Grow Leaders to Grow Your Business

Article excerpt

Mention growth in a business context and an economic mindset is automatically triggered; however, not all growth is good. Growth as a goal can be dangerous, and growth without growing leaders can be fatal. This article draws from the author's personal research presented in The Leadership Experience as well as from significant organizational thought leaders.

Starting in 2003, Hyundai experienced an amazing growth expansion. Sales records were broken nearly every quarter, business periodicals were bullish on the company's fortunes, and the days of "Hyundai who?" appeared to be history. On June 1, 2006, Forbes.com named the Hyundai Azera the best luxury car for a nonluxury price, ranked behind Toyota's Avalon and Buick's Lucerne.

Behind the scenes, several subterranean cracks and strains finally erupted. US managers never seemed to be able to please their Korean superiors, and the North American management staff was in constant turnover. Even as the Azera was being grouped with the Avalons and Lucernes, the news broke that both the chairman of Hyundai Motors, Chung Mong-koo, and his son, Kia Motors president Chung Eui-sun, were under investigation for their roles in scandals involving political slush funds and the misuse of company money. Stock prices that one month before were hovering in the mid-90s fell off a cliff to the mid-50s. The whole story may never be known, but, in the Hyundai Motors case, the face-losing events of arrests and trials have taken place. Chung Mong-koo was convicted of several charges, including embezzlement. Although his business and social contributions were noted during the sentencing, Judge Kim Dong-oh declared Chung Mong-koo had engaged in criminal acts. (1)

Without ethical leadership, growth is at best a ruse and at worst an economic calamity. Any growth strategy that does not include the satisfactory growth of leadership talent will eventually wander into sticky thickets. Corporate case studies are replete with examples. Linking growth and leadership requires an understanding of how they interact.

Alfred Chandler and Stafford Beer are two often-overlooked, pioneering thought leaders, whose ideas have influenced popular management writing. Chandler taught business history at Harvard, and Beer was a pioneer of applying cybernetics to organizational design. Chandler suggested that economic activities passed from the "invisible hand" of the marketplace to the "visible hand" of managers during the 20th century. His long view regarded the individuals who patiently and energetically managed large organizations as the real heroes of market growth, not the overly romanticized entrepreneurial geniuses who appear to get the lion's share of attention. Move over, Jim Collins--Chandler beat you to "level five managers" by a couple of decades.

Beer suggested that too much emphasis on economic viability leads to a problematic economic mindset. Not all organizational problems, nor indeed perhaps the most important, are economically based. Solvency and profitability are necessary, but they do not constitute the goals of the enterprise. Rather they are the constraints under which it operates. Beer argued the "laws of viability in complex organisms are not merely, or even primarily, concerned with the energy (like the metabolism of money) that propels them, but with the dynamic structure that determines the adaptive connectivity of their parts." (2) The vital idea Beer raises casts economics as constraints rather than goals and viability as paramount, whether growth is a current factor of that viability or not. Move over, Arie de Geus, Beers beat you at the living company question by a couple of decades at least.

Chandler and Beer's thinking collides in the form of the nature of organizations. If you consider an organization as a living entity that has worth not merely defined by economic advantage, then it becomes clear that the custodians of organizations should see growth as one of the possible immediate futures of the organization, not the goal in and of itself. …