How Great Leaders Think

by Lee G Bolman

  Mulcahy was primarily a win-win bargainer. She invested heavily in meetings with bankers to assure them that Xerox really would pay back its $7 billion credit line. It was a tough sell, but bankers saw the win-win. There was one issue on which she was a stubborn positional bargainer. Whenever anyone tried to tell her that Xerox would be better off in Chapter 11, her response was firm: “Bankruptcy’s never a win. I’m not going there until there’s no other decision to be made.”17

  Mulcahy’s passion, persistence, and patience eventually paid off. She cut expenses to a manageable level and got the bankers to provide the cash Xerox needed while she rebuilt a leaner, more effective business. She had to make some painful decisions, but Xerox emerged from the crisis as a profitable and growing enterprise.

  A CASE EXAMPLE: THE TROUBLED AUDITOR

  Suppose that you’re working as the vice president of internal audit at the only big employer in your town, the headquarters of a major national corporation. It has not been easy, but over time you’ve earned credibility with your skeptical CEO by showing that your unit can cut waste and improve the bottom line. Life has been good—until the day a worried executive tells you that corporate accounting has taken a cool $400 million out of a reserve account and used it to improve the company’s bottom line. Only months have passed since bad accounting killed Enron, so this is a red flag. You ask an Arthur Andersen auditor to explain the transaction, but he brushes you off. Then you bring up the issue at a meeting of the corporate audit committee, and your boss, the chief financial officer, gets so angry you begin to wonder if your job is safe.

  You’re the family breadwinner, and your spouse is home with your children. Your company is the only game in town, so if you lose this job, your fallback might be working the counter at a fast-food restaurant. This transaction doesn’t pass the smell test, but it’s a dangerous hot potato that your boss has told you to drop. In those circumstances, would you drop it or pursue it? If you decide to pursue, how would you go about it? What’s your agenda? What does the political map look like? Whom do you need as allies? What’s your negotiating stance?

  This story may sound like something out of a John Grisham novel, but it’s very real. The troubled auditor was Cynthia Cooper, vice president of internal audit at WorldCom.18 She was a smart and dogged professional whose mother had taught her not to let people intimidate her. She decided she had to look further. Her agenda was straightforward: keep digging until she got the truth. She knew that the political map was unfavorable. Her boss, the CFO, and his boss, the CEO, would block her investigation. She was in the classic position of a guerrilla leader: a frontal assault was suicide, and stealth was her best option. In effect, she took her bosses off the political map by keeping them in the dark; they couldn’t play in a game that they didn’t know was going on. She was fortunate that one of her allies, Gene Morse, had the right permissions to get the data they needed. Morse was eager to sign on; he had moved over to Cooper’s unit after a previous boss threatened to throw him out if he shared certain numbers with the auditors. Working in a windowless room, often at night after most people had gone home, Morse downloaded reams of numbers onto CD-ROMs to make sure WorldCom officials couldn’t make the data disappear.

  The deeper Cooper and her allies dug, the worse it got. By the beginning of June 2002, they had discovered a stunning $3 billion in questionable items. Armed with the data she needed, Cooper was now in the driver’s seat on a very different political field. She confronted WorldCom’s controller, who admitted the entries could not be justified. The CFO, Scott Sullivan, tried to persuade her to hold off, but she refused. On June 20, Cooper and her team shared their findings with the board of directors’ audit committee. The board asked Sullivan to explain, and fired him when he couldn’t. On June 25, WorldCom announced that it had overstated its profits for the previous five quarters by almost $4 billion. A month later, WorldCom declared bankruptcy—at the time, the largest collapse in American corporate history.

  The success of Cooper and her allies in overcoming opposition to expose corporate fraud demonstrates the power of political thinking, even in uphill battles. It is unrealistic to hope that reason and data, as important as they are, will always be enough to carry the day. Mapping the political field, networking, and building alliances can turn a weak hand into a winner.

  CONCLUSION

  The question is not whether organizations are political but rather what kind of politics they will encompass. Political dynamics can be sordid and destructive, conspiracies crafted in smoke-filled rooms. But politics can also be a vehicle for achieving noble purposes in public forums. The political frame provides the essential tools that leaders need to understand and cope with the political dynamics they will inevitably face. Organizational change and effectiveness depend on political skills and savvy. Constructive politicians know how to fashion an agenda, map the political terrain, create a network of support, and negotiate with both allies and adversaries.

  Conflict plays a key role in political dealings. This makes it very difficult for leaders who prefer calm waters to stormy seas. Unfortunately, conflict is an integral part of life in organizations. Harry Truman’s terse message to leaders was, “If you can’t stand the heat, stay out of the kitchen.” Chapter Seven explores the roles of leaders in dealing with discord.

  NOTES

  1. Morris, B. “The Accidental CEO,” CNNMoney, June 23, 2003, http://money.cnn.com/magazines/fortune/fortune_archive/2003/06/23/344603/index.htm.

  2. Morris, B. “She Was Never Groomed to Be the Boss. But Anne Mulcahy Is Bringing Xerox Back from the Dead.” Fortune, June 23, 2003. http://money.cnn.com/magazines/fortune/fortune_archive/2003/06/23/344603.

  3. Bianco, A., and Moore, P. L. “Xerox: The Downfall: The Inside Story of the Management Fiasco at Xerox,” Bloomberg Businessweek, Mar. 5, 2001, http://www.businessweek.com/2001/01_10/b3722001.htm.

  4. A number of authors have developed this idea, including Kanter, R. M. The Change Masters: Innovations for Productivity in the American Corporation. New York: Simon & Schuster, 1983; Kotter, J. P. The Leadership Factor. New York: Free Press, 1988; Pfeffer, J. Politics and Influence in Organizations. Boston: Harvard Business School Press, 1992; Smith, H. The Power Game. New York: Random House, 1988.

  5. Authors who have discussed political mapping include Bolman, L. G., and Deal, T. E. Reframing Organizations: Artistry, Choice, and Leadership, 4th ed. San Francisco: Jossey-Bass, 2008; Pfeffer, Managing with Power: Politics and Influence in Organizations. Boston: Harvard Business School Press, 1994: Pichault, F. Ressources humaines et changement stratégique: Vers un management politique. [Human resources and strategic change: Toward a political approach to management]. Brussels, Belgium: DeBoeck, 1993.

  6. This idea is discussed in Bolman, L. G., and Deal, T. E. The Wizard and the Warrior: Leading with Passion and Power. San Francisco: Jossey-Bass, 2006; Kanter, Change Masters; Kotter, J. P. Power and Influence: Beyond Formal Authority. New York: Free Press 1985; Kotter, Leadership Factor; Pfeffer, Managing with Power; Smith, Power Game.

  7. Among the many discussions of bargaining, see Bolman and Deal, Reframing Organizations; Kolb, D., and Williams, J. Everyday Negotiation. San Francisco: Jossey-Bass, 2003; Fisher, R., and Ury, W. Getting to Yes. Boston: Houghton-Mifflin, 1981; Shell, G. R. Bargaining for Advantage: Negotiation Strategies for Reasonable People, 2nd ed. New York: Penguin, 2006.

  8. Bennis, W. Why Leaders Can’t Lead: The Unconscious Conspiracy Continues. San Francisco: Jossey-Bass, 1989, p. 20.

  9. Kanter, Change Masters, p. 218.

  10. Matthews, C. Hardball. New York: Free Press, 1999, p. 113.

  11. Ibid., p. 114.

  12. Kanter, Change Masters, p. 223.

  13. Morris, “Accidental CEO.”

  14. Fisher and Ury, Getting to Yes.

  15. Ibid., p. 39.

  16. Morris, “Accidental CEO.”

  17. George, B. True North. San Francisco: Jossey-Bass, 2007, p. 174.

  18.
Accounts of Cooper’s story include Cooper, C. Extraordinary Circumstances: The Journey of a Corporate Whistleblower. Hoboken, NJ: Wiley, 2008; Ripley, A. “The Night Detective.” Time, Dec. 22, 2002. http://www.time.com/time/magazine/article/0,9171,1003990,00.html; Kaplan, R. S., and Kiron, D. “Accounting Fraud at WorldCom.” Case study. Prod. no.: 104071-PDF-ENG. Boston: Harvard Business School, Apr. 29, 2004. (Rev. Sept. 2007.)

  Chapter 7

  The Leader as Warrior and Peacemaker

  Conflict is an unwelcome but inevitable feature in relationships, groups, and organizations. When it surfaces, people typically try to smooth it over or avoid it. Left untended, it intensifies and festers, undermining communication, encouraging plots and sabotage, and producing disruptive explosions. People dislike and avoid conflict because they see it as dangerous, fear the emotional turmoil it generates, or distrust their own skills in confronting it. But conflict plays an integral role in leadership, and savvy leaders recognize its benefits: “a tranquil, harmonious organization may very well be an apathetic, uncreative, stagnant, inflexible and unresponsive organization.”1 When leaders handle conflict well, they can break through logjams, stimulate innovation and learning, and make their institution a livelier and more effective place.

  In this chapter, we will look at two stances that leaders can adopt in handling conflict: warrior and peacemaker. We’ll examine a dramatic example of the two stances at work, with Apple’s Steve Jobs epitomizing the warrior, and Walt Disney’s Bob Iger serving as peacemaker. We discuss when and how leaders can adopt each role.

  STEVE JOBS: THE WARRIOR

  Artist, entrepreneur, futuristic visionary, and brilliant marketer—Steve Jobs was all of these. He was also an aggressive pugilist ready to slug it out for any project or cause he championed. His combat style relied more on persistence and brute force than compromise and subtlety. A case in point was his battle with Michael Eisner, the Walt Disney Studios CEO, over kids’ movies. The skirmish traced back to 1986, when Jobs bought 70 percent of the computer division of Lucasfilm because he thought its technology was “really cool.” Over the next several years, Jobs poured more than $50 million into the business, even as it kept losing money. As things started to turn around, he persuaded a player with deep pockets—Walt Disney Studios—to finance the studio’s first feature film, Toy Story.2

  The Disney deal saved the business—now called Pixar—but at a price. Disney got full ownership of the first three films, leaving Pixar with only a sliver of the revenues. After Toy Story’s success, Jobs flew to Hollywood and doggedly renegotiated the deal with Disney’s new chief, Michael Eisner. Jobs got what he wanted: cobranding and 50 percent ownership of the next two films. But in sealing the transaction, he and Eisner got off to a bad start, initiating a rocky relationship that was to deteriorate even more as time passed. A full-scale feud emerged several years later in 2002, when Eisner publicly criticized “computer companies” for promoting digital piracy. Eisner didn’t name names, but everyone knew he was talking about Apple and iTunes. Whether he wanted a war or not, he had inflamed a dangerous adversary. He and Jobs traded salvos as the Disney-Pixar deal was coming up for renewal. At that point, Eisner made one of the most common political mistakes in business and life: he misread the balance of power and escalated a battle he was destined to lose.

  Jobs, as a shrewd warrior, began to assemble his allies. He cultivated relationships with key members of Disney’s board, including Walt’s nephew, Roy Disney. Jobs spread the word that there would be no new deal as long as Eisner was CEO. Eisner countered with a memo to the board insisting that Disney was in the driver’s seat because it owned all of Pixar’s characters—Woody, Buzz Lightyear, and the whole gang. In addition, he maintained that Pixar’s bargaining position was about to get weaker because he’d seen their next film and it wasn’t very good. The memo backfired. Someone leaked it to the Los Angeles Times, and Jobs was predictably infuriated. Even worse, Eisner had seriously underestimated Pixar’s next film. Finding Nemo won the Oscar for animated films and became Disney’s most successful film yet.

  Two proud and stubborn warriors dug in for a battle that many observers viewed as more about ego than substance. Eisner forced Roy Disney off the board and threatened to make Toy Story III with no help from Pixar. Jobs countered that he was cutting off negotiations with Disney and broadcast his assessment that, except for Pixar, Disney had produced nothing but flops in recent years. The impasse was broken only when the Disney board decided they needed Pixar more than they needed Eisner. They fired their CEO and replaced him with his deft, good-humored second-in-command, Bob Iger, “even though Eisner reportedly told directors Iger wasn’t up to the top job.”3

  ENTER BOB IGER: THE PEACEMAKER

  Bob Iger began his career as a weatherman on a local television station in upstate New York. He later joined ABC and worked his way up to become president of ABC Television. When Disney acquired Capital Cities/ABC, Iger came over to serve as chief operating officer under Eisner. Described as a leader who does more listening than talking, Iger “was as sensible and solid as those around him were volatile” and “had a disciplined calm, which helped him deal with large egos.”4 His friend Warren Buffett offered a similar impression: “He’s always calm and rational and makes sense. He runs things without a heavy hand.”5 In viewing the Eisner-Jobs conflagration, Iger observed, “Every negotiation needs to be resolved by compromises. Neither one of them is a master of compromise.”6 As soon as he became CEO, Iger embarked on peacemaking initiatives. He reconciled with Roy Disney and brought him back into the fold. He worked even harder to repair the relationship with Jobs and Pixar.

  Iger agreed with Jobs on the issue that mattered most: Disney’s animated hits in the previous decade had all come from Pixar. It helped that Iger and Jobs had worked together previously on a deal to put some of ABC’s shows on the iPod. Iger had come on stage at one of Jobs’s signature product launches to celebrate the partnership. Iger recalled, “It signaled my way of operating, which was ‘Make love not war.’ We had been at war with Roy Disney, Comcast, Apple, and Pixar. I wanted to fix all that, Pixar most of all.”7 As soon as he replaced Eisner, Iger got on the phone to tell Jobs he wanted to make a deal. It took extended negotiations. Even though Eisner made a last-ditch effort to throw a monkey wrench into the works, Disney agreed to buy Pixar for $7.1 billion in stock. Jobs became a billionaire and Disney’s biggest shareholder, and Pixar’s leadership took over Disney’s animation.

  ORCHESTRATING CONFLICT: RAISE OR LOWER THE FLAME?

  Bob Iger and Steve Jobs embody two basic approaches to conflict: those of the peacemaker and the warrior. Organizations need both. Warriors are resolute fighters who raise the heat and intensify the conflict. Peacemakers work to lower the temperature and defuse conflict in the hope of minimizing destructive, lose-lose dynamics. Blessed are the peacemakers, but great leaders are often warriors. You will be a more versatile and powerful leader if you know how and when to play either role.

  The Peacemaker: Cooling the Flame

  The battle between Michael Eisner and Steve Jobs typifies conflict situations that carry the potential for mutual destruction. Conflict takes on personal and emotional overtones, and the parties feel convinced that “we’re right and they’re wrong.” Such highly charged situations touch hot buttons for leaders and create the risk that raw emotions and jangled nerves will impair their capacity to produce a positive outcome. Like Bob Iger, a leader may be caught somewhere between contending parties, hoping to find some mutually acceptable resolution. But finding a suitable middle path is rarely easy. It requires adaptation by parties wed to their current stance. Leadership often has to challenge existing beliefs and emotional investments, asking others to review where they stand and what they know or value.

  This is not easy, but leadership experts Ronald Heifetz and Martin Linsky offer an optimistic note: “The hope of leadership lies in the capacity to deliver disturbing news and raise difficult questions in a way that p
eople can absorb, prodding them to take up the message rather than ignore it or kill the messenger.”8 They emphasize the importance of distinguishing technical from adaptive problems. A technical problem is one for which available information and procedures can produce a solution that meets accepted criteria for success. When leaders have the information and expertise to make a workable decision, they can do what their constituents expect: solve problems so everyone can move on. Adaptive problems, however, are messier. They don’t offer well-defined paths to solution, and differences in values, purposes, or beliefs make it hard to agree about what constitutes a good option. Unilateral decisions usually fail because the audience isn’t ready. Adaptive leaders help parties understand why the problem is so difficult and become more willing to find and accept a solution.

  Several guidelines can help peacemakers do their work well.

  Be Patient

  When the baby is not yet ready to be born, rushing the process makes things worse. Skilled peacemakers understand that conflict resolution takes time, effort, and learning. This often requires working against the grain and being prepared for predictable resistance and criticism. Rather than fulfilling others’ expectations for quick answers, leaders need to pose questions and encourage dialogue.

  Listen and Inquire: Understand Parties’ Interests, Thinking, and Feelings