Harvard Business Discovers Level 6 Work – The Strategy of Combining Two Models
By Michelle Malay Carter on February 26, 2008
In a former work levels post on strategy, I discussed how migrating a strategy upward by one level of complexity can give an organization a breakaway lead from its competitors operating at the lower level.?
From “Or” Thinking to “And” Thinking, i.e. From Level 5 to Level 6
My historical example was that the US auto industry in the 1960?s offered EITHER low cost OR quality (Level 5 strategy).? The Japanese raised the bar by raising the complexity level of the strategy by finding a way to offer low cost AND quality(Level 6 strategy).
HBS Working Knowledge has released a working paper: Embracing Commitment and Performance: CEOs and Practices Used to Manage Paradox.? Here is their introduction (emphasis mine):
“We tend to assume that great leaders must make difficult choices between two or more conflicting outcomes. In an interview study with 26 CEOs of top American and European companies (incl. IKEA, Campbell Soups, Nokia, H&M), we find that instead of choosing between conflicting outcomes such as long-term strategy or short-term performance drivers, top tier managers argue that their role is to embrace such paradoxes to make both things happen simultaneously. The study identifies five groups of practices that make this possible.”
Have You Heard?? Six is the New Five
What the authors have stumbled upon and are describing when they say “top tier?managers” is a leader with level 6 capability.?
Differentiating Level 5 from Level 6
A leader with level 6 capability will create a level 6 strategy, i.e. let’s combine two (or more)?strategy models.? A leader with level 5 capability will create a level 5 strategy, i.e. we are going to focus on our (one)?core competency – low cost leader.?
Organizations are Shadows of Their Leaders
Different levels of strategy require (or emanate from) different levels of cognitive capacity.? Additionally, different levels require different CEO compensation.? (I’ll be posting on this later this week.)
A Huge Mistake – All CEO Roles are Equal
Another quote from the article, once again, reinforces the idea of work levels and differing cognitive capability but NOT a recognition that not all CEO roles are equal.? The authors clump all CEO roles together.? The particular size and complexity level of an organization will call for a particular level CEO.
A New Bandwagon to Jump Upon – Level 6 Capability
Now that level 6 capacity has been “discovered”, it suddenly becomes the holy grail.? The authors decide that now ALL CEOs must combine models to be successful, i.e. all CEO roles are level six roles and require level 6 leadership capacity.?
“The CEOs did not (as one might have expected) discuss major choices that needed to be made or the dilemmas that they were facing. Instead of speaking in terms of ?either-or?, they spoke consciously of their ability and understanding of how to do ?both-and?.? They argued that seemingly conflicting outcomes cannot be made the subject of choice, nor can they be balanced. Instead, it is the role of the CEO to embrace the paradoxes and meet both ends at the same time. This is signifying for the leadership that they (at least on an espoused level) try to exercise.”
Embracing paradoxes need NOT be the role of ALL CEOs.? A level 5 organization can do well under the leadership of a level 5 CEO with a single model strategy.
We can continue to look through a glass darkly and muse about the shadows on the cave wall, or we can seek to understand work levels?and find?a level of clarity in understanding strategy, talent management, and organization design not seen to date.? Which will you choose?
Your thoughts?? What level is your organization?
Filed Under Corporate Values, Executive Leadership, Felt Fair Compensation, Organization Design, Requisite Organization, Strategy, Succession Planning, Talent Management, Work Levels
Comments
6 Responses to “Harvard Business Discovers Level 6 Work – The Strategy of Combining Two Models”
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With regard to your statement that “embracing paradoxes need NOT be the role of ALL CEOs,” I would agree only if we limited the discussion to the area of market strategy models (which was obviously what was on your mind when you wrote this). In all fairness to the authors of the paper you shared with us, though, they were considering CEO issues (what they called “management dualities”) beyond just market strategy (see Figure 3 on page 42). Many (though certainly not all) of those dualities are present even in organizations that fit Level 5 criteria. What would be true is that a Level 6 or higher CEO will find that the degree of separation between the two endpoints of any duality is likely to be greater than in a Level 5 situation because of the increase in organization size and complexity. The difference between Level 5 and the higher levels (with regard to the paper in question) in the common categories is one of degree, with the addition of certain other categories in the higher levels.
For those readers who haven’t yet tackled this paper, note that the table and figures referenced in the body of the paper are all located on pages 40-42. Also, you’ll find that the findings of the study begins on page 14–if you read the abstract on page 2, you could skip right to page 14 and only miss out on the process description and survey of current literature on the topic.
Will,
Good points. Thanks for you insight and for the pointers about the article.
Regards,
Michelle
Michelle,
You reference the Auto Industries of the 1960’s
and how the Japanese made the transformation.
In 1960’s the American Auto Industry was revolutionary at its time. however became shortsided.They did however have the opportunity to see change which was presented to them by a gentlemen named “Edward Deming”.
The Americam Auto Industry had problems absorbing or understanding “The Deming Philosphy” and packed up his bag and went to Japan. The Japanese truly embraced & implemented such idea’s and have never looked back since.
Daniel,
Hello, thanks for stoppping by and commenting. Yes, Deming played a role in this.
When one person (or industry) appears short-sighted in comparison to another, that is an indicator of differing cognitive capacity. As cognitive capacity increases so does one’s ability to manage longer time horizons.
Michelle
I’m not sure that the Big Three’s overlooking Deming was so much a matter of their being short-sighted as it was that they suffered from both high business model inertia and the arrogance that comes from long-term market dominance. Quite simply, they weren’t facing the kind of crisis that would have motivated them and their associated unions (a factor that can’t be ignored) to attempt the kind of organization culture overhaul that would have been necessary as a part of adopting Deming’s model.
By contrast, Toyota was both small enough, desperate enough, and free enough from outside encumbrances (read: unions) to make the attempt. That they followed through is a testament to their ability to see the long term.
My point isn’t that the Big Three’s top executives might not have been operating at too low of a level. Rather, I’m saying that their circumstances were such that they probably wouldn’t have made the decision to change even if they had level 6 or 7 ability. In other words, we may never know what they were personally capable of, just that their organizations’ cultures overrode any individual ability they may have had (a situation that continues to this day, for the most part).
Will,
I can always count on you to keep me honest. Yes, you’re right. There are a variety of factors at play beyond cognitive capability that influence an organization’s change readiness. I think you’ve hit several of them. I agree with your thoughts.
Thanks for the comment.
Michelle