The Practice of Adaptive Leadership: A book review by Bob Morris

The Practice of Adaptive Leadership: Tools and Tactics for Changing Our Organization and the World
Ronald Heifetz, Alexander Grashow, and Marty Linsky
Harvard Business Press (2009)

Charles Darwin’s concept of natural selection among species also applies to organizations and even to individuals within an organization. Those that do not adapt do not survive; only those that do adapt thrive. Therein lie two of the greatest challenges now facing those entrusted with leadership responsibilities: How to prepare, launch, sustain, and then successfully complete change initiatives? How to respond effectively to change initiatives that originate elsewhere? Ronald Heifetz, Alexander Grashow, and Marty Linsky respond to these and other questions when sharing their thoughts about what adaptive leadership involves and what it requires of those who practice it. Almost immediately, they focus the relationship of adaptive leadership to thriving: It is specifically about change; builds on the past rather than repudiating it; achieves organizational adaptation through continuous experimentation; heavily relies on diversity (i.e. talents, skills, experience, and perspectives); ensures that new adaptations significantly displace, re-regulate, or rearrange whatever is defective, obsolete, or irrelevant; and usually requires (as do biological adaptations) both time, patience, and persistence. Heifetz, Grashow, and Linsky observe, “There is a myth that drives many change initiatives into the ground: that the organization needs to change because it is broken. The reality is that any social system (including an organization or a country or a family) is the way it is because the people in that system (at least those individuals and factions with the most leverage) want it that way…As our colleague Jeff Lawrence poignantly says, `There is no such thing as a dysfunctional organization, because every organization is perfectly aligned to achieve the results it gets.’”

Only after twice re-reading Lawrence’s comment did I fully appreciate how relevant his insight is to so many of the companies that seem dysfunctional but really aren’t. Their inept leadership, flawed strategy, mediocre products, indifferent workforce, and poor customer service are all in alignment. That would not have happened had the companies’ leaders been adaptive. That is, had they possessed the diagnostic skills needed to recognize or anticipate problems and opportunities and then take appropriate action. I commend Heifetz, Grashow, and Linsky for their skillful use of several reader-friendly devices, notably the On the Balcony sections in most chapters that enable a reader to step back from a key point and examine from it a wider perspective (e.g. relevance to the reader’s own circumstances) than its context in the chapter allows. They also include On the Practice Field sections in most chapters in which they suggest possible ways to apply key ideas or, in some instances, raise questions for the reader to consider.

Here are two examples, both from Chapter 9:

On the Balcony (i.e. macro perspective): “Each of the even steps [when designing effective interventions] can be understood as a skill set. What are your strengths? Where do you need to build your skills?”

On the Practice Field (i.e. micro perspective): “The next time you are in a meeting, notice what is going on inside your head while others are speaking. Are you judging their ideas or comments? Rehearsing what you are going to say when it is your turn? In what ways are you staying on the dance floor and leaping into action? Practice avoiding this mental leaping by listening to others and trying to figure out on whose behalf are they speaking, whose perspectives they are representing, and how you can give your perspectives context within the current concerns and subject on the table.”

Those who have read Heifetz’s Leadership Without Easy Answers and/or Heifetz and Linsky’s Leadership on the Line: Staying Alive Through the Dangers of Leading already know that they (and presumably Grashow) are world-class pragmatists who have an insatiable curiosity to know what works in the business world, what doesn’t, and (especially) why. After identifying the components (i.e. the “what”) of adaptive leadership, they devote most of their attention to explaining how to develop and apply it. For that reason, they insert various checklists and Figures throughout their lively narrative that anchor insights in real-world situations. For example:

The unique challenges of adaptive leadership (Pages 52-53)
How to identify a primarily adaptive challenge (Page 74)
Nonconfrontational ways to slow down organizational momentum (Page 111)
Seven steps to orchestrating conflict (Pages 152-153)
How to personalize the adaptive challenge (Page 193)
Common leadership traps and how to avoid them (Pages 244-246)
How to ease the constraint presented by loyalties (Pages 248-251)

In the first chapter, Heifetz, Grashow, and Linsky explain that The Practice of Adaptive Leadership is a “field book” in that it draws upon the vast scope and depth of their combined experiences “in the field” and that they wrote it “for the field” so that it could be of greatest practical value to their reader’s own leadership efforts. On both counts, they succeed brilliantly.

Book Review: The Buyout of America

The Buyout of America: How Private Equity Will Cause the Next Great Credit Crisis
Josh Kosman
Portfolio/The Penguin Group (2009)

In the Introduction, Josh Kosman offers what he calls a “little primer” on how private equity firms operate, explaining that they “buy businesses the way that homebuyers acquire houses. They make a down payment and finance the rest. The financings are structured like balloon mortgages, with big payments due at some point in the future. The critical difference, however, is that while homeowners pay the mortgages on their houses, PE firms have the businesses they buy take out the loans, making them responsible for repayment. They typically try to resell the company or take it public before the loans come due.” It soon gets even more interesting. “As long as the PE firms could refinance, or turn around and sell off their holdings before the biggest loan payments came due, spectacular flameout bankruptcies could be avoided…PE firms would like to have us all think the reason they try so hard to raise earnings in their businesses [by `starving companies of operating and human capital'] is so that companies can use these profits to pay down the money they borrowed to finance their own acquisitions. But the records show that during the 2003-7 buyout rush, that wasn’t generally the case. Instead, they used the profits s a basis to borrow more money. The new loans, which were piled in top of the original debt taken on to finance the LBO, were used to issue dividends” to the (you guessed it) PE firms. What if all, most, or even only some of the companies collapse? No problem. The PE firms have incurred no debt while receiving dividends as well as substantial management fees. “Despite the credit crisis in 2009,” Kosman notes, “PE firms are sitting on roughly $450 billion in unspent capital and itching for more deals.” Of course they are. Given their resources, why wouldn’t they?

Kosman explains how and why PE firms “put their companies into crippling debt and, unlike entrepreneurs, who manage their businesses to succeed in the marketplace and grow, they manage their companies largely for short-term gains.” PE firms hurt their businesses competitively by limiting their growth, cutting jobs without reinvesting the savings, do not even generate good returns for their own investors. According to Kosman, they are “about to cause the Next Great Credit Crisis,” one that could leave about two million of the 7.5 million Americans who work at PE-owned companies unemployed, and more than one thousand businesses bankrupt. “Leadership is needed to rally opposition to close the tax loopholes that make this very damaging activity possible.”

Kosman provides a wealth of information (financial data and statistics as well as real-world situations) to support his observations, recommendations, and especially his accusations. After reading the book and then re-reading several key passages that I highlighted, I wish Kosman had included other perpectives on the issues he raises. For example, the thoughts of those who head the most active PE firms, of federal officials associated with relevant regulatory agencies, and of analysts who are best qualified to discuss PE firms. It seems that PE firms could play an important role in the process of what Charles Darwin characterizes as “natural selection,” one from which some businesses survive (and perhaps even thrive) while others do not. Kosman asserts that these firms must not be allowed “unnatural” advantages that corrupt free market competition. Whether or not his call for action results in any significant reforms of what he calls “tax loopholes” remains to be seen.

Book Review: The Versatile Leader

The Versatile Leader: Make the Most of Your Strengths – Without Overdoing It
Bob Kaplan with Rob Kaiser
Pfeiffer/John Wiley & Sons (2006)

Written in collaboration with Rob Kaiser, Kaplan has selected versatility as his “capstone concept” and notes several of its dominant characteristics. “”First, versatility is usually understood as a wide repertoire, along with the capacity to call appropriately on one capability or another…Second, versatility is defined as covering all of the two-sided bases that are deemed appropriate. The book is predicated on two major pairs [identified in Figure P.1. on Page xix in the Preface]…Third, being versatile in this sense departs in another way from the usual meaning of the word. It is not just having enough of both sides of every major pair but it is also not having, or more precisely not employing, too much of either side. Getting it right depends, however, on something that is not a foregone conclusion for leaders – having an accurate on how much they are deploying, neither too little nor too much.”

Kaplan then shifts his attention to the final characteristic. “Fourth, to employ pair-wise capabilities adeptly, two conditions have to be met. The individual must be evenhanded with each pair, when the tendency is to place too high a value on one side and to disparage the other. The second condition is that the leader be self-aware both about the way he or she behaves with respect to each pair and how he or she regards each pair.” The versatile leader, therefore, must develop a sufficient number capabilities and continuously strengthen them; he or she must understand the nature of each capability and possess the sound judgment required to know when to exercise which and to what extent; and he or she must, meanwhile, maintain (for lack of a better term) humility in combination with a sincere concern to serve those entrusted to his or her care.

As Kaplan makes crystal clear, versatile leaders are not creatures of expediency. They identify and focus on what is most important, then measure and reward what is most important, and meanwhile ensure that those for whom they are responsible do the same. Although they are versatile in terms of capabilities, they have steadfast, non-negotiable core values that they consistently demonstrate in their behavior. That is how they earn, preserve, and deserve their associates’ trust and respect. Versatile also leaders delight in others’ achievements and eagerly celebrate them. They think in terms of first-person plural pronouns. They are aggressive and tenacious but principled competitors.

Much has been written about how to establish and then sustain a “versatile” organization but as Kaplan so eloquently as well as compellingly explains, achieving that worthy objective depends almost entirely on first having developed a sufficient number of versatile leaders at all levels and in all areas.