than those offered by the State Hospitals.

we conceive Kantha Bopha Hospitals asperpetual? Can we claim that everythingwill continue as it is today, or be even better,when the icon of Beatocello is no longerpresent? According to Dr Richner, a US$200 mn is needed to ensure that KanthaBopha Hospitals will run for the next 20years. So the question is not simple.

DiscussionThere are two basic questions we oughtto focus on: (1) the excellence of thebusiness model-based management ofaid activities vis-à-vis the moremacroeconomic and systemic approachto the management of aid; and (2) thesustainability question of Dr Richner’spersonalized effort.

In the first place, we have seen that,unlike multilateral aid organizations thattake up more systemic approaches to theissue of underdevelopment, and therefore,tend to pursue effectiveness rather thanefficiency, Dr Richner centres more ona clearly defined objective and thereforefollows the path of operational efficiency.Such a move constitutes a successfulbusiness model which can be extrapolatedto today’s entrepreneurial ambience. Toput it into practice, the enterprise hasto count on the implementation of themotivational strategy by structuring the

process according to Dr Richner’s modelas follows:

The transcendental motivation is theinitial kick-off to start mobilizing peopleto help and activate the idea;

The extrinsic and intrinsicmotivational factors are the way toimplement the actions to be followed,for having a unique idealistic aim doesnot get feasible and tangible results. Thisentails a twofold monitoring system,controlled externally by an audit firm anda supervisory board, upheld by aFoundation strictly linked to the project,and along with a good reputationgenerated by an honest and strict set ofactivities. This helps gain the supportand confidence of people andorganizations from different walks of life.This will certainly favor the continuityand success of business. Besides, theinternal motivations include an alignmentof interests that materialize in fair wages,a good name, cutting-edge training inmaintaining standards and masteringtechniques, and the best practices usedtoday, apart from a deep interest in theactivity we are dealing with.

In the second place, we should notmake the mistake of thinking that withoutDr Beat Richner all of these amazingachievements will stray. Dr. Richner hasestablished a solid structure andempowered the very foundation of thiswork, namely, the hospitals, theirdistinctive policies and the way they worksans bureaucracy. Thus the basic line ofaction is subscribed, so that this greatteam of experts would not necessarilyhave to face trouble in continuing withthis work.

Note: This article is largely based on IESE BusinessSchool’s case No. SM-1548-E – “Kantha BophaChildren’s Hospitals: Dr Richner’s Lifework”.

8 Une bonne action? Pensez au Dr. Med Beat“Beatocello” Richner KANTHA BOPHA Children’sHospital. (http://www.lausannekendo.ch/modules/wordpress/category/friends/ accessedon December 22, 2009)

Reference # 03M-2010-02-11-01



Ext Ad 9



Business Model Innovationfor Growth

Reuters Market Light

Reuters Market Lightalso needs to evaluatethe extent to which itshould allowcustomers shape itsservice offering? RMLwould need to createexperiments to learnabout the designprinciples in order tobuild the optimalbusiness model for itsbusiness. The answersto these questionsmight have lessons onhow to innovate thebusiness model forboth RML as well asthe Thomson ReutersGroups as a whole.

Reuters Market Light (RML) is a unique,‘bottom of the pyramid’, mobile-based

information service from Thomson Reutersfor farmers in certain states of India.Launched in October 2007, it providesindividual farmers with ‘customized,localized and personalized’ weatherforecasts, local crop prices, agricultural newsand relevant information (i.e., crop advisory)– in the form of SMS messages sent to theirmobile phones in their local language. Thisallows subscribing farmers to plan irrigation,application of fertilizers, and harvest theircrop – thus, managing some of their risks,as well as to decide when and where to selltheir produce to maximize profit. In 2008,RML was selected by the UNDP as one ofthe six business initiatives that have thepotential to contribute to the MillenniumDevelopment Goals.1

Among the many challenges faced byfarmers in India, which account for India’spoor productivity when compared to otherleading agricultural countries – such asoverregulation and inefficientgovernment policies, poor physicalinfrastructure (e.g., irrigation), inadequateaccess to land and finance and weaknatural resource management – a keyproblem is poor access to informationthat could help farmers with cultivationas well as selling.2 RML provides a solutionto the lack of information problem thatfarmers face. As a result, many farmers

1 “Thomson Reuters Expands Mobile Crop Servicefor Indian Farmers”, Business Standard,January 15, 2009, (http://www.business-standard.com/india/news/thomson-reuters-expands-mobile-crop-service-for-indian-farmers/346223/), accessed August 17, 2009.

2 “India: Priorities for Agriculture and RuralDevelopment”, World Bank report, (http://go.worldbank.org/8EFXZBL3Y0), accessedAugust 10, 2009.



Dr. Chander Veluis an Assistant Professor in

Marketing at the Judge Business

School at the University of

Cambridge, the UK. He is

particularly interested in

exploring the antecedents and

consequences of business model

innovation. Prior to his academic

career, he worked for Booz Allen

Hamilton and

PricewaterhouseCoopers in

London as a consultant

specializing in the financial

services industry. He completed

his PhD at the Judge Business

School, University of Cambridge.

He also holds an MPhil in Finance

from the University of Cambridge

and is a qualified Chartered

Accountant from the Institute of

Chartered Accountants in England

and Wales. Chander’s work has

been published in the Journal of

Development Economics.

Samir Prakashcompleted his MBA at the Judge

Business School, University of

Cambridge, the UK. Prior to that

Samir worked for the BBC as an

R&D Engineer, journalist and

strategy officer. Samir did his

bachelor’s degree in electronic

engineering at the University of

Manchester Institute of Science

and Technology where he was the

recipient of the Engineering

Student Sponsorship award.

Samir also completed his MSc in

Advanced Computing at Imperial

College and was the recipient of

the UK Engineering and Physical

Sciences Research Council

Studentship award.


have attributed significant cost savingsto their RML service.

But why through mobile phones?Because in India, the number of mobileconnections today (427 million) faroutstrips both (a) the number of landlineconnections (37.5 million) and (b) thenumber of Internet subscribers (13.5million).3 Whereas India’s mobile marketis one of the fastest growing in the world,4

the number of landline connections hasdeclined in recent times.5 Internet accessis still highly limited. Therefore, mobileswill remain the dominant means ofpersonal telecommunications in India forthe foreseeable future. To appreciate thepotential of a service like RML, considerthat slightly more than half of India’sworkforce of 523.5 million – i.e., morethan 262 million people – is in agriculture6

and about 130 million of them arecultivators.7

RML’s service was initially beenavailable in three states of India –Maharashtra, Haryana and Punjab – andthe company has expanded sales to 13states by the end of 2009. Initially, saleswere direct with RML agents approachingfarmers. The rapid take-up of RML’sservice – 100,000 farmers in 12,000 -15,000 villages in less than two years –has allowed RML to switch to selling itsservice through agricultural retailers, amode called RML Direct, which waslaunched in February 2009 e.g., farmerscan subscribe to RML through 2,500 retailoutlets in Maharashtra. RML has, atpresent, three channels for sales: through

agri retailers to farmers (RML Direct);bulk sales to agri input companies/NGOs/large groups; bulk sales to mobileoperators. In the latter two cases,intermediaries—those with well-developed distribution networks—areused to sell individual subscriptions.

The current revenue model for RML’sservice is subscription and the serviceis available through major mobilenetworks. The current value chain ofRML’s activity is captured in Exhibit I.Currently, RML carries out all activities—from content sourcing to customersupport and accounting—in connectionwith the service that customers receive,other than operating a mobile network.

The RML’s activities across the valuechain are as follows:l Content is sourced largely by RML’s

own sourcing network. Except forweather and best practicesinformation, the rest is developed byRML internally.

l Formatting of the content to suit SMS/Voice/WAP platforms is also managedby RML’s content managementsystem.

l Marketing is executed by agencies.Mostly through below-the-lineactivities like wall paintings, banners,posters, van campaigns, marketactivities, etc.

l Agri input shops, cooperative banksand other rural sales networksdistribute RML.

l Subscription is sold in the form ofprepaid scratch cards in quarterly, half-

3 “Telecom Subscription Data as on 30th June 2009”, Telecom Regulatory Authority of India, (http://www.trai.gov.in/WriteReadData/trai/upload/PressReleases/694/pr6aug09no61.pdf), accessed August10, 2009.

4 “India Adds 11.9 mil l ion Telecom Subscribers in June”, The Economic Times, (http://economictimes.indiatimes.com/News-by-Industry/119-mn-telecom-users-added-in-June/articleshow/4838311.cms), accessed August 10, 2009.

5 “Telecom Subscription Data as on 30th June 2009”, Telecom Regulatory Authority of India, (http://www.trai.gov.in/WriteReadData/trai/upload/PressReleases/694/pr6aug09no61.pdf), accessed August10, 2009.

6 CIA World Factbook on India, (https://www.cia.gov/library/publications/the-world-factbook/geos/in.html), accessed August 10, 2009.

7 “India: The Impact of Mobile Phones”, ICRIER report, January 2009.



yearly and annual service packs.l Service can be activated by calling a

toll-free line.l Delivery of SMS is managed by service

providers.l A team of multilingual customer care

executives support features likepersonalization, profile changes,delivery issues, etc.RML is continuously exploring

opportunities in different service verticals:dairy farming, poultry, fisheries andsugarcane. The traditional model for value-added mobile services/applications hasinvolved three partners: the mobilenetwork, the service providers and data/content provider. The challenge for RMLis to innovate its business model from afully vertically integrated business modelas it scales up its business. The questionfor RML is whether it should be a contentplayer, an aggregator or should it continueto be in distribution, delivery andcustomer support. This article considersbusiness models from other industriesin order to draw lessons for RML aboutthe appropriate business model as it scalesup its operations.

RML’s Customer ValuePropositionIn January 2009, the Indian Council forResearch on International EconomicRelations (ICRIER), conducted a studyto assess the impact of mobile phoneson agricultural productivity in India. Twohundred people, of whom 160 were small

farmers in five states (Uttar Pradesh, TamilNadu, Maharashtra, Rajasthan and Delhi)were interviewed. ICRIER reports thatamong the farmers it surveyed “almostall reported some increase in convenienceand cost savings” by use of their mobilephones to access agricultural information.8

The nature of the impact falls into threecategories:I. Easy Access to Customized

Contenta. Customers avoided potential losses

by responding quickly to weather anddisease information.

b. Customers improved yields byadopting new seed varieties andcultivation practices.

II. Mobility Benefitsa. Customers benefitted by being able

to make/receive calls while workingon the farm: e.g., the ability to describeplant diseases from the field to expertsand to coordinate with hired labor.

b. Customers benefitted from the abilityto react to travel problems whiletransporting crops.

III.Improved Convenience, Time andTravel Savings

a. The service allowed farmers to avoidlocal travel to get data.

b. The service helped farmers makebetter decisions about where to selltheir output.RML’s customer value propositions

aim to cater for the farmers’ above needs.Clearly, farmers have much to gainthrough the sort of ‘customized, localized

and personalized’ decision-criticalinformation service that RML is offering.Analysis of the ‘Voice of Customers’feedback from RML’s customers led tothe findings, presented in bar chart formin Exhibit II.

Three key benefits were repeatedlystressed by the farmers interviewed aspart of this study:i. Improved profitability through

knowledge of market prices,ii. Weather-related risks mitigated

through forecasts, andiii. Improved knowledge of crop

cultivation and disease controlthrough the crop advisory segmentof the text messages.IMRB’s most recent customer study

also found that the key benefits of RML– as perceived by farmers – are ‘ProvidesMarket Rates’ followed by ‘Weather’information and ‘Farming/Agriculturaladvice on Mobile’. Interviews with RMLcustomers indicate that the benefit fromincreased price transparency was capturedby one of the farmers who said, “Knowledgeof market prices has made it easier to sellproduce at good rates.” In addition, anotherfarmer articulated the benefits of weatherinformation as follows, “RML’s weatherforecasts have made it much easier toprotect my crops. [And] RML’s cropadvisories are excellent. I have learnt alot. My tomato plants are lasting longernow because I know the right fertilizers

8 “India: The Impact of Mobile Phones”, ICRIERreport, January 2009.

ContentSourcing

ContentManagement

Marketing Distribution Subscription Activation Delivery CustomerSupport

Accounting

Market Data TeamWeather AgenciesAgri UniversitiesReuters NewsNetwork

InternalSystems

BTL ActivitiesCo-brandingwithAgri-inputProducts

Agri-input ShopsCooperativeBanksAgri-input cos.

Prepaid ScratchCards

Toll-Free line Service Providers MultilingualSupport Team

Internal FinanceTeam

Exhibit I: The Current Value Chain of RML’s Activity



and medicines for them.” The aboveanalysis shows that RML has a verycompelling customer value proposition.RML needs to leverage these key customervalue propositions to design its businessmodel as it scales up its operations.

Business ModelsRML’s built its business ground up bybuilding all components of the value chain.RML is exploring different businessmodels as it builds up scale. To achievescale, RML is seeking and entering intopartnerships with organizations that havewell-established rural networks whichRML can work together for itsdistribution, e.g., farmers’ cooperativesin India’s states which sell seeds, fertilizersand pesticides to farmers.

To achieve its goals of sustainableprofitability as well as leadership in themarket for customized informationservices for the rural economy, RML needsto work out (a) how to scale up itsoperations nationally in the most cost-effective manner, and (b) how to maintaindifferentiation as competitors andsubstitute services challenge RML forshare. The first (a) implies that RML focuson those activities that are critical to thedelivery of a quality service of genuinevalue to farmers, rather than engage inall activities that form part of the servicedelivery value chain. The second (b)implies that RML establish clearly whatrural customers and potential customersmost want and value – in terms of content,

delivery package, technology platform,customer services, etc. – and stay aheadin the competition for delivering these.

Should RML be a content player, oran aggregator, i.e., a pure, branded supplierof business intelligence for rural customersor should it continue to be in distribution,delivery and customer support. How dothese models affect the customerrelationship and service delivery? Nextwe consider three business models fromother industries in order to draw lessonsfor RML. The three examples werechosen because1. They represent the service industry2. There were innovations to the

business models to cater for newcustomer value propositions that theincumbent firms were not fulfilling

3. There are lessons to be learnt for RMLfrom the design of such businessmodel innovations.

NetflixNetflix is an online DVD rental servicethat uses the postal system and its ownunique distribution system to deliverDVDs to customers. The companyprovides a monthly flat-fee service forthe rental of DVD and Blu-ray discs.9 Asubscriber creates an ordered list, called

a rental queue, of movies that he or shewishes to rent. The movies are deliveredindividually through the postal systemfrom a range of regional warehouses. Thesubscriber can keep the rented disc aslong as desired, but there is a limit onthe number of movies (determined bysubscription level) that each subscribercan have on loan at any one time. To receivea new movie, the subscriber must posta previous one back to Netflix in a prepaidmailing envelope. On receipt of the disc,Netflix sends the next available disc inthe subscriber’s rental queue.10 Netflixallows customers to keep the DVDs foran unlimited period without penaltiesand also offers customer reviews andrecommendations. The success of Netflixcan be seen in the firm’s numbers: Netflixtoday has a collection of more than 55million discs covering 100,000 titles andapproximately 10 million subscribers. Onaverage, the company ships 1.9 millionDVDs to customers each day.11 Netflixshows that success is not dependent onowning the distribution channel. It alsoshows the benefits possible by extractingintelligence from knowledge of customerbehavior to manage service demand andpromote well-matched products (in itscase movies) to customers.

Exhibit II: Perceived Benefits of the RML Service

Benefits of RML Service # of claims (total 381)

Improved crop/product quality

No measured benefit yet

Knowledge through agricultural news

Greater market knowledge/understanding

Weather risk managed

Increased profts (real and expected)

Improved general knowledge of crop, cultivation

7

25

25

54

66

99

105

Source: “Voice of Customers” feedback, July 2009

9 With advances in broadband speeds, Netflix hasdeveloped another service, called Watch Instantly,which allows subscribers to stream a movie theywish to see direct to their computers. The numberof movies a subscriber may stream per monthdepends on their chosen subscription level.

10 Netflix website, How Netflix Works (http://www.netflix.comMediaCenter?id=5379#how),accessed October 5, 2009.

11 Netflix website, Netflix Passes 10 MillionSubscribers (http://netflix.mediaroom.com/index.php?s=43&item=307), accessed October5, 2009.




12 “Expanding the Innovation Horizon”, IBM GlobalCEO Study, 2006.

AppleApple introduced the iPod digital musicplayer together with the iTunes onlinemusic store. The iTunes Store ended theconstraint consumers faced by buyingDVDs by album to buying music on a pertrack basis at a flat rate (99 US cents or69 UK pence). Following thisdevelopment, music, i.e., content, wasfreed from the constraints of old formatswhere customers needed to buy all thetracks that belonged to one album evenif they are only interested in one track.Moreover, Apple was able to persuadefive major record labels of the time tosell their content through the iTunes Store:EMI, Universal, Warner, Sony MusicEntertainment and BMG. Music frommore than 2,000 independent labels wasadded later. Apple does not produce anymusic itself. Rather, it configures others’content into standard digital formats forselling through its online store. The Appleapproach demonstrates the potentialbenefits of acting as a channel betweencontent creators and users, as anaggregator of content. By not producingcontent to compete with the contentcreators that it partners with, Apple isable to reach mutually beneficial revenue-sharing agreements. Apple’s success andthe willingness of the record labels andapplication developers to partner withApple also depends substantially onApple’s ability to provide a platform forthe delivery of that music and thoseapplications that will appeal strongly tothe end consumers. Thus, Apple’s partnersare keen for their products to be availableon the Apple platform, in Apple’s formats.

FacebookFacebook and MySpace are two social

networking websites. MySpace was setup in August 2003, MySpace quicklybecame the most popular socialnetworking site in the US by June 2006.Facebook, on the other hand, waslaunched in February 2004 for studentsof Harvard University but it was not untilSeptember 2006 that Facebook was opento anyone with a valid e-mail address.However, Facebook subsequentlyovertook MySpace in terms of customermembership. In much of the recentliterature discussing the reasons forFacebook’s eclipse of MySpace a key reasoncited is that Facebook offered developersan open architecture so that they coulddevelop their own applications for thewebsite. This made the Facebook universeone of more choice, more user-drivenfeatures, and more functionalities on offer.By contrast, MySpace did not offer itsusers a developer platform until February2008 by which time the momentum hadlong already swung in favor of Facebook.The developments between Facebook andMySpace reveals that users are attractedto markets where they have more choiceand are able to influence the products/services that may emerge. Users may wantto contribute their own expertise. In thedomain of agriculture, this may take theform of, for example, one farmer sharinghis experience of which pesticide workedbest for a particular infestation or whatconditions and nutrients were found tobe ideal for growing a particular type oftomato. Engaging customers to help shapethe evolution of the service enables firmsto keep pace with changes much faster.For example, Facebook shows that thebusiness model which creates room forconsumers to be creative and participatesin the evolution of the service – orempowers them to not only consumecontent/information but also to offer

something back of value that they knowor can create – attract more customersand create more of a buzz.

Discussion and ConclusionA business model essentially describesthe delivery of the customer valueproposition, how the value propositionis created through the operations of thebusiness and how the value is capturedthrough the revenue architecture. A recentreport by IBM (IBM 2006)12 shows thatfirms that emphasize business modelinnovation are more likely to grow fasterthan businesses that focus on other typesof innovations such as product or processinnovations. The strategic issue for manybusinesses is to figure out the principlesof business model design and innovationthat enable superior performance for theirrespective businesses.

Upon further examination of thethree examples discussed above, itappears that the critical element is beingable to articulate the customer valueproposition in a succinct way in orderto deliver a critical need and being ableto build the operations to fulfil theseneeds in an efficient manner. Moreover,the business model needs to derive valuefor the firm through its revenuearchitecture. For example, in the caseof Netflix, the critical customer valueproposition that it was able to fulfil overand above Blockbuster was its abilityto provide DVD’s without fixed returntimes as well as to encourage customersto post reviews and recommendations.Through this process, Netflix was ableto manage its inventory better and fulfilcustomers’ tastes and preferences moreefficiently compared to Blockbuster. Inaddition, Netflix built a distributioninfrastructure to fulfil the demandpatterns and manage its inventory



effectively to match customer demandwith minimal stockouts. More than themere use of the postal system, it wasthe ability of Netflix to build such adistribution infrastructure that createdits superior business model that othersfind it difficult to replicate. Netflixmanaged through its business model tohave a closer connection to the customer:to be able to identify customerintelligence, distribute that intelligenceand respond to it very effectively. Netflixwas able to create and deliver value toits customers without necessarily owningall components of the value chain butonly the critical elements that ensuresstrong connection to the customer todeliver the key value proposition.

In the case of Apple iTunes, it wasits ability to fulfil the twin requirementsof customers that they are able todisaggregate their purchases to individualsongs and also to ubiquitously carry theirpersonal albums to various gadgets (e.g.,computers, CD players as well as theiPod). Apple delivered this propositionby persuading the five major record labelsof the time to sell their content throughthe iTunes Store. Apple came up withthe appropriate digital rightsmanagement for these songs to providesufficient copyright protection. Applewas then able to act as an aggregatorfor this content by providing both acustomer-friendly gadget, the iPod andan easy to navigate store, the iTunesstore. Apple was able to deliver the keycustomer value proposition comparedto the previous method of selling musicvia DVD albums by overcoming someof the shortcomings that customersfaced. Apple delivered this valueproposition by acting as an aggregatorof content without owning every aspectof the value chain. The key again is the

ability of Apple to be connected to thecustomer and be able to overcome theirtwo major limitations compared to DVDsfor distributing music. Apple builtcomponents of the value chain tocontinue such a close connection andonly delivering the key elements of thevalue chain to enable these.

In the third example, Facebook’scustomers demanded variety in the typeof offerings available on the Facebooksite. Facebook recognized this and henceadopted an open architecture model thatenabled third party developers to developapplications. Facebook recognized thatthe benefits of opening up and adoptinga more collaborative approach to newapplications developments outweighsits own ability to come up with newapplications compared to a closed system.Consequently, Facebook’s recognitionof the rate of change in customerpreferences and correspondingly thecustomers demand for variety enabledthe firm to build its value chain byintegrating third party developers as akey component of the value creationprocess. Facebook decided not to ownall parts of the development value chainas one its key propositions to thecustomer was variety which MySpacecould not deliver as well.

RML is an innovative businessmodel for Thomson Reuters to learnabout both mobile channel deliveryas well as emerging markets like India.Like many innovative business modelsfor the rural market, RML had to buildits own value chain to create a newmarket. From the earlier discussion,RML’s key customer proposition shouldinclude easy access to customizedcontent, mobility benefits andimproved convenience with time andtravel savings. As it expands and builds

scale RML needs to concentrate onretaining only the value chaincomponents that deliver this keycustomer value propositions. Inaddition, RML would need to considerthe evolution and change in itscustomer value proposition as itdesigns its business model. Inparticular, the business model wouldneed to be able to identify the evolutionof the customer value propositions andrespond to changes quickly. In doingso, RML could learn from othersuccessful businesses in terms ofdesign of its business model. Inparticular, how other businesses havedeveloped design principles for thebusiness model that is based on havingclose customer intimacy and ensuringthe critical elements of the value chainto deliver these propositions are retainedwithin the business. RML needs toconsider how to leverage its success sofar with an appropriate business modelinnovation to sustain growth as it scalesup its operations. In particular, the keystrategic questions that need to beevaluated are the extent to which RMLshould be a content provider, anaggregator or should it continue to bein distribution, delivery and customersupport. Moreover, RML also needs toevaluate the extent to which it shouldallow customers shape its serviceoffering? RML would need to createexperiments to learn about the designprinciples in order to build the optimalbusiness model for its business. Theanswers to these questions might havelessons on how to innovate the businessmodel for both RML as well as theThomson Reuters Groups as a whole.

Reference # 03M-2010-02-12-01

© 2010 Dr. Chander Velu, Samir Prakash.

All Rights Reserved.




Multiplies Effectiveness

Leadership Duos

What is required ofthe organizations oftomorrow is“dynamic duos” asleaders to steer themthrough thecomplexities ofglobalized markets.

A couple of years back, David G.Thomson†, Chairman, Blue Print

Growth Institute, carried out a multi-yearstudy on American businesses to understand“how exceptional growth businesses arebuilt”—in other words, to identify thesuccess pattern of America’s highest growthcompanies. The study revealed that out ofthe 7500 companies that went publicbetween 1985 and 2007, only 5% companiesrecorded a revenue of $1bn—which meanshardly 387 companies. Nonetheless, theyhave accounted for 56% of employment and64% of market value created by all the IPOcompanies. Their disproportionate successesmade them the very core of America’sinnovation and growth. They are consideredto be companies ‘to work for and invest in’.Such examples are many: Microsoft, Cisco,Google, Starbucks, etc. These companiesare considered to be the architects ofAmerica’s future.

No wonder, these companies are uniqueby themselves. But behind their success thereis an underlying commonality: their leadershipteams. According to the study of David G.Thomson, most of the star performers aremanaged by dynamic duos—two individualsworking together in close association builtthese firms from dreams to billion dollarrevenue companies. Some such strikingexamples of ‘dynamic duos’ are: Hewlett andPackard, Sears and Roebuck, and Walt andRoy Disney. The study also revealed that theduo, like that of Bill Gates and Jon Shirleyof Microsoft in 1983, are required to bedynamic and complementary in their strengthsto build such dream growth companies. It isalso found that one of the duo must excel inthe ‘public’ part of the business just as Gatesfocusing on market, shaping technologies forvarious products, and establishing leadershipstandards, while the other had to be the‘insider’—just as Shirley, stay focused on



GRK MurtyManaging Editor,

IUP, Hyderabad,

India.

He can be reached at

[email protected]

Leadership Duos

internal production and management offinances for ensuring uninterruptedmaintenance of production cycle.

As the author looked further deep intothe matter, he encountered many surprises:the ‘duo’ was found to explore and innovatetogether continuously, be it in the productdevelopment or marketing. They made swiftdecisions, and willingly corrected theirmistakes quickly. Essentially, these two leadershad complete trust in each other. They werefound to have utmost respect for each other.Similarly, they had a unique chemistry andsynergy that electrified everything that theymanaged. These two were often found tobe connected by a friendship that enabledthem to be very open with each other andwhenever faced with challenges could freelytalk to each other with no hang-ups.Importantly, their relationship wasmaintained by reining in their egos. In short,these dynamic duos, enjoying the benefitof complementary strengths, had becomethe yin and yang, the web and warp of thebusiness that made them grow exponentially.

Dynamic ‘Duo’ from theRamayanaWe come across such a dynamic duo ofleadership in the saint poet Valmiki’sRamayana—Rama and Laksmana. Betweenthem we see such free flow of warmth offriendship, free and frank discussions/arguments aided by clear absence of‘individual egos’, complementarities ofstrength, trust in and respect for each other,playing a critical role in their struggle toweather many a storm that they encounterwhile in exile in the forest successfully, andfinally return to Ayodhya, the capital of theirkingdom. It is the sheer strength of thisleadership ‘duo’ that ultimately enables Ramareturn as the King after fourteen years oftumultuous exile in the forests. The journeyof this ‘duo’ through the epic is a classic

example of how the coming together of twodynamic leaders sans ego, with respect forand trust in each other could secure excellentresults in whatever endeavor they took upby virtue of the interplay of complementarystrengths yielding great synergies. Let ustherefore take a critical look at some of thescenes from the Ramayana that highlightthese elements of success.

‘Duo’ Sans ‘Egos’We have a scene in the Aranyakanda of theRamayana where Marica, the minister ofRavana, taking the form of a golden deerlures Sita—wife of Rama— by strolling infront of their hermitage, to ask for it. Drivenby the passion of playing with that queeranimal, Sita calls Rama and Laksmana andentreats them to fetch it. Seized with suspicionon seeing it, Laksmana warns that this goldendeer must be that ogre, Marica, in disguise,for no such deer, freckled with jewel-likespots, exists on the face of the earth.Interrupting Laksmana, Sita, who had beenrobbed of her faculty of judgment by thehoax played by the ogre, says with a brightsmile to Rama: “The yonder charming deercaptivates my mind. Fetch it. If the deer doesnot allow itself to be captured by you alive,its skin itself will afford delight. I long tosit along with you on its golden skin spreadon a mat of grass.”

Rama—whose mind too is filled withcuriosity about that deer— rejoiced to hearthe request of Sita, decides to fetch it. Butbefore leaving on the mission, Rama makeshis understanding of Sita’s request clear toLaksmana thus: “Mark, O Laksmana, thisburning desire of Sita. No deer whatsoeverwhich is similar to it exists in the groove.If, O Laksmana, this deer is such as you tellme, it must be put to an end because it is aphantom conjured up by an ogre. Manymonarchs have been killed by him appearingin his real form; hence this deer [Marica]



deserves to be made short work of.” Hereit is necessary to bear in mind that Rama—the elder brother of Laksmana, who wouldhave been crowned as Prince but forKaikeyee’s desire to exile him, but sureto ascend the throne once the exile periodis over —is not obliged, even by tradition,since Laksmana is his younger brother,to offer such an elaborate explanationabout his stand on fulfilling the desireof his wife, the future queen. This act ofreasoning out the decision by Rama simplymakes it evident that Rama respectsLaksmana’s observations. It also becomesevident that ego does not come in theway of Rama making his stand transparentto his junior, Laksmana.

Before leaving on the mission, Ramaalso orders Laksmana: “O Laksmana! ...Stay you protected with armour and,remaining confined to this place, guardSita....I proceed apace to bring the deer.Mark, O Laksmana ...You must remainwide awake in the hermitage with Sitatill I dispose of this spotted deer ... KeepingSita by your side, O Laksmana, remainvigilant every moment and full ofapprehension from all quarters ...”Interestingly, this entrusting of the safetyof his wife to Laksmana clearly establishesnot only Rama’s faith in the competencyof Laksmana but also his trust in him.

So warning his brother, Rama goesout in search of the deer. Vexed by theflight of golden deer, Rama at last hitsit with his arrow. Struck by the arrow,Marica, before dying, piteously cries, “Oh!Laksmana, Oh! Sita”. Hearing the cry,poor Sita gets maddened with grief andorders Laksmana to go and ascertain thetruth about Rama. But he is not willingto go, for he is sure that none can harmhim. So he tells her: “Can there be anydanger to him? What is likely to happento him? And if anything is to happen to

him, am I going to save him? Don’t fear.I am here to protect you, I am under strictorders.” But Sita does not listen to him.She even hurls harsh imputation at him.Yet, Laksmana silently remains struckto his brother’s order. Finally, she says,“While you are looking on I am going todie at your feet.” She indeed gets readyto do it. Then Laksmana, saying “you havedriven me to choose between one horriblealternative, that of disobeying my brother,and the other alternative which I considerstill more horrible, to see you kill yourselfbefore me. Well, I will go”.

Greeting her with joined palms andrespectfully bowing, Laksmana departsto seek Rama. Seeing Laksmana comehaving abandoned Sita in a lonely forestfrequented by ogres, Rama speaks harshly:“Ah Laksmana, a reproachful act has beendone by you in that you came away hereleaving alone Sita, who deservedprotection, O gentle brother! ...” Even afterLaksmana narrates the reason for hisleaving Sita alone, and pleads that he hasnot come on his volition, Rama still saysit in so many words: “A woman is a womanafter all. I am her very life, what wouldbe left to her without me? She thoughtI was in danger. You must expect, youmust be prepared for her saying all sortsof things, like a mad woman. She mighthave said anything. She might havethreatened to do anything. You oughtnot have come away. You ought to havestayed and protected her. You havedisobeyed me. I am displeased with you.You have earned my displeasure.”

That is the freedom—to voice theiropinion without any inhibition—andopenness these two leaders enjoy with eachother. They do not mince words when itcomes to questioning the other’somissions/commissions and yet areaffectionate to each other as is reflected

in Rama’s style of addressing Laksmana—“a reproachful act has been done by you... O gentle brother!” Another interestingtrait is that they do not get hurt personallywhen one questions the action of the other.They have the courage to see through theaction more as a mere witness than froma personal angle—as is evident fromLaksmana’s silence at Rama’s charging himof disobeying his orders. His silence is areflection of his belief to “firmly abide bythe words of my elder brother”. Indeed,Laksmana was very clear about hisresponsibility for the security of Sita whenhe said to her: “You are a sacred trust placedin my charge by the high souled Rama...” in defense of his not willing to obeyher orders to go to Rama leaving her alone.It is a clear proof of egos not having anyrole in the transaction. Hence they couldgo hand in hand in search of the missingSita with great concern—one seekingsolace in the other.

Complementary Strengths atTheir Full DisplayWe have another scene in the sameAranyakanda where we come across thecomplementary strengths of Rama andLaksmana helping them to stay focusedon their goal. Indeed it is a continuationof the previous scene. On his return tothe hermitage after killing the golden deer,seeing the lonely hut bereft of Sita, Ramawails again and again: “The timid ladymust have been carried away or, devoured,or dead. Or has gone to pluck flowers?”Running fast from tree to tree in searchof Sita, Rama cries in grief: “Was my Sitaseen by you? O deer, do you know of Sita?Ah priye, where have you gone?” Notfinding Sita there, Rama, lifting up hisarms, calls out to Sita at the top of hisvoice: “Where on earth, O Laksmana,could Sita be? ... Or by whom, O darling



Ext Ad 10



of Sumitra, has she been borne away orby whom has she been devoured? ...Deserting at this place me, helpless,tormented with grief, afflicted and pitiableas I am, my aspirations shattered, whereare you going ... O do not leave me, Olovely Sita! Bereft of you, I shall yield upmy life.” Thus laments Rama in theabsence of Sita!

What we must particularly take noteof here is: Rama’s innocent faith inLaksmana—his frustrations areaddressed to him, perhaps, hoping foran answer. Indeed, it was only a little whileago that Rama had reproached Laksmanain a very harsh tone for leaving Sita allalone to herself, that too, much againsthis order. The message here is, Rama,as a leader, is more concerned about the‘transaction’ rather than the individual[Laksmana] behind it, while reproachinghim. Hence his faith in Laksmana—asrevealed by his wailings to Laksmana—remained undiminished. Laksmana too,true to the faith reposed in him by Rama,in his extreme solicitude for Rama’swelfare, pleads with Rama: “Don’t giveway to despondency, O Prince possessedof great wisdom! Put forth endeavor withme. Sita is fond of frequenting grovesand is enraptured at the sight of forest.She must have penetrated deep into theforest. O glorious prince, let us both striveto search for her at once. I pray, do notgive over your mind to grief.” Again, thissolicitude of Laksmana for Rama clearlyestablishes the respect he had for Rama’srighteousness, and for Rama himself. Else,like any ordinary mortal, peeved by thedisapproval meted out to him on accountof his flouting Rama’s earlier order tostay with Sita—though not on his ownvolition—Laksmana too, would havedisplayed elusive behavior. That is theduo’s concern for each other.

Coming back to the story, being thusexhorted by Laksmana, Rama, regaininghis composure, proceeds along with himto search for Sita. They fully explore theforests as well as mountains, rivers andlakes too. Yet, they fail to locate her. Dulledby agony, Rama says piteously: “The entireforest has been fully explored. But I donot find Sita, who is more valuable eventhan life.” Sighing again and again Ramarepeatedly cries: ‘Ah, my darling!’Laksmana, though himself grief-stricken,humbly tries to comfort Rama with foldedhands in several ways. Turning a deaf earto him, Rama, lamenting at Sita’s absence,says to Laksmana: “ ... leaving me in theforest itself, (O Laksmana!) return toAyodhya. ... The death of Sita, which hasalready taken place, as also mine shouldbe reported to my mother by you Odestroyer of foes!” Laksmana, too, beatenby fear, becomes extremely sick at heart.

Thereafter, Laksmana understandingcorrectly the hint given by the deer suggeststhat they proceed in the southerly directionin search of Sita. Rama, followed byLaksmana, proceeds southwards. Uponseeing flowers that he had given to Sitaearlier lying on the ground around a brokenchariot, Rama infers that some ogres foughtbetween themselves to take hold of Sitaand devoured her. Agonized by Sita’sabsence and angered by a feeling that his“disciplined and compassionate outlookis being taken as his powerlessness” bygods, Rama, in order to let everyone knowhis power, says: “When the three worldsare annihilated through my anger, neithergods nor demons nor goblins nor ogreswill survive. Torn to a number of piecesby the volley of my arrows, the worlds ofgods, demons and Yaksas as also thosewhich are inhabited by ogres will collapse.With my arrows I will reduce these worldsto a state of utter confusion today if those

in authority do not restore Sita to me, nomatter if she has been killed or is dead.”

Looking at the agony of Rama,Laksmana submits to him with foldedhands: “Having been mild, disciplined anddevoted to the good of all created beingsbefore, you should not abandon yournature. As loveliness dwells in the moon,brilliance in the sun, movement in thewind and forbearance in the earth, all theseas also unsurpassed fame ever invariablydwell in you. You ought not to annihilatethe worlds for the offence of one individual.I do not actually perceive the footprintsof a large army imprinted here. And youought not to annihilate the worlds onaccount of one man; for suzerain lordsof the earth are just in their punishment,mild and very composed; (while) you arealways fit to protect all created beings, nay,their supreme asylum.”

Laksmana continues to comfort Ramasaying: “Who on earth would approveof the disappearance or destruction ofyour spouse? With me as your companion,and bow in hand, and with the greatestof sages as your helpers you ought to seekout him by whom Sita has been borneaway. We shall explore the ocean as wellas the mountains and forests, and shallalso steadfastly search the realms of godsand Gandharvas until we find the abductorof your consort. If the rulers of gods donot restore your spouse by peaceful means,you may then adopt a measure that isopportune. If you do not recover Sitathrough exemplary conduct, conciliation,modesty and prudence, then annihilatethe worlds, O ruler of men!”

Laksmana then goes on to inspireRama with courage saying: “This impactof suffering is but natural with humanbeings. Even very great beings and godsare not immune from the control of fate,much less all embodied beings, O flower



of men! Even in the event of Sita beingdead or having disappeared, O heroicRama, you ought not to grieve in the sameway as any other common man. Peoplelike you, who perceive everything, do notreally give way to grief even in the faceof the gravest perils, O Rama, but everremain undepressed in their outlook.Discriminate between right and wrongin the true perspective by recourse toreason. Endowed with reason, highlyintelligent souls are correctly able to knowwhat is good and evil, O jewel among men!Indeed, you alone have often instructedme accordingly in the past. What objectof yours will be achieved through universaldestruction wrought by you? So, findingout your sinful adversary, you ought toroot out him alone.”

What a fine piece of exhortation! Howelse can anyone restore confidence intothe mind of a crestfallen leader? A fineexhibition of one of the duo trying torestore confidence and intellect to anotherwise depressed mind of the otherand put him back on rails from wherehe can himself see reason and actintelligently and fairly, so that the ultimateinterest is well protected. When suchleaders work in tandem with each other,nothing remains insurmountable. Andthat is exactly what happened in thepresent case: Rama, listening toLaksmana, controls his anger and askshim, “What shall we do? And whithershall we go, O Laksmana? Ponder overthis.” That is the dynamism of the duo’strust in each other. And the outcomeof this well-woven synergy between theduo is: the beginning of an intense searchfor Sita by the duo like rational beings.

Respect for Each Others’ValuesAs the brothers are searching for Sita in

the forest, they come across a headlessogre, Kabandha that catches hold ofpassers by and eats them. Rama andLaksmana too fall into the clutches ofthis ogre. As the ogre catches hold of them,despite being armed with swords andwielding strong bows, and possessed ofgreat strength, they are reduced to ahelpless plight. By virtue of his firmness,Rama, however, does not feel distressed.But due to his puerile nature, Laksmanafeeling helpless, giving himself up toagony, and feeling despondent submitsto Rama: “Look at me helplessly falleninto the clutches of the ogre. O scion ofRaghu! Offering me as a sacrifice to thedevil run away at your convenience. Youwill recover Sita before long: such is myconviction....” Here, we see Laksmana inquiet an opposing mood vis-à-vis hisearlier stand when Rama was peevingat the absence of Sita. It is Rama, whonow takes on the role played by Laksmanaearlier, and says: “Do not give way to fear,O valiant Laksmana! A man like you wouldnever feel dejected.”

In the meanwhile, the cruel demon,Kabandha says: “Your life is (now) difficultto get back (now that it is in my hands).”Hearing the evil-minded Kabandha’schallenge, Rama says to Laksmana: “Acalamity which threatens to terminateour life has befallen us without our beingable to recover Sita. While we had (already)suffered a terrible disaster (in the shapeof the loss of Sita), which is more painfulthan the one we had already undergone—loss of sovereignty and exile to the forest—O Laksmana of unfailing prowess! Verygreat is the power of the Time-Spirit overall living beings, O Laksmana! Look atyourself and me too, O tiger among men,distracted by misfortunes. Surely thecontrol of Destiny on all living beings,O Laksmana, does not constitute a burden

(to it). Caught in the grip of the Time-Spirit, even valiant and mighty souls, nay,even those who have practiced archeryon the field of battle perish like dams ofsand.” It is interesting to note here howRama could philosophize even in the teethof danger—Rama’s mind-force prevailingover the sheer physical force of theheadless Kabandha?

A little later, Laksmana regaining hisnormal sagacity renders an opportune andfriendly advice: “This vile ogre caught holdof us at the outset with no provocationfrom us. This demon’s strength lies in hisarms. With these arms he is killing thosewho are defenseless. So, it is right for aruler of the earth to kill him. Let us thereforecut off his arms.” Angered by it, Kabandhatries to swallow them. But in themeanwhile, Rama, with alacrity, cuts hisright arm while Laksmana his left. Thus,they get freed from the demon. Of course,Kabandha later helps them know how tosucceed in their quest for Sita. Now whata practicing leader must learn from thisepisode is: In a crisis, if there are two leadersinstead of one, the scope for successmultiplies, for when one feels helpless,the other can still come up with a life savingidea to enable the duo wriggle out of thedanger. But for such a success to materialize,it is a must that the duo know each others’beliefs and value systems and has respecttoo for them. In the above incident, markthe concern of Laksmana even in such atiring situation for upholding his brother’seternal commitment for ‘Dharma’: he doesnot merely suggest a way out but alsoreasons out how it is right to kill the ogre.Otherwise, it is sure that Rama who isknown as Ramo vigrahvan dharmahawould have not yielded to his suggestionto save himself. To be functional andeffective, the duo must respect their valuesystems.



Togetherness is What MattersHaving finally learnt that Sita has beentaken away by Ravana and placed in Lanka,the duo, along with the monkeys and theirking, lay siege to Lanka. The result is: afierce battle between Rama, Laksmana,Sugriva, Hanuman, Vibhisana on one sideand Ravana, his son Indrajit and otherogres on the other side.

Here again, the duo complement eachother’s strengths in winning the battlethrough mutual dialogue and advice. Ina battle with Indrajit, Laksmana, angeredat the destruction wrecked by Indrajiton the monkeys, submits to Rama: “I shallnow use the mystic missile presided overby Brahma to destroy all the ogres.” Butas could be expected, Rama admonisheshim: “To get square with one individualyou ought not to exterminate all the ogreson the earth.” Rama, having said that,reflects on how to put an end to the fierceogre of cruel deeds.

Meanwhile, Indrajit brings an illusoryliving image of Sita to the battlefieldand to hoodwink the simian army, killsher with his sword. Hanuman rushesto Rama and conveys the sad news tohim, hearing which Rama faints. Herethe role of the ‘duo’ surfaces again:Laksmana, seized with great agony,makes a submission to Rama that is fullof meaning and reason: “Virtue, Obrother, cannot save you ... thepresumption that virtue alone prospersis not warranted; for a virtuous man likeyou would not suffer. ... I shall fully dispelwith my exploits today the great agonycaused by Indrajit, O gallant prince!Therefore rise, ... Why don’t yourecognize yourself to be the SupremeSpirit, endowed with vast intelligence,O long-armed prince, who have kept yourvows?” That is Laksmana’s love for Rama.This incident makes it abundantly clear

how important ‘love’ between theleadership ‘duo’ is for its success.

Vibhisana then tells Rama of the secretof the conjuring trick played by Indrajitand assures that Sita is still alive. He urgeshim to send Laksmana with an army tothe sanctuary of Nikumbhila—whereIndrajit, being sure of no disturbance fromthe monkeys, will be pouring oblationsinto the sacred fire—to let him notcomplete the offerings, for once heperforms it he would become invincibleeven to gods. Convinced about this, Ramacommands Laksmana to march againstIndrajit and destroy him. Laksmana reachesNikumbhila with monkeys and challengesIndrajit. A fierce fight takes place. Laksmanakills the charioteer of Indrajit. Finally,Laksmana saying, “If Rama has set hismind on virtue and is true to his promiseand is unrivalled in prowess, make shortwork, then, of this son of Ravana”, sendsthe arrow charging it with the missilepresided over by Indra, which dutifullysevers Indrajit’s head. Let us here take noteof the immense faith that Laksmana hason Rama’s steadfast commitment toDharma which he draws as a support tohis annihilation of Indrajit. It is only suchimplicit faith in the other that can keepthe ‘duo’ effective—in fact, enable themachieve greater accomplishments.

When Laksmana and Vibhisanaapproach Rama with the news of Indrajit’sdeath, Rama saying, “Well done! OLaksmana! I feel gratified.... Know it forcertain that victory (over Ravana) hasactually been scored with the killing ofIndrajit”, forcefully draws him to his lapand tenderly gazes upon his fortunatebrother again and again, whichincidentally reveals that Rama’s love forLaksmana is no way less than that ofLaksman’s concern for Rama. Indeed,Rama’s longing for Laksmana can truly

be gauged from what he says whenLaksmana lay unconscious by the effectof the naga bana—serpent arrows ofIndrajit— in Yuddhakanda: “What wouldit matter to me if my brother was deadand lost to me, even if I got back Sita. Awife quite the equal of Sita may be foundif we make a thorough search in the earth,but a brother like Laksmana, supremein war, it will be very difficult to find.”Then, another time, when Laksmana hitby Ravana’s sakti lay apparently dead,Rama cries in great affliction: “Even asLaksmana followed me into the hardshipsand terrors of the forest, so will I afterhim follow him into the abode of Yama.”Realize, all this is uttered by Rama whenLaksmana is unconscious—he is notaware what Rama is saying. Which is why,it—love—is called innate love.

That is the testimony of Rama’s lovefor Laksmana. And the poet says thatsuch love alone ensures bonding betweenthe ‘duo’—whether they are brothers ornot—by encouraging free f low ofarguments, questioning of opinions,beliefs, values, and even admonitions,of course, all in the interest of arrivingat the truth and in that truth there wouldbe no gainers or losers simply because truthis a great leveler. In today’s complex worldof business, what is essential to ensureexponential growth is a leadership-duo—which, more importantly, seldom enjoysthe benefit of being brothers like Ramaand Laksmana—at the top that is drivenby such simple and natural love.† The Organization of the Future 2—Visions,

Strategies, and Insights on Managing in a NewEra. Edited by Frances Hesselbein and MarshallGoldsmith, Jossey – Bass, A Wiley Imprint 989Market Street, San Franciso, CA 94103 – 1741,pp. 285-296 (The Leadership blueprint toachieve exponential growth. By David G.Thomson.)

The quotes from Ramayana are taken from “SrimadValmiki-Ramayana”, published by Gita Press,Gorakhpur, India. The author acknowledges thesame gratefully.

Reference # 03M-2010-02-13-01


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