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10 Leadership Challengesand Opportunities
R-diger Wittmann/iStock/Thinkstock
Learning Objectives
After reading this chapter, you should be able to:
1. Identify how the concept of leadership has changed over
time.
2. Summarize the challenges regarding sustainability and CSR
that future leaders face.
3. Describe the characteristics of next-generation leaders as
they relate to sustainability and CSR.
© 2016 Bridgepoint Education, Inc. All rights reserved. Not for
resale or redistribution.
Section 10.1Changing Concepts of Leadership
Pretest Questions
1. The concept and meaning of leadership has remained
relatively constant over time. T/F
2. Trait theories of leadership opened the door for leadership
training. T/F
3. Waste reduction and social equity have always been the
concerns of corporate
leaders. T/F
Answers can be found at the end of the chapter.
Introduction
Every generation defines and redefines the concept of
leadership as it faces the challenges
of its era. Certainly, some time periods provide more material
and opportunity for reflection
than others. For example, in 1862, as the fractured United States
fought the Civil War, Presi-
dent Abraham Lincoln said, “The dogmas of the quiet past are
inadequate to the stormy pres-
ent. The occasion is piled high with difficulty and we must rise
with the occasion. As our case is
new, so we must think anew and act anew” (as cited in Woolley
& Peters, 2015).
Part of Lincoln’s legacy stemmed from his ability to “think and
act anew.” While the issues
facing our globalized world significantly differ compared to the
1800s, some themes remain
the same: When it comes to issues like CSR and sustainability,
it seems necessary for brave
people to think and act anew. This chapter examines how the
next generation of leaders can
begin this process. If society is to face new problems in a novel
way, completing such tasks is
not easy, but it is essential.
The first nine chapters of this text illustrated the difficult and
specific problems of build-
ing socially responsible and sustainable organizations. The
opportunity to make the future
dramatically different from the past—and the present—presents
unique leadership chal-
lenges that we address in this chapter. After reviewing the
history of leadership, we describe
CSR-relevant conditions facing leaders. Finally, we describe
skills that leaders must mas-
ter if they are to effectively lead in a global, environmentally
stressed, and economically
fluctuating world.
10.1 Changing Concepts of Leadership
This text has discussed critical concepts of sustainability and
stewardship. Both are important
terms closely related to leadership. However, the concept of
leadership and our expectations
for it have evolved over time, as all concepts do. In this section,
we describe how concepts of
leadership have changed. Students should note that this helps us
appreciate history and lays
the foundation for a deeper understanding of how leaders can be
successful when they are
held accountable for corporate social responsibility.
© 2016 Bridgepoint Education, Inc. All rights reserved. Not for
resale or redistribution.
Section 10.1Changing Concepts of Leadership
Leadership as Monarchy and Divine Right
Western cultural norms about leadership have strong roots in a
patriarchal and monarchical
social structure—a male-dominated social order in which royal
families prevailed. In this
property- and lineage-based mind-set, the fundamental
assumption was that kings and
queens (or other monarchs) were entitled to the positions they
held (in some cases such posi-
tions were considered to be appointed, or at least approved, by a
deity). Typically, in monar-
chies positions of power are transferred based on lineage. The
average person has little access
to the monarchs; rather, he or she has to contribute significantly
to the well-being of more
powerful people. In monarchies, leadership historically came
from “an outside source, the
power of the original source of delegation or control—divine,
delegated, hereditary, or raw
force” (Miller, 2004, p.110). In other words, leadership came as
a divine right but was often
maintained by brute force.
In a world dominated by divine right, lead-
ership was completely self-justified. It was
more about authority and control and less
about collaboration and information. A
king, queen, emperor, sultan, or shogun
each had authority over the local world, and
most sought to expand access to resources
in competition against other kingdoms or
principalities. In other words, it was the role
of the monarch to obtain as many resources
as possible and protect his or her people
from other monarchs who also wanted
to acquire more resources. This changed
as leadership theory evolved and moved
toward a CSR mind-set and generated an
expectation of sustainability.
Great Man Theory
As a result of the historical dominance of certain families and
monarchies, it is not surprising
that the first management theories about leadership were called
“great man theories.” These
assume that a leader is both born in the right place and
developed to protect against the chaos
of nature and malevolent others. Also, despite exceptions such
as Joan of Arc or Queen Eliza-
beth, as a cultural by-product of the times, it was typically
assumed that all leaders would be
men. In terms of how this relates to CSR, such thinking
suggests that dominance and compe-
tition define and characterize leaders. While leadership thinking
has changed and matured,
such a mind-set may still characterize lingering attitudes about
nature and larger society.
Monarchies gave way to forms of democracy and capitalism, but
conceptualizations of lead-
ership did not really change at first. Great man theories of
leadership replaced the idea that
leaders were simply leaders by birthright, though they continued
to imply that leaders were
special people, and usually men, who developed leadership
traits.
Stefan Wermuth/AP
Despite sharing more leadership and power,
Queen Elizabeth II and her family are an exam-
ple of a monarchy.
© 2016 Bridgepoint Education, Inc. All rights reserved. Not for
resale or redistribution.
Section 10.1Changing Concepts of Leadership
Scottish writer Thomas Carlyle (1840) popularized the great
man theory in the 1840s, add-
ing the belief that heroes influenced history through personal
attributes and divine inspira-
tion. This idea eventually gave way to other, less deterministic
conceptualizations of leader-
ship that are different from modern-day CSR and sustainability
concerns. Still, many people
tend to wait for someone powerful to emerge and lead the
charge to a more socially and envi-
ronmentally friendly future. When people groom themselves to
stand out or wait for others to
dominate, they echo the Western thinking that dominated the
19th century.
Trait Theories
Research on the trait theory of leadership began in the early part
of the 20th century. Trait
theory describes personality traits and attributes of effective
leaders. It stemmed from the
hope that if one could understand what made great people great,
one could screen, select,
and even train others to have those traits. Some trait theories go
so far as to suggest that good
leaders have certain physical attributes, including male gender.
In the trait theory of leader-
ship, scholars sought to understand the physical and personal
characteristics of leaders, but
they were biased by the samples offered by the early 20th
century’s social order—at the time
almost all leaders were White males with access to property and
sources of wealth.
In 1948 one of the first trait theorists, Ralph Stogdill, published
an article in the Journal of
Psychology titled “Personal Factors Associated With
Leadership.” Stogdill’s research showed
that leaders’ characteristics included capacity, achievement,
responsibility, participation, and
status. Other trait theories, whether based on research or not,
argued that leaders must have
subjective characteristics like charisma, be smart in specific
ways, and generally be male.
Trait theory maintained that leaders are born but also suggested
that leaders must develop
certain traits to leverage their birth advantages into effective
leadership. Trait theories led to
the suggestion that leaders demonstrate consistent behaviors and
tendencies in certain situa-
tions and popularized the idea that people can enhance their
natural skills and abilities. Trait
theories also opened the door to the democratization of talent
and leadership. Scholars and
philosophers began to argue that leadership traits could be
learned and replicated by differ-
ent people, perhaps even those who are different from the
majority.
Behavioral Theories
As leadership behaviors were identified as a key factor of a
firm’s success, behavioral theory
began to emerge in the 1950s as a way to promote corporate
success. Rather than focusing
on traits intrinsic to an individual, behavioral theories look
outside the leader and focus on
actions or behaviors. One behavioral theorist, Douglas
McGregor (1960), offered a research-
based concept called theory X and theory Y. Theory X leaders
behave as if the workers they
lead are cogs in a machine. They assume workers are lazy and
need motivation from a power-
ful and influential leader. In contrast, theory Y leaders see
workers as wanting to do a good
job and as creative and innovative. McGregor (1960)
emphasized that a leader’s behavior
would vary depending on which view he or she adopted.
In 1967 Fieldler’s contingency theory separated the behaviors
of leaders into either a task
or a relational orientation. Fielder argued that some leaders
emphasized “getting things
done,” (task orientation) while others emphasized “having
strong relationships” (relational
© 2016 Bridgepoint Education, Inc. All rights reserved. Not for
resale or redistribution.
Section 10.1Changing Concepts of Leadership
orientation). Later, in the 1970s Hersey and Blanchard proposed
situational leadership, argu-
ing that leaders employed either task or relational behaviors as
the situation required. While
helpful, these concepts of leadership are limited to individual
behavior and not systems and
sustainability.
As the field of leadership scholarship matured, academics and
practitioners moved away
from these male-dominated, trait-dominated, and command-and-
control orientations toward
process theories of leadership, which bring workplaces closer to
the concept of sustainability
and CSR.
Process Theory
The next leadership theory to emerge employed concepts related
to sustainability. In 1991
scholar Margaret Wheatley wrote Leadership and the New
Science. The book is a primer for
systems theory and complexity theory in leadership, and it
emphasizes a process theory
of leadership. This theory posits that leadership cannot simply
be observed (think of traits
or behaviors), nor does it flow in one direction, from leader to
follower. Rather, leadership
occurs when leaders apply knowledge and skills to their
interactions with others. Impor-
tantly, process theories view leadership as bidirectional, where
learning flows between
leader and follower; in fact, the very construct of “leader” and
“follower” are less useful and
thus downplayed in process theories. Wheatley (2006)
postulates that leadership should be
viewed through the lens of chaos theory to best understand how
organizations really work—
the result of using such a lens is that leaders will take a systems
view of the organization
and seek to involve as many stakeholders as possible in
decision-making processes. Prior
to Wheatley, other relationship-based mind-sets, including those
put forth by scholars who
discuss servant leadership (Greenleaf, 1977) or theory Z
leadership (Ouchi, 1981), argued for
a more holistic view of what leadership is and could be, which
brings us closer to a sustain-
ability and pro-CSR model.
A process theory of leadership remains central to those who
embrace the concept of sustain-
ability. It encompasses the idea of traits, in that all leaders must
have certain traits or capaci-
ties that match the challenges they face. But process theory also
encompasses a contingency
theory of leadership because certain traits match certain
environments, and no single trait
ensures success in all environments. The process theory of
leadership puts managers beyond
the “win–lose” traditions of older theories and toward a more
holistic approach that pays
attention to important social and environmental relationships.
For example, research from author Jim Collins argues for what
he calls level 5 leadership. In
his best-selling book Good to Great, Collins (2001) shows why
some companies remain simply
functional and “good,” as opposed to becoming “great,” which
tends to mean highly profitable
and composed of engaged and loyal employees. Collins claims
that level 5 leadership reflects
a general concern for a leader’s character and motivation and
for all involved in the process.
He proposes that everyone should be involved in the process of
leadership, including share-
holders, employees, suppliers, customers, and people in the
community.
Process theories of leadership are potentially more compatible
with the challenges of the
future, which are likely to be entirely different from challenges
of the past. The next sections
address those challenges and discuss how leaders can prepare to
face them with confidence.
© 2016 Bridgepoint Education, Inc. All rights reserved. Not for
resale or redistribution.
Section 10.2Challenges Facing Future Leaders
10.2 Challenges Facing Future Leaders
The previous section described concepts of leadership
developed in and for previous genera-
tions. These notions of leadership were adopted before people
could fully see the importance
of creating socially responsible and sustainable corporations
that can improve gender and
racial equality and other socially responsible behaviors. These
older models of leadership,
while exceptionally helpful, were also very limited. For
example, they tended to be simplistic
and linear and did not embrace complexity and systems. They
tended to be oriented toward
men and privileged classes and did not take into account the
particular characteristics of
women or other socioeconomic groups. The older models
assumed the ever-present need
for an organizational hierarchy and did not imagine new kinds
of organic organizations that
would be less hierarchical and perhaps less permanent. Despite
these significant drawbacks,
theories from previous generations still have some validity.
Vestiges of previous thinking also
continue to dominate corporate and educational culture.
However, older theories of leader-
ship do not point society in the direction of embracing key
contemporary ideas such as waste
reduction, social equality, and environmental responsibility, all
of which matter to many mod-
ern corporate leaders.
Waste Reduction
The rise of the corporation began about 250 years ago, when
social interests led to the cre-
ation of hospitals, and political–business interests such as those
of the British East India Com-
pany (Rao, 2011) or the Hudson’s Bay Company became tools
for economic conquest. Accord-
ing to Rao, globalization created the corporation because large-
scale enterprise was needed
to dominate in a world where competition remained unchecked.
In such corporate environ-
ments, leaders were expected to compete and dominate.
Moderation, social responsibility,
and waste reduction were not visible or important to governing
boards or investors.
For example, the Hudson’s Bay Company, one of the oldest
corporations in the world, was
charted by the British to trade with North American natives and
secure a steady supply of
fur. It was also used to politically and economically dominate
North America, at one time
claiming more than 15% of the continent as its “territory.” But
as hunting grounds in the east
were depleted and fur became scarce, the trappers and traders
working for the corporation
moved west to find new territories. There was no leadership or
discussion of topics such as
conservation, waste reduction, care for the environment, or even
care for the native people
who supplied the fur (Carlos & Lewis, 1993). The Hudson’s Bay
Company was essentially an
instrument of political and social dominance in a political
rivalry first between British and
French factions and later between British and American
factions. It represents an early and
dominant influence on subsequent market behaviors of many
American businesses.
Social Equality
Social equity was also not typically part of corporate values in
early years. Corporations
practiced protectionist policies that guarded equity owners at
the expense of many groups,
including Black and other Americans who were enslaved, as
well as women and laborers.
© 2016 Bridgepoint Education, Inc. All rights reserved. Not for
resale or redistribution.
Section 10.3Next-Generation Leaders
Many US corporations (and some universities) still in business
today benefited from support-
ing the slave trade. For example, Aetna Insurance has
acknowledged paying life insurance
to slave owners when a slave died. Like many responsible
companies involved in behaviors
now deemed atrocious, Aetna acknowledged its role and
apologized. Still, this illustrates how
corporations throughout history have often taken the wrong side
on moral issues (“15 Major
Corporations,” 2013).
While some might think the issue of slavery is a part of deep
history, the issue remains alive
today as corporations, particularly in global environments,
grapple with how people, even
children, are compelled to work. The question of social equity
and work participation is a
permanent challenge for corporations.
Similarly, labor relations and workers’ rights are permanent
leadership challenges. Corpora-
tions have a long and deep history of challenging what is now
regarded as workers’ right to
organize in a labor union. In 1894 presidential candidate
Eugene Debs worked to unionize
the Pullman railroad car company in Chicago. The local workers
were convinced to strike, and
other rail workers’ unions also went on strike in support of their
colleagues in Chicago. By
summer, more than 125,000 workers were on strike, shutting
down the ever-important rail
system in the United States. There were riots, clashes, and an
eventual resolution, but more
than 60 people died and more than $80 million in damages was
caused in an effort to deny
workers the right to organize (Papke, 1999).
Gender inequity is another permanent leadership challenge. One
hundred years ago, women
did not generally participate as corporate employees. In World
War II many women took
over factory positions held by men who were called into
combat. By the 1950s women were
not just on the floor of the factories but in their boardrooms. By
the 1970s the wage equity
debate was raging, and it continues today. Achieving gender
equity and creating appropriate
work environments for people of all gender identities are an
ongoing challenge for corporate
leaders.
Research has found that corporate leaders rate CSR and
sustainability as important leader-
ship concerns (Bonini & Gorner, 2011). However, it is
extremely complex to manage each of
these and also maintain the corporation’s many financial, social,
and environmental issues.
The leadership challenge is large, but newer models of
leadership share the responsibility.
10.3 Next-Generation Leaders
Each student of CSR and sustainability should ask themselves:
What kind of leader will I be?
What kind of leader will I work with? What kind of leader is
ideal for the world I would like
to live in? The following sections articulate a vision of a next-
generation leader who builds
and enhances a socially responsible and sustainable corporation.
We argue that such a leader
displays specific aspects of leadership; each one is essential to
building responsible and sus-
tainable organizations of any size. Table 10.1 compares how a
next-generation leader differs
from older standards of leadership. Note that our model focuses
on leadership actions, rather
than on a leader’s characteristics or traits.
© 2016 Bridgepoint Education, Inc. All rights reserved. Not for
resale or redistribution.
Section 10.3Next-Generation Leaders
Table 10.1: The evolution of a next-generation leader
Old Leadership Style New Leadership Style
Leader as: Head, director
Top of the hierarchy
Colleague, collaborator
Systems thinker
Scale: Loyal to local
Zoom in
Global citizen
Zoom out
Critical skills: Expert
Impose
Emotionally intelligent
Empathy
Lead by: Control
Sole problem solver
Collaboration
Problem clarifier; joint problem solver
Communication: Top down
Dialectic
Transparent
Dialogic
Ethics: Bigger is better Leaner is better
Environment: Exploit
Polluter
Explore
Steward
Organize by: Hierarchy
Geography
Information flow
Virtual proximity
Learning is: A prerequisite
A luxury
A cost
An ongoing process
A necessity
An investment
Source: Hammond, S. and Christensen, L. (2016). “The New
Generation Leader [unpublished paper].” Reprinted with
permission.
Systems Thinker
This entire text emphasizes the value of systems thinking. Here,
we specifically emphasize
that next-generation leaders cannot skip developing this mind-
set. For decades, the opposite
of systems thinking—a mind-set called scientific
reductionism—was considered the way lead-
ers could solve most problems. Reductionism was based on the
philosophy of René Descartes
and Isaac Newton. It was popularized by other scientists as they
explored an ever-smaller
universe looking for miniscule molecules, atoms, or quarks to
explain physics and life experi-
ences. Scientific reductionism requires the searcher to zoom in;
to take a detailed and particu-
lar look at the physical world’s building blocks and events—or
in business, a closer look at the
building blocks of organizational successes or failures.
A systems thinking mind-set (as introduced in Chapter 2) offers
a contrary view of the physical
world. In systems thinking, the only way to understand a
problem is to see its relationship to
the whole. A systems thinker understands the interactions and
linkages between the various
elements that make up an entire system. In other words, if one
is trying to understand what
happens in an ecosystem, it does not make sense to zoom in on
the microbiology of a single
species; rather, one should look at all the elements in that
system and their relationships to
each another. In a physical ecosystem, one who takes a systems
view looks at each species:
the geography, the wetlands, and the interactions that occur
between those elements. In an
organizational system, one who takes a systems view looks at
each department, along with
© 2016 Bridgepoint Education, Inc. All rights reserved. Not for
resale or redistribution.
Section 10.3Next-Generation Leaders
customers, suppliers, partners, and potential partners. The
difficulty with systems thinking
usually relates to clarifying the boundaries of the system and
how deep to investigate, inspect,
and verify the connections.
As discussed in Chapter 2, systems thinkers view a business
enterprise or corporation as part
of a complex and dynamic whole. In a dynamic system,
corporate actors interact with govern-
ment, the environment, individuals, the community, and other
entities under the principles of
complex systems. Energy and materials flow into a complex
system. These are processed and
flow out of the system through boundaries that define the
system. However, those boundaries
are always problematic. For example, it can be challenging for
an employee to know the exact
boundary between work and social life. For a company, it can
be difficult to know the bound-
ary between the corporation and the community. The truth is
that our social lives are tied up
at work and are part of a community. In other words, every
system is part of a larger one, and
it is often difficult to distinguish the boundaries between the
two. Helping define, protect,
and clarify boundaries may be one job for future leaders who
support colleagues in creating
a socially responsible and sustainable world.
Features of systems thinking that next-generation leaders will
need to consider include the
following:
• Systems function with lots of information. In business,
raw materials are useless
unless one knows how to turn the raw product into something
more valuable. Accord-
ingly, systems thinkers spend considerable time talking about
learning organizations.
New knowledge is essential to keep a system alive (Senge,
1990).
• Systems also seek equilibrium. Certain patterns are visible
in the behavior of any
system, but patterns are subject to interpretation and are often
unclear. Also, some
amount of randomness or chaos influences the behavior of every
system. This makes
challenges of leadership particularly difficult, because while the
leader is trying to
bring equilibrium to the system, he or she cannot fully take into
account the patterns
that influence it; nor can he or she or account for random
events.
• Systems are composed of many parts. A leader who adopts
a systems theory per-
spective understands that the system has many parts that
interact through rela-
tionships. Corporate systems are nested inside other systems
with which they
overlap. Over time, systems change, as do inputs, processes,
and the ability to
provide a value-added output. Some of those changes are out of
the leader’s control
(Skyttner, 2006).
How does being a systems thinker make a next-generation
leader different from the leaders
of the past? Good advice has emerged from Colonel George E.
Reed, the director of Command
and Leadership Studies at the U.S. Army War College. When
contemplating how tomorrow’s
leaders can adopt and apply systems thinking, he suggests the
following:
Focus on the purpose of the system.
Identify patterns and use feedback loops to understand the
dynamics of systems.
Consider the whole rather than the components.
Consider the present, but don’t focus too much on short-term
achievements. Think of
long-term goals (Reed, 2006).
© 2016 Bridgepoint Education, Inc. All rights reserved. Not for
resale or redistribution.
Section 10.3Next-Generation Leaders
Apply Your Knowledge: Systems Thinking Tools
This exercise can be done individually or in a group, in
abbreviated form, or over a long
period of time for greater insight. The objective is to see
important relationships and
processes and to identify how an organization adds value and
relates to a larger community.
Step 1: Choose an organization to research. List all stakeholders
in the company, in-
cluding owners, employees, customers, suppliers, and so forth.
Put the name of each
on a 3-by-5-inch index card. For example: John Gross and Sons.
Step 2: Sort each type of stakeholder into a category. For
example, John Doe and
Sons— Supplier.
Step 3: List all of the corporation’s essential processes. These
are generally areas
where the corporation performs a service or adds value. For
example, a hospital
performs surgery (among other things).
Step 4: Create a way to visually represent the corporate system
that could be shown
to any of its stakeholders. Your map should show the following:
The types of key stakeholders.
The relationship between key stakeholders.
The relationship between key stakeholders and critical
processes.
Critical process in the form of inputs, processes, and outputs.
The system’s relationship with the broader environment.
Step 5: List all critical relationships and processes. Ask:
How can the corporation’s leader better manage key
relationships?
How can critical processes improve?
How is the corporation impacting the environment?
Global Citizen
Becoming an active and effective systems thinker means
considering factors beyond one’s
own neighborhood, corporation, or immediate work
environment. One has to look at the
broader communities and ecosystems in which these elements
reside. For most, this means
becoming a global citizen. Doing so does not mean giving up
citizenship in one’s own local
community, nor does it mean abandoning any kind of nationalist
or patriotic spirit. Being
a global citizen means taking responsibility for problems that
require local and potentially
global solutions. A global citizen understands the needs of the
whole and considers those
when making personal decisions and directing groups, teams,
and organizations.
This sometimes means considering linkages between problems
far away and behaviors at
home. A classic example comes from the apparel industry.
Consider the deadliest garment
factory disaster in history, which occurred in Bangladesh in
2013. More than 1,000 work-
ers died and 2,500 were injured when owners pressured workers
to assemble garments in
a decrepit building that collapsed during peak hours (Butler,
2013). A global citizen takes
the time to consider the connection between wealthy, developed
countries creating demand
for new and inexpensive apparel and the pressures placed on
low-income garment factory
…

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  • 1. 10 Leadership Challengesand Opportunities R-diger Wittmann/iStock/Thinkstock Learning Objectives After reading this chapter, you should be able to: 1. Identify how the concept of leadership has changed over time. 2. Summarize the challenges regarding sustainability and CSR that future leaders face. 3. Describe the characteristics of next-generation leaders as they relate to sustainability and CSR. © 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 10.1Changing Concepts of Leadership Pretest Questions 1. The concept and meaning of leadership has remained relatively constant over time. T/F 2. Trait theories of leadership opened the door for leadership training. T/F 3. Waste reduction and social equity have always been the concerns of corporate
  • 2. leaders. T/F Answers can be found at the end of the chapter. Introduction Every generation defines and redefines the concept of leadership as it faces the challenges of its era. Certainly, some time periods provide more material and opportunity for reflection than others. For example, in 1862, as the fractured United States fought the Civil War, Presi- dent Abraham Lincoln said, “The dogmas of the quiet past are inadequate to the stormy pres- ent. The occasion is piled high with difficulty and we must rise with the occasion. As our case is new, so we must think anew and act anew” (as cited in Woolley & Peters, 2015). Part of Lincoln’s legacy stemmed from his ability to “think and act anew.” While the issues facing our globalized world significantly differ compared to the 1800s, some themes remain the same: When it comes to issues like CSR and sustainability, it seems necessary for brave people to think and act anew. This chapter examines how the next generation of leaders can begin this process. If society is to face new problems in a novel way, completing such tasks is not easy, but it is essential. The first nine chapters of this text illustrated the difficult and specific problems of build- ing socially responsible and sustainable organizations. The opportunity to make the future dramatically different from the past—and the present—presents
  • 3. unique leadership chal- lenges that we address in this chapter. After reviewing the history of leadership, we describe CSR-relevant conditions facing leaders. Finally, we describe skills that leaders must mas- ter if they are to effectively lead in a global, environmentally stressed, and economically fluctuating world. 10.1 Changing Concepts of Leadership This text has discussed critical concepts of sustainability and stewardship. Both are important terms closely related to leadership. However, the concept of leadership and our expectations for it have evolved over time, as all concepts do. In this section, we describe how concepts of leadership have changed. Students should note that this helps us appreciate history and lays the foundation for a deeper understanding of how leaders can be successful when they are held accountable for corporate social responsibility. © 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 10.1Changing Concepts of Leadership Leadership as Monarchy and Divine Right Western cultural norms about leadership have strong roots in a patriarchal and monarchical social structure—a male-dominated social order in which royal families prevailed. In this property- and lineage-based mind-set, the fundamental assumption was that kings and
  • 4. queens (or other monarchs) were entitled to the positions they held (in some cases such posi- tions were considered to be appointed, or at least approved, by a deity). Typically, in monar- chies positions of power are transferred based on lineage. The average person has little access to the monarchs; rather, he or she has to contribute significantly to the well-being of more powerful people. In monarchies, leadership historically came from “an outside source, the power of the original source of delegation or control—divine, delegated, hereditary, or raw force” (Miller, 2004, p.110). In other words, leadership came as a divine right but was often maintained by brute force. In a world dominated by divine right, lead- ership was completely self-justified. It was more about authority and control and less about collaboration and information. A king, queen, emperor, sultan, or shogun each had authority over the local world, and most sought to expand access to resources in competition against other kingdoms or principalities. In other words, it was the role of the monarch to obtain as many resources as possible and protect his or her people from other monarchs who also wanted to acquire more resources. This changed as leadership theory evolved and moved toward a CSR mind-set and generated an expectation of sustainability. Great Man Theory As a result of the historical dominance of certain families and monarchies, it is not surprising
  • 5. that the first management theories about leadership were called “great man theories.” These assume that a leader is both born in the right place and developed to protect against the chaos of nature and malevolent others. Also, despite exceptions such as Joan of Arc or Queen Eliza- beth, as a cultural by-product of the times, it was typically assumed that all leaders would be men. In terms of how this relates to CSR, such thinking suggests that dominance and compe- tition define and characterize leaders. While leadership thinking has changed and matured, such a mind-set may still characterize lingering attitudes about nature and larger society. Monarchies gave way to forms of democracy and capitalism, but conceptualizations of lead- ership did not really change at first. Great man theories of leadership replaced the idea that leaders were simply leaders by birthright, though they continued to imply that leaders were special people, and usually men, who developed leadership traits. Stefan Wermuth/AP Despite sharing more leadership and power, Queen Elizabeth II and her family are an exam- ple of a monarchy. © 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 10.1Changing Concepts of Leadership
  • 6. Scottish writer Thomas Carlyle (1840) popularized the great man theory in the 1840s, add- ing the belief that heroes influenced history through personal attributes and divine inspira- tion. This idea eventually gave way to other, less deterministic conceptualizations of leader- ship that are different from modern-day CSR and sustainability concerns. Still, many people tend to wait for someone powerful to emerge and lead the charge to a more socially and envi- ronmentally friendly future. When people groom themselves to stand out or wait for others to dominate, they echo the Western thinking that dominated the 19th century. Trait Theories Research on the trait theory of leadership began in the early part of the 20th century. Trait theory describes personality traits and attributes of effective leaders. It stemmed from the hope that if one could understand what made great people great, one could screen, select, and even train others to have those traits. Some trait theories go so far as to suggest that good leaders have certain physical attributes, including male gender. In the trait theory of leader- ship, scholars sought to understand the physical and personal characteristics of leaders, but they were biased by the samples offered by the early 20th century’s social order—at the time almost all leaders were White males with access to property and sources of wealth. In 1948 one of the first trait theorists, Ralph Stogdill, published an article in the Journal of Psychology titled “Personal Factors Associated With
  • 7. Leadership.” Stogdill’s research showed that leaders’ characteristics included capacity, achievement, responsibility, participation, and status. Other trait theories, whether based on research or not, argued that leaders must have subjective characteristics like charisma, be smart in specific ways, and generally be male. Trait theory maintained that leaders are born but also suggested that leaders must develop certain traits to leverage their birth advantages into effective leadership. Trait theories led to the suggestion that leaders demonstrate consistent behaviors and tendencies in certain situa- tions and popularized the idea that people can enhance their natural skills and abilities. Trait theories also opened the door to the democratization of talent and leadership. Scholars and philosophers began to argue that leadership traits could be learned and replicated by differ- ent people, perhaps even those who are different from the majority. Behavioral Theories As leadership behaviors were identified as a key factor of a firm’s success, behavioral theory began to emerge in the 1950s as a way to promote corporate success. Rather than focusing on traits intrinsic to an individual, behavioral theories look outside the leader and focus on actions or behaviors. One behavioral theorist, Douglas McGregor (1960), offered a research- based concept called theory X and theory Y. Theory X leaders behave as if the workers they lead are cogs in a machine. They assume workers are lazy and need motivation from a power- ful and influential leader. In contrast, theory Y leaders see
  • 8. workers as wanting to do a good job and as creative and innovative. McGregor (1960) emphasized that a leader’s behavior would vary depending on which view he or she adopted. In 1967 Fieldler’s contingency theory separated the behaviors of leaders into either a task or a relational orientation. Fielder argued that some leaders emphasized “getting things done,” (task orientation) while others emphasized “having strong relationships” (relational © 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 10.1Changing Concepts of Leadership orientation). Later, in the 1970s Hersey and Blanchard proposed situational leadership, argu- ing that leaders employed either task or relational behaviors as the situation required. While helpful, these concepts of leadership are limited to individual behavior and not systems and sustainability. As the field of leadership scholarship matured, academics and practitioners moved away from these male-dominated, trait-dominated, and command-and- control orientations toward process theories of leadership, which bring workplaces closer to the concept of sustainability and CSR. Process Theory
  • 9. The next leadership theory to emerge employed concepts related to sustainability. In 1991 scholar Margaret Wheatley wrote Leadership and the New Science. The book is a primer for systems theory and complexity theory in leadership, and it emphasizes a process theory of leadership. This theory posits that leadership cannot simply be observed (think of traits or behaviors), nor does it flow in one direction, from leader to follower. Rather, leadership occurs when leaders apply knowledge and skills to their interactions with others. Impor- tantly, process theories view leadership as bidirectional, where learning flows between leader and follower; in fact, the very construct of “leader” and “follower” are less useful and thus downplayed in process theories. Wheatley (2006) postulates that leadership should be viewed through the lens of chaos theory to best understand how organizations really work— the result of using such a lens is that leaders will take a systems view of the organization and seek to involve as many stakeholders as possible in decision-making processes. Prior to Wheatley, other relationship-based mind-sets, including those put forth by scholars who discuss servant leadership (Greenleaf, 1977) or theory Z leadership (Ouchi, 1981), argued for a more holistic view of what leadership is and could be, which brings us closer to a sustain- ability and pro-CSR model. A process theory of leadership remains central to those who embrace the concept of sustain- ability. It encompasses the idea of traits, in that all leaders must have certain traits or capaci-
  • 10. ties that match the challenges they face. But process theory also encompasses a contingency theory of leadership because certain traits match certain environments, and no single trait ensures success in all environments. The process theory of leadership puts managers beyond the “win–lose” traditions of older theories and toward a more holistic approach that pays attention to important social and environmental relationships. For example, research from author Jim Collins argues for what he calls level 5 leadership. In his best-selling book Good to Great, Collins (2001) shows why some companies remain simply functional and “good,” as opposed to becoming “great,” which tends to mean highly profitable and composed of engaged and loyal employees. Collins claims that level 5 leadership reflects a general concern for a leader’s character and motivation and for all involved in the process. He proposes that everyone should be involved in the process of leadership, including share- holders, employees, suppliers, customers, and people in the community. Process theories of leadership are potentially more compatible with the challenges of the future, which are likely to be entirely different from challenges of the past. The next sections address those challenges and discuss how leaders can prepare to face them with confidence. © 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution.
  • 11. Section 10.2Challenges Facing Future Leaders 10.2 Challenges Facing Future Leaders The previous section described concepts of leadership developed in and for previous genera- tions. These notions of leadership were adopted before people could fully see the importance of creating socially responsible and sustainable corporations that can improve gender and racial equality and other socially responsible behaviors. These older models of leadership, while exceptionally helpful, were also very limited. For example, they tended to be simplistic and linear and did not embrace complexity and systems. They tended to be oriented toward men and privileged classes and did not take into account the particular characteristics of women or other socioeconomic groups. The older models assumed the ever-present need for an organizational hierarchy and did not imagine new kinds of organic organizations that would be less hierarchical and perhaps less permanent. Despite these significant drawbacks, theories from previous generations still have some validity. Vestiges of previous thinking also continue to dominate corporate and educational culture. However, older theories of leader- ship do not point society in the direction of embracing key contemporary ideas such as waste reduction, social equality, and environmental responsibility, all of which matter to many mod- ern corporate leaders. Waste Reduction The rise of the corporation began about 250 years ago, when
  • 12. social interests led to the cre- ation of hospitals, and political–business interests such as those of the British East India Com- pany (Rao, 2011) or the Hudson’s Bay Company became tools for economic conquest. Accord- ing to Rao, globalization created the corporation because large- scale enterprise was needed to dominate in a world where competition remained unchecked. In such corporate environ- ments, leaders were expected to compete and dominate. Moderation, social responsibility, and waste reduction were not visible or important to governing boards or investors. For example, the Hudson’s Bay Company, one of the oldest corporations in the world, was charted by the British to trade with North American natives and secure a steady supply of fur. It was also used to politically and economically dominate North America, at one time claiming more than 15% of the continent as its “territory.” But as hunting grounds in the east were depleted and fur became scarce, the trappers and traders working for the corporation moved west to find new territories. There was no leadership or discussion of topics such as conservation, waste reduction, care for the environment, or even care for the native people who supplied the fur (Carlos & Lewis, 1993). The Hudson’s Bay Company was essentially an instrument of political and social dominance in a political rivalry first between British and French factions and later between British and American factions. It represents an early and dominant influence on subsequent market behaviors of many American businesses.
  • 13. Social Equality Social equity was also not typically part of corporate values in early years. Corporations practiced protectionist policies that guarded equity owners at the expense of many groups, including Black and other Americans who were enslaved, as well as women and laborers. © 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 10.3Next-Generation Leaders Many US corporations (and some universities) still in business today benefited from support- ing the slave trade. For example, Aetna Insurance has acknowledged paying life insurance to slave owners when a slave died. Like many responsible companies involved in behaviors now deemed atrocious, Aetna acknowledged its role and apologized. Still, this illustrates how corporations throughout history have often taken the wrong side on moral issues (“15 Major Corporations,” 2013). While some might think the issue of slavery is a part of deep history, the issue remains alive today as corporations, particularly in global environments, grapple with how people, even children, are compelled to work. The question of social equity and work participation is a permanent challenge for corporations.
  • 14. Similarly, labor relations and workers’ rights are permanent leadership challenges. Corpora- tions have a long and deep history of challenging what is now regarded as workers’ right to organize in a labor union. In 1894 presidential candidate Eugene Debs worked to unionize the Pullman railroad car company in Chicago. The local workers were convinced to strike, and other rail workers’ unions also went on strike in support of their colleagues in Chicago. By summer, more than 125,000 workers were on strike, shutting down the ever-important rail system in the United States. There were riots, clashes, and an eventual resolution, but more than 60 people died and more than $80 million in damages was caused in an effort to deny workers the right to organize (Papke, 1999). Gender inequity is another permanent leadership challenge. One hundred years ago, women did not generally participate as corporate employees. In World War II many women took over factory positions held by men who were called into combat. By the 1950s women were not just on the floor of the factories but in their boardrooms. By the 1970s the wage equity debate was raging, and it continues today. Achieving gender equity and creating appropriate work environments for people of all gender identities are an ongoing challenge for corporate leaders. Research has found that corporate leaders rate CSR and sustainability as important leader- ship concerns (Bonini & Gorner, 2011). However, it is extremely complex to manage each of
  • 15. these and also maintain the corporation’s many financial, social, and environmental issues. The leadership challenge is large, but newer models of leadership share the responsibility. 10.3 Next-Generation Leaders Each student of CSR and sustainability should ask themselves: What kind of leader will I be? What kind of leader will I work with? What kind of leader is ideal for the world I would like to live in? The following sections articulate a vision of a next- generation leader who builds and enhances a socially responsible and sustainable corporation. We argue that such a leader displays specific aspects of leadership; each one is essential to building responsible and sus- tainable organizations of any size. Table 10.1 compares how a next-generation leader differs from older standards of leadership. Note that our model focuses on leadership actions, rather than on a leader’s characteristics or traits. © 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 10.3Next-Generation Leaders Table 10.1: The evolution of a next-generation leader Old Leadership Style New Leadership Style Leader as: Head, director Top of the hierarchy
  • 16. Colleague, collaborator Systems thinker Scale: Loyal to local Zoom in Global citizen Zoom out Critical skills: Expert Impose Emotionally intelligent Empathy Lead by: Control Sole problem solver Collaboration Problem clarifier; joint problem solver Communication: Top down Dialectic Transparent Dialogic Ethics: Bigger is better Leaner is better Environment: Exploit Polluter Explore Steward Organize by: Hierarchy
  • 17. Geography Information flow Virtual proximity Learning is: A prerequisite A luxury A cost An ongoing process A necessity An investment Source: Hammond, S. and Christensen, L. (2016). “The New Generation Leader [unpublished paper].” Reprinted with permission. Systems Thinker This entire text emphasizes the value of systems thinking. Here, we specifically emphasize that next-generation leaders cannot skip developing this mind- set. For decades, the opposite of systems thinking—a mind-set called scientific reductionism—was considered the way lead- ers could solve most problems. Reductionism was based on the philosophy of René Descartes and Isaac Newton. It was popularized by other scientists as they explored an ever-smaller universe looking for miniscule molecules, atoms, or quarks to explain physics and life experi- ences. Scientific reductionism requires the searcher to zoom in; to take a detailed and particu- lar look at the physical world’s building blocks and events—or in business, a closer look at the building blocks of organizational successes or failures.
  • 18. A systems thinking mind-set (as introduced in Chapter 2) offers a contrary view of the physical world. In systems thinking, the only way to understand a problem is to see its relationship to the whole. A systems thinker understands the interactions and linkages between the various elements that make up an entire system. In other words, if one is trying to understand what happens in an ecosystem, it does not make sense to zoom in on the microbiology of a single species; rather, one should look at all the elements in that system and their relationships to each another. In a physical ecosystem, one who takes a systems view looks at each species: the geography, the wetlands, and the interactions that occur between those elements. In an organizational system, one who takes a systems view looks at each department, along with © 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 10.3Next-Generation Leaders customers, suppliers, partners, and potential partners. The difficulty with systems thinking usually relates to clarifying the boundaries of the system and how deep to investigate, inspect, and verify the connections. As discussed in Chapter 2, systems thinkers view a business enterprise or corporation as part of a complex and dynamic whole. In a dynamic system, corporate actors interact with govern-
  • 19. ment, the environment, individuals, the community, and other entities under the principles of complex systems. Energy and materials flow into a complex system. These are processed and flow out of the system through boundaries that define the system. However, those boundaries are always problematic. For example, it can be challenging for an employee to know the exact boundary between work and social life. For a company, it can be difficult to know the bound- ary between the corporation and the community. The truth is that our social lives are tied up at work and are part of a community. In other words, every system is part of a larger one, and it is often difficult to distinguish the boundaries between the two. Helping define, protect, and clarify boundaries may be one job for future leaders who support colleagues in creating a socially responsible and sustainable world. Features of systems thinking that next-generation leaders will need to consider include the following: • Systems function with lots of information. In business, raw materials are useless unless one knows how to turn the raw product into something more valuable. Accord- ingly, systems thinkers spend considerable time talking about learning organizations. New knowledge is essential to keep a system alive (Senge, 1990). • Systems also seek equilibrium. Certain patterns are visible in the behavior of any system, but patterns are subject to interpretation and are often
  • 20. unclear. Also, some amount of randomness or chaos influences the behavior of every system. This makes challenges of leadership particularly difficult, because while the leader is trying to bring equilibrium to the system, he or she cannot fully take into account the patterns that influence it; nor can he or she or account for random events. • Systems are composed of many parts. A leader who adopts a systems theory per- spective understands that the system has many parts that interact through rela- tionships. Corporate systems are nested inside other systems with which they overlap. Over time, systems change, as do inputs, processes, and the ability to provide a value-added output. Some of those changes are out of the leader’s control (Skyttner, 2006). How does being a systems thinker make a next-generation leader different from the leaders of the past? Good advice has emerged from Colonel George E. Reed, the director of Command and Leadership Studies at the U.S. Army War College. When contemplating how tomorrow’s leaders can adopt and apply systems thinking, he suggests the following: Focus on the purpose of the system. Identify patterns and use feedback loops to understand the dynamics of systems. Consider the whole rather than the components. Consider the present, but don’t focus too much on short-term
  • 21. achievements. Think of long-term goals (Reed, 2006). © 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 10.3Next-Generation Leaders Apply Your Knowledge: Systems Thinking Tools This exercise can be done individually or in a group, in abbreviated form, or over a long period of time for greater insight. The objective is to see important relationships and processes and to identify how an organization adds value and relates to a larger community. Step 1: Choose an organization to research. List all stakeholders in the company, in- cluding owners, employees, customers, suppliers, and so forth. Put the name of each on a 3-by-5-inch index card. For example: John Gross and Sons. Step 2: Sort each type of stakeholder into a category. For example, John Doe and Sons— Supplier. Step 3: List all of the corporation’s essential processes. These are generally areas where the corporation performs a service or adds value. For example, a hospital performs surgery (among other things). Step 4: Create a way to visually represent the corporate system that could be shown to any of its stakeholders. Your map should show the following:
  • 22. The types of key stakeholders. The relationship between key stakeholders. The relationship between key stakeholders and critical processes. Critical process in the form of inputs, processes, and outputs. The system’s relationship with the broader environment. Step 5: List all critical relationships and processes. Ask: How can the corporation’s leader better manage key relationships? How can critical processes improve? How is the corporation impacting the environment? Global Citizen Becoming an active and effective systems thinker means considering factors beyond one’s own neighborhood, corporation, or immediate work environment. One has to look at the broader communities and ecosystems in which these elements reside. For most, this means becoming a global citizen. Doing so does not mean giving up citizenship in one’s own local community, nor does it mean abandoning any kind of nationalist or patriotic spirit. Being a global citizen means taking responsibility for problems that require local and potentially global solutions. A global citizen understands the needs of the whole and considers those when making personal decisions and directing groups, teams, and organizations. This sometimes means considering linkages between problems far away and behaviors at home. A classic example comes from the apparel industry. Consider the deadliest garment
  • 23. factory disaster in history, which occurred in Bangladesh in 2013. More than 1,000 work- ers died and 2,500 were injured when owners pressured workers to assemble garments in a decrepit building that collapsed during peak hours (Butler, 2013). A global citizen takes the time to consider the connection between wealthy, developed countries creating demand for new and inexpensive apparel and the pressures placed on low-income garment factory …