Strategic Leadership:
The New Normal and the Rise of Networks
by Leland A. Russell

We’re all too familiar with the massive workplace unemployment statistics of recent years, but here is an underreported fact: it’s also tough at the top. No, I mean really tough at the level of strategic leadership. Challenger Gray & Christmas, a leadership recruitment firm that tracks CEO turnover, found that the CEO turnover rate suddenly doubled in 2005 and has continued to increase since then.

Booz & Company's annual study of chief executive arrivals and departures, now with 10 years' worth of data covering 3,719 succession events at the world's largest companies, shows that the tenure of a CEO is becoming shorter and more intense, the margin for leadership error or underperformance is narrowing and the range of accountability is broadening. “There aren’t many things I don’t feel both accountable and responsible for,” says Doug Oberhelman, CEO-elect of heavy equipment manufacturer Caterpillar. “I don’t think there’s any abdication of anything by the CEO on any subject.”

The New Normal Environment

From our own conversations with the top leadership in a wide variety of organizations, we have found a growing anxiety about strategic leadership that springs from something much deeper and more profound than pressure to perform, which has always been there. There is something new—a growing sense that larger, relentless forces are at work in the world. They see that a New Normal environment has come into being, one that they may not be equipped to handle using the strategic leadership practices that have worked for them in the past. This New Normal is a dynamic landscape shaped by multiple, intersecting arrays of global change forces.

The first array of global change forces includes intensifying global competition, which is boundaryless (in terms of geographies and industries); global economic ripples triggered by seismic events, for example 9/11 and the 2008 financial crisis, each of which caused global economic downturns; and the acceleration of global social and political issues, like climate change, which not only drive demand for “green” products and “green” regulation (e.g., carbon tax) to mitigate climate change, but also new regional conflicts triggered by desertification, flooding and food, water and energy shortages.

Another array of change forces emerges from the expanding global technology infrastructure: the ever-increasing processing power of computers, which doubles every 18 months; communications bandwidth, which is expanding even more rapidly, and, most significant, the networking of the world.

Then, there is the "Wal-Mart Effect", the pressure to deliver more value for the same or a lesser price. One example is the price paid for value delivered in computers and communications, which has been falling approximately 30% per year.

Meanwhile, the rate of leadership acceptance and use of new technologies is driving business model and product innovations, albeit at a slower rate the growth of the technology infrastructure.

Strategic Leadership Challenges and Opportunities

The New Normal environment spawns a plethora of complex strategic leadership challenges. Consider the multiplicity of communication channels, the blurring of geographic and cultural boundaries, and the instantaneous mobility of ideas and capital, to name a few. In this New Normal environment, competition is no longer predictable in time, place, or specifics.

More and more often, the past does not indicate the future. Disruptive innovations, appearing with increasing frequency, can suddenly endanger a long-successful organization by making an entire profession or even an entire industry economically obsolete, seemingly overnight. 

But unprecedented strategic leadership challenges are only half the story. The first decade of the 21st century has also been the most opportunity-rich period in human history.  Consider the extraordinary innovations in personal communications, health and well-being, manufacturing methods, energy alternatives, science and technology and wide range of other human endeavors.  These kinds of breakthroughs have spawned a cornucopia of possibilities for creating new products, new services and new business concepts. And—for the first time in human history—enormous wealth can be generated quickly by a small group with limited resources.

It should be noted that the New Normal is a temporary landscape where what’s true today may not be true tomorrow. That’s another strategic leadership challenge. When familiar landmarks keep disappearing, it’s easy to lose your strategic bearings and have that uncomfortable feeling once described by the legendary Kentucky frontiersman, Daniel Boone. When asked by a reporter if he’d ever been lost in the woods he replied, “No, I can’t say I was ever lost, but once I was totally bewildered for three whole days.”

Many leaders today admit that they are bewildered by the rate of compounding complexity and accelerating change because it is often beyond their bandwidth to understand and manage. They are on information overload and their natural response is to work harder, to do more of worked for them in the past. But, when they don’t get the results they expect and need to survive and thrive, they feel like they’ve lost control.

But, ready or not, a New Normal has arrived and every organization must come to grips with a fundamental strategic leadership issue: how to respond to the compounding rate of complexity and change driven by unprecedented arrays of global change forces

New Normal, New Rules

Albert Einstein once said that “the definition of insanity is doing the same thing over and over again and expecting different results.” Think about that and consider this question: If the world is fundamentally different now, are there new rules for strategic leadership? There is a broad consensus that the answer is a definite “yes” and some of those new rules are beginning to crystallize.  

For example, in the New Normal it is important to decentralize knowledge sharing in order to quickly sense and respond to changes in the environment. Thomas Malone, a professor at MIT Sloan School of Management, points out three other benefits of decentralization: (1) it encourages motivation and creativity; (2) it allows many minds to work simultaneously on the same problem; and (3) it accommodates flexibility and individualization.   

The organizational structure that best accommodates decentralized knowledge sharing is flat and fluid—a network structure. That is why, in fields ranging from agricultural management to sociology, from health care to national security, we are observing the rise of networks.

Case in point: When the leadership of our client Weyerhaeuser needed to take its home building products business in a whole new direction, they created a virtual network of 300 leaders to execute the strategy. The network mission was to educate and energize their 15,000 employees scattered across four time zones to stay on course during a massive workforce overhaul. 

Recognizing the need for web-based tools and fast-cycle processes for large-scale, 2-way communication, Weyerhaeuser licensed the FastTime® Leadership Collaboration Center, which enabled its “Transition Leadership Network” to meet online each week. The network was organized into 25 virtual leadership teams for knowledge sharing and problem solving.

Every Monday the leadership team agendas were distributed, and the network leadership held online meetings the following day with the assistance of human resource facilitators. On Wednesday, the facilitators held their own meeting to summarize feedback for a report to the Business Leadership Team, which convened on Thursday to review the feedback, make decisions and develop agendas for the following week. On Friday, to ensure that everyone remained aligned in real-time, the business leader personally reported back to the full network regarding the decisions that had been made.

Networks and Leadership

What does the rise of networks mean for strategic leadership?  First, it means that there are new ways to improve Execution performance and achieve greater strategic impact with existing resources. The key for strategic leadership is to have a network perspective—a point of view that illuminates the many formal and informal human channels through which most of the value-producing work, leadership communication and learning gets done in an organization—and then look for creative ways to leverage new technologies and new models of group interaction. The goal is to reduce workflow bottlenecks and communication silos and accelerate strategic leadership action agendas.

It is equally important for strategic leadership to look beyond the walls of the organization because the fastest way to achieve greater market impact is bring your own internal organizational networks into alignment with other external networks, and, to the extent possible, help them work together as one larger network. That is how the internet evolved, as a network of networks held together by common purpose and common protocols and standards, and that has enabled thousands of technology companies to thrive and prosper for decades, some on a global scale.

Many creative and energetic online communities have formed to address common social, business, and political interests. Members share information, contacts and ideas, and they collaborate to solve complex problems and take collective action. Don Tapscot, author of Wikinomics, explains:

Whether your organization’s network plays a central orchestrating role or peripheral participating role, effective strategic leadership in the New Normal requires an understanding of the logic of networks. There is a lot to understand, some of which can be counterintuitive.  For example, in his book, New Rules from the New Economy, Kevin Kelly points out that people working in networks, even in a highly competitive environment, often have an allegiance to the network mission that may exceed their loyalty to any particular organization.    

Silicon Valley’s success is external to any particular company’s success, and so loyalty is external, too. As AnnaLee Saxenian, author of Regional Advantage, notes, Silicon Valley has in effect become one large, distributed company. People job-hop so frequently that folks "joke that you can change jobs without changing car pools. Some say they wake up thinking they work for Silicon Valley. Their loyalty is more to advancing technology or to the region than it is to any individual firm."

From a strategic leadership perspective, leveraging network power will always be a balancing act beginning with the issue of network allegiance and organizational loyalty.  Then, there is finding the right blend of the hierarchal and distributed leadership models.

How can you best combine the positive aspects of the hierarchy—clarity of authority and accountability—with the advantages of networks—interconnectivity, speed, adaptability and resource sharing?  There are no one-size-fits-all answers. It typically takes some experimentation to find the right balance for each particular network and organization. The answer ultimately depends on the network mission, as well as the available technology and human resources.

Because they are enabled by evolving Internet technologies and new models of group interaction, online networks have the potential to become self-reinforcing, with each additional member increasing the network's value, which in turn attracts more members, initiating an upward spiral of benefits. Kevin Kelly explains the mathematics: “The sum value of a network increases as the square of the number of members. In other words, as the number of nodes in a network increases arithmetically, the value of the network increases exponentially.”

SUMMARY

A New Normal environment has arrived, and every organization must come to grips with a fundamental strategic leadership issue: how to respond to the compounding rate of complexity and change, which is being driven by an unprecedented array of global change forces. One solution is “Leveraging Network Power.”

The secret to “Leveraging Network Power” is viewing networks through a strategic leadership lens—a point of view that illuminates the many formal and informal human channels through which most of the value-producing work, leadership communication and learning gets done in an organization—and then look for creative ways to leverage new technologies and group processes.

The goal is to reduce workflow bottlenecks and communication silos and accelerate strategic leadership action agendas.

From a strategic leadership perspective, networks offer organizations new communication channels that can be efficiently and effectively leveraged to:

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