Portable guide to leading organizations (Helps you to grow in space of how to be creative and motive others on Leadership and Marketing Matters. Helps to build both Large and Small scale organizations.

2. © 2010 David Burkus.
All Rights Reserved. No part of this book may be reproduced, stored in retrieval system or
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3. The Portable Guide to
Leading Organizations
a brief introduction to theory
David Burkus
LDRLB

4. PROLOGUE

5. airport bookstores
are crowded with business books. Each volume in this copious genre seems to promote a “lack.”
They’ll begin with phrases like “The most pressing issue in organizations is that leaders lack
integrity…or empathy…or strategy…or even humor.” These books continue by laying out the
author’s simple framework for developing the perfect leader.
On and on the dialogue goes until we reach the point of confusion, where the 21 Unassailable
Edicts of Leadership are different than the Seven Routines of Really Efficient Leaders. It would
be a poor move to add to this confusion. With this in mind, the “lack” in this book is not intended
to be the most pressing issue in organizations, just the easiest to fix.
Leaders lack an understanding of organizational theory.
These airport leadership books provide decent advice that is easily digestible. And because it is
easily digestible, leaders continue to gorge themselves on it until there is very little room left for
real, solid theory. Most see theory as complex and hard to digest. When leaders think about
leadership or management theory, they think back to the 400+ page textbook they had to buy in
business school. “Seems like quite an undertaking,” leaders think. So they cheerfully hand their
money to the cashier and board the plane with the latest, pocket-sized “leadership” book.
Leaders lack an understanding of organizational theory because it isn’t presented in pocket-sized
form.
But organizational theory isn’t some kind of rocket surgery (a fictional discipline exponentially
harder than rocket science). Attaining a true understanding of theory isn’t difficult, if it’s
presented right. This book presents the major organizational theories. The intent is to present
them in the same easily digestible, pocket-sized form as the airport bestsellers.

6. why theory?
During WWII, Allied bomber losses were high, so high that the British Air Ministry undertook a
rigorous analysis in hopes of finding a solution. Their engineers set out to eyeball every bomber
they could, gathering data on each bullet hole. After analyzing the results, engineers decided to
reinforce the areas that had the highest concentrations of holes with armor plating.
It didn’t work.
Perplexed, the engineers assumed that the extra plating had made the planes too heavy, and that
the difficulty in handling the planes was offsetting the protection of the armor plating.
Enter Abraham Wald.
Wald, a mathematician, suggested that they simply put extra armor plating where the bullet holes
weren’t. The idea was simple: if the planes are returning with bullet holes, obviously those areas
can be struck without causing the planes to crash. The planes that weren’t returning, Wald
theorized, are the ones that are getting hit in different areas. The engineers’ error was so
significant, statisticians decided to name it: survivorship bias (the tendency to include only
successes in statistical analysis). Any time you only examine just the successes, you will skew
the results.
If we return to the airport bookstore in our minds, we see the shelves littered with survivorship
bias. We love reading about successes. That’s why books by celebrity CEOs and leadership
gurus are among the best sellers of any list. We’d much rather read about the brilliant company
leader who started working out of his garage and ended up dominating the industry. However,
when this is all we consume about leadership, we succumb to survivorship bias. While a
celebrity CEO may reveal the secrets he used to climb to the top, how are we to know they work
in every situation?
This is where theory comes in.
Organizational theories are constructed and tested by examining not just the successes but also
the failures. Good and bad leaders, successful and failing change efforts, all get included in the
analysis and the resulting theories spare us from our survivorship bias. If we want to grow into
outstanding leaders, we must know how and when to utilize the knowledge provided by the
existing body of leadership research.
Good leaders focus on where the bullet holes are; great leaders consider where they aren’t.

7. a word on theory
Two actually: useful lies.
All theories are useful lies. Theories are attempts to simplify what is happening in a set of
observations. They are attempts to describe reality that typically fall short (otherwise they
wouldn’t be so simple). Consider the opposing theories of the earth’s shape: flat or round. At
first, mankind thought the earth of flat. Then, at a highly debatable point in time, it was decided
that the world was a sphere.
Shipbuilders didn’t need to make any adjustments in designing boats with this new information,
so the old theory worked. Ship captains, however, needed to adjust and use a sohere-earth theory
if they were going to properly navigate the globe. Today, both theories are still being used, even
though both are incorrect (the earth is actually slightly pear-shaped).
All theories have elements of both truth and uncertainty. What makes a certain leadership theory
more useful than others is the same as what makes a certain earth-shape theory more useful than
others: situation.
The theory that will be most useful is the theory that works best with the situation. This is why
leaders and aspiring leaders both need to become students of organizational theories: in order to
know which one the situation calls for.
Study theory.
Learn models of organizations. Learn them all. Otherwise, you may find yourself without a clue
regarding what the situation calls for.

8. LEADERSHIP

9. trait theory
The search for the characteristics or traits of leaders has existed for centuries. History’s greatest
philosophical writings from Plato’s Republic to Plutarch’s Lives have explored the question of
“What qualities distinguish an individual as a leader?” Underlying this search was the early
recognition of the importance of leadership and the assumption that leadership is rooted in the
characteristics that certain individuals possess. So it is natural that the first systematic attempt to
study leadership researched the traits of leaders. These Trait Theories were also dubbed “Great
Man” theories since early research focused on the innate qualities of historical leaders such as
Lincoln, Napoleon and Ghandi.
Every trait researcher ultimately had the same aim, do develop a definitive list of the traits of
leaders. However, each researcher inevitably arrived at a different list. There are at least five
major trait theories, each listing different traits necessary to leadership. Some of the traits that
commonly appear on this list are:
Intelligence: general intellectual ability
Self-Confidence: certainty of one’s skills and competencies
Determination: desire to achieve a certain end
Integrity: honesty and trustworthiness
Sociability: ability to create pleasant interactions with others
Trait theory argues that effective leadership isn’t contingent on the situation or the followers, but
rather the level to which leaders have certain characteristics. Not surprisingly trait theory has
given birth to a host of trait assessments and selection criteria used by organizations to identify
those who demonstrate the potential to become leaders.
The trait approach is not only supported by our intuitive visualization of what make a leader, it is
also supported by a century of research and analysis. Using an inventory of traits, aspiring
leaders can objectively assess their capability to lead. However, trait theory has also been
criticized for its relative uselessness in developing leaders. Recent research also suggests that
followers may need different behaviors from leaders at different times. To both of these
criticisms, trait theorists would respond: you either have it or you don’t.

10. skills theory
The Skills Theories grew from the obvious flaw in the trait approach: traits are relatively fixed.
This meant that trait theory was not particularly useful for developing new leaders who lack
those traits. Skills theorists sought to discover the skills and abilities that made leaders effective.
Similar to trait theory, skills theories are leader-centric, focused on what characteristics about
leaders make them effective. The two primary theories to develop from a skills approach were
Katz’s three-skill approach and Mumford’s skills model of leadership.
The three-skill approach argued that effective leadership required three skills: technical, human
and conceptual skills. Technical skill refers to proficiency in a specific activity or type of work.
Human skill refers to being able to work with people and conceptual skill refers to the ability to
work with broad concepts and ideas. The three-skill approach asserted that, while all skills were
important for leaders, their level of importance varies depending on the organizational level of
leaders. As leaders move through the levels of the organization (from lower to upper), skill
importance moves from technical to human to conceptual.
More complex than the three-skill approach, the skills model of leadership outlined five
components of effective leadership: competencies, individual attributes, leadership outcomes,
career experiences and environmental influences. Effective leadership is dependent on how
leader competencies are affected by the leader’s attributes, experiences and the environment.
Perhaps the most useful strength of skill theory is that it places the issue of effective leadership
performance on learned (and learnable) skills rather than on traits. In this way, leadership is
available to everyone. However, while it is not a trait approach outright, certain innate abilities
(motivation and cognitive ability, for example) are still included in the model. Skills theories are
also weak in their predictive ability, failing to explain how a person’s competencies lead to
effective leadership. Finally, the majority of data used to construct the skills model was taken
from the military, meaning its applicability to general organizations is questionable.

11. style theory
Style Theory differs drastically from trait or skill theories. Instead of focusing on who leaders
are, style theories consider what leaders do. At the core of all style theories is the idea that
leaders engage in two distinct types of behavior: task behaviors and relationship behaviors. How
leaders combine these two behaviors determines their leadership effectiveness. Style theory
refers to three main theories or lines of research: the Ohio State University studies, the Michigan
University studies and the Blake and Mouton Managerial Grid.
Both the Ohio State and Michigan studies sought to identify the best combination of the
leadership behaviors (although each used differing terms). Their research lead to a myriad of
research attempting to define leadership behaviors that worked in every situation. However, the
results of this research are inconclusive, suggesting that there is not one best style of effective
leadership.
Blake and Mouton ran with this idea, developing a model for training leaders that describes
leadership behaviors as plots on a grid with two axes: concern for results (task behaviors) and
concern for people (relationship behavior). The model outlines five main plots on the managerial
grid: authority-compliance (9,1), country club management (1,9), impoverished management
(1,1), middle-of-the-road management (5,5) and team management (9,9).
While style theory represents a step forward in understanding leadership, there are some
strengths and weaknesses. In addition to enhancing our understanding of leadership, style theory
is supported by a large body of research. Style theory also works to identify two main behaviors,
task and relationship, which can be learned and cultivated. However, style theorists have yet to
come to consensus on an optimal style of leadership. The theory implies that a high task, high
relationship style will yield the best results, but this implication has yet to be supported by
research.

12. contingency theory
Maybe leadership isn’t about who you are, what skills you have or how you act. Maybe what
defines effective leadership is about more than just you. This inquisitive contemplation brought
forth the idea of Contingency Theory, and moved the field of leadership theory forward by
another drastic step.
Developed by Fielder, contingency theory examines the leader in conjunction with the situation
the leader is in. In essence, it argues that effective leadership is contingent upon a match between
the leaders style and the work situation. Leadership style is assessed using a measure called the
Least Preferred Coworker (LPC) scale. This scale divides leaders into task motivated (low LPC),
socio-independent (middle LPC) and relationship-motivated styles.
Three different variables provide a means for situational measurement: leader-member relations,
task structure (defined or undefined tasks) and position power (how much power does the leader
have). When considered together, these variables suggest a style of leadership that has the best
chance of success. Generally, low LPCs are found effective in extreme combinations with high
LPCs effective in moderate situations.
Contingency theory is easily measurable, and as a result has a considerable amount of research
supporting it. As mentioned, it represents the first theory to consider more than just leaders’
attributes, but also the situation leaders find themselves in. While it is supported by substantial
research, an adequate explanation of why it works has yet to be discovered. Lastly, contingency
theory is merely predictive. It can predict which leaders will be effective in what situations but
cannot be used to make leaders in unfavorable situations more effective.

13. situational leadership theory
If you haven’t noticed it yet, most leadership theories build on the previous one. In the same
manner, Situational Leadership Theory builds upon contingency theory. Where contingency
theory asserts that certain leaders work best in certain environments because of their leadership
style, situational leadership theory argues that any leader can work best in any environment by
changing their style accordingly.
Situational leadership defines four leadership styles: S1 (high-directive but low-supportive), S2
(high-directive and high-supportive), S3 (low-directive but high supportive) and S4 (low-
directive and low-supportive). Developed by Paul Hersey & Ken Blanchard, the theory’s model,
called Situational Leadership II or SLII, promotes a particular leadership style depending upon
the development level of the follower: D1 (low-competence but high-commitment), D2
(moderate-competence but low-commitment), D3 (moderate-competence but no commitment)
and D4 (high-competence and high-commitment). Effective leadership is a matter of assessing
the development level of a follower and acting in the correlating leadership style to elicit the best
response from followers (D1s respond to S1, D2s respond to S2, and so on).
In the time since its inception, situational leadership II has become a standard model for use in
training managers and leaders. The situational approach is effective and provides a prescription
for leadership success rather than merely describing why certain leaders work in certain
situations. In this way, situational leadership theory further eroded the notion of “one best way”
of leadership. Despite a broad base of support from trainers and consultants, situational
leadership theory lacks a significant body of research-based support. While situational leadership
considers the followers in determining leadership style, it does so on a one-on-one basis and does
not provide guidelines on how to use the model when leading groups.

14. path-goal theory
Path-Goal Theory is half-leadership, half-motivational theory. It was developed to explain how
leaders motivate their followers toward a determined end. It is derived from expectancy theory,
which argued that employees will be motivated if they believe that a) putting in more effort will
yield better job performance b) better job performance will lead to rewards, such as an increase
in salary or benefits and c) these rewards are valued by the employee in question.
According to path-goal theory, leaders help followers by selecting a style of leadership
(directive, supportive, participative or achievement-oriented) that motivates followers and helps
them move toward the desired reward. In essence, followers are on a path toward a goal, and
leaders are there to help followers reach that goal through guidance, coaching and direction.
Path-goal theory is a type of contingency theory, in that it predicts how a leader’s style will
interact with follower needs and the nature of the task. It argues directive leadership for
ambiguous tasks, supportive leadership for repetitive tasks, participative leadership for unclear,
autonomous task and achievement-oriented leadership for challenging tasks.
Path-goal theory provides leaders with a practical yet theoretical foundation for discerning which
leadership style to select. It also builds on a motivational theory as its foundation. However,
path-goal theory is difficult to apply to organizations because it utilizes so many interconnected
assumptions. Despite building upon a motivational theory, path-goal theory does not fully
explain how leadership styles affect follower motivation, which is one of many reasons why it
lacks a strong research supporting its claims.

15. leader-member exchange theory
Originally referred to as the “vertical dyad linkage theory,” Leader-Member Exchange (LMX)
Theory has been the subject of much research (and an upgraded name). LMX focuses on the
interactions between leaders and an individual follower. The leaders relationship to the follower
unit as a whole is viewed a series of these individual relationships. These relationships are
referred to as vertical dyads. Leadership’s focus, then, should be on developing these dyads.
LMX separates these relationships into two groups: the in-group and the out-group. Researchers
have found that those classified as part of the leaders in-group are often more productive. They
are given more trust and take on extra roles within the organization. In contrast, out-group
members receive the standard job benefits and respond by performing up to the standard job
description. More recent research has identified three phases that each leader-follower dyad goes
through as one moves from out-group to in-group: stranger, acquaintance and partner. As the
relationship moves from stranger to partner, mutual trust, respect and obligation toward each
other develops.
LMX is widely researched and accurately depicts leader-member relationships. It explains why
leaders often develop “go-to” people and utilize their skills more than others. LMX was also the
first theory to focus its study on the leader-member relationship, rather than just the leaders
attributes or behavior. However, LMX is merely a descriptive theory. While it explains that
mutual trust and respect develop as dyads progress, it fails to explain how or why this occurs.
Likewise, it accurately explains leader-member interactions but it does not prescribe any method
or model for developing in-group relationships.

16. transformational leadership theory
Transformational Leadership is a relatively new approach to leadership that focuses on how
leaders can create valuable and positive change in their followers. James MacGregor Burns first
introduced the concept of transformational leadership when studying political leaders, but this
term is now used when studying organizations as well. Burns described two leadership styles:
transactional and transformational.
Transactional leaders focus on gaining compliance by giving and withholding rewards and
benefits. Transformational leaders focus on "transforming" others to support each other and the
organization as a whole. Followers of a transformational leader respond by feeling trust,
admiration, loyalty and respect for the leader are more willing to work harder than originally
expected. Another researcher, Bernard M. Bass, added to the work of Burns by explaining the
psychological mechanisms that underlie transformational and transactional leadership. Bass’
work established that transformational leaders demonstrate four factors: individual consideration,
intellectual stimulation, inspirational motivation (charismatic leadership) and idealized influence.
Transformational leadership theory is supported by nearly 30 years of research correlating
transformational leadership to positive performance outcomes including individual, group and
organizational level variables. It was also the first developed and validated theory to emphasis
morals and values in leadership. However, research on the theory is primarily based on the
multifactor leadership questionnaire, which has produced inconsistent results. Research has also
focused heavily on senior-level leaders. Transformational leadership also has the potential to be
used negatively by leaders “faking it.” Regardless, transformational leadership theory is a
valuable and widely used approach to studying and teaching leadership.

17. servant leadership theory
The magnum opus of Robert Greenleaf, Servant Leadership Theory is a recent theory of
leadership that argues that the most effective leaders are servants of their people. Servant leaders
get results for their organization through whole-hearted attention to their followers and
followers’ needs. Unlike many approaches to leadership, which offer suggestions on how top-
level leaders can influence and motivate those further down the hierarchy, servant leadership
puts its emphasis on collaboration, trust, empathy and ethics. The leader should be a servant first,
leading from a desire to better serve others and not to attain more power. The assumption is that
if leaders focus on the needs and desires of followers, the followers will reciprocate through
increased teamwork, deeper engagement and better performance.
Greenleaf first presented the theory in a 1970 essay, “The Servant as Leader.” However,
numerous others theorists have contributed to our understanding of servant leadership. One
theorist, Larry Spears, outlined ten characteristics of servant leaders by analyzing the writings of
Greenleaf. These ten characteristics are listening, empathy, healing, awareness, persuasion,
conceptualization, foresight, stewardship, commitment to the growth of others, and building
community.
Servant leadership is one of the more popular theories of leadership, especially among Christian
leaders who vigorously cite Jesus as the ultimate example of servant leadership. However, its
effectiveness in organizations is still being debated. Many researchers and theorists argue that
servant leaders can become so focused on the needs of their followers, that the needs of the
organization suffer as a result. In any case, servant leadership theory has a place within the
spectrum of leadership theory, as it represents the strongest emphasis on followers of any theory.

18. strengths-based leadership theory
Strengths-Based Leadership Theory (also known as Strengths-Based Organizational
Management or SBOM) is a method of maximizing the efficiency, productivity, and success of
an organization by focusing on and continuously developing the strengths of organizational
resources, such as computer systems, tools, and people. At the core of the strengths-based
leadership is the underlying belief that people have several times more potential for growth
building on their strengths rather than fixing their weaknesses. A strength is defined as the ability
to exhibit near-perfect performance consistently in a given activity. Strengths-based
organizations don’t ignore weaknesses, but rather, focuses on building talents and minimizing
the negative effects of weaknesses. Strengths-based leaders are always investing in their
strengths and the strengths of individuals on their team. Tom Rath and Barry Conchie put forth
three tenants of strengths-based leadership: (1) effective leaders invest in their followers’
strengths, (2) effective leaders build well-rounded teams out of followers who are not and (3)
effective leaders understand the needs of followers.
Strengths-based leadership theory is supported by over 30 years of research from the Gallup
Organization and others. In addition, its core beliefs overlap a variety of other developing
theories in personal and organizational psychology including positive psychology and
appreciative inquiry. However, many have criticized the fundamental assessment tool of the
Gallup Organization, StrengthsFinder 2.0, as unreliable. Recent research has found that when
leading teams, strengths-based leadership causes individual team member efficacy to increase,
but collective team efficacy to decrease, suggesting that it is not an optimal method for leading
teams where cohesion is necessary.

19. MANAGEMENT

20. evidence-based management
I once had a conversation with a cardiologist about a brand new drug. This drug had been
released literally days before and this physician told me he was already using it. Despite my
background in pharmaceuticals (or maybe because of it) I was taken aback. I asked him what
experiences he had that led him to begin to prescribe it.
“I don’t need any. The data is there.”
The physician was trained to respect evidence-based medicine. Indeed the majority of physicians
now practicing are trained to consider the results of scientific studies and give that evidence
more weight than their own, limited experience. Evidence-based medicine is serious business
with doctors.
Why is business any different?
In the organizational world, we tend to believe that managers get better by being managers. As
you gain years of experience, we believe, you become better and better at managing. Surely,
there is something to be said for experience. However, managers must realize that their
experience is anecdotal. Just because it worked once with a certain team in a certain organization
doesn’t mean it will work again in a different arena. In medical history, placing too much
emphasis on individual experience led to doctors drilling holes in patients’ brains to cure
headaches and draining life-giving blood from sick patients. In management, it leads to poorly
managed, burnt-out teams.
But there’s hope. Medicine has progressed because of centuries of scientific studies. Likewise in
management, there is nearly a century of scientific study and analysis of organizations and
management. This series of posts is designed to serve as a mini-medical school or managers,
giving a summary of the various management research and theories that these studies have
produce.
Learning these theories is the first step to practicing evidence-based management.

21. scientific management
Scientific management (or Taylorism) is the first major theory of management. This theory
analyzes and synthesizes workflows, with the objective of improving labor productivity. The
core ideas of the theory were developed by Frederick Winslow Taylor in the 1880s and 1890s,
and were first published in his monographs, Shop Management and The Principles of Scientific
Management. While he served as a foreman at Midvale Steele Company in 1875, Taylor was
seeking a way for workers to increase their efficiency. Taylor believed that decisions based upon
tradition and rules of thumb should be replaced by precise procedures developed after careful
study of an individual at work. Its application is contingent on a high level of managerial control
over employee work practices.
Taylor conducted the now famous time motion studies. Taylor would break the actions of a
worker into a series of movements and then, using a stopwatch, time the most efficient worker
going through the motions. The goal was to discover a “one best way” for workers to operate in
order to achieve maximum productivity. In management literature today, Taylorism is most often
discussed in contrast to a new, improved ways of managing.
However, Taylor’s effect on management thinking is undeniable. Peter Drucker saw Frederick
Taylor as the creator of knowledge management, as the aim of scientific management is to
produce knowledge about how to improve work processes. With his work on scientific
management, Taylor essentially founded the management theory movement.

22. bureaucracy
Bureaucracy is used so often in such negative terms, most who use it forget its roots.
Bureaucracy in its ideal sense, according to its most influential thought leader Max Weber, can
be a positive term. At the time, the ideal bureaucracy was a more rational and efficient form of
organization than the available alternatives. According to Weber, the attributes of modern
bureaucracy include its impersonality, concentration of the means of administration, a leveling
effect on social and economic differences and implementation of a system of authority that is
practically indestructible.
Weber set down seven principles with which to govern a bureaucratic organization:
1. Business conducted on a continuously.
2. Business conducted with strict accordance to the following rules:
Officials must do certain types of work.
Official must have the authority to perform their assigned functions
Officials’ means of coercion must strictly defined and limited.
3. Officials’ responsibilities and authority are part of a vertical hierarchy of authority, with
respective rights of supervision and appeal.
4. Officials are accountable for their use of the resources needed to perform, but do not own
these resources.
5. Official and private business and income must be separated strictly.
6. Offices cannot be appropriated by their incumbents.
7. Business is conducted on the basis of written documents.
Each of these seven principles must be present for a bureaucracy to function efficiently. Max
Weber himself remarked that ideal bureaucracy is difficult to attain. Most often, the degradation
of bureaucracy can lead to overspecialization, groupthink and even organizational inertia. With
both strengths and weaknesses, the principles of bureaucracy laid a foundation still in use in
modern organizations.

23. hawthorne studies
The Hawthorne Studies were conducted from 1927 to 1932 at the Hawthorne Works plant
outside of Chicago. Elton Mayo, a scientific management researcher, wanted to examine the
impact of work conditions on employee productivity. Mayo first examined the physical and
environmental influences of the workplace and eventually moved into the psychological aspects
and their impact on employee motivation as it applies to productivity. Mayo began by searching
for the right formula for productivity. Instead, he found the “Hawthorne Effect.”
In essence, the Hawthorne Effect, as it applies to the workplace, argues that “Employees are
more productive because the employees know they are being studied.” Mayo's experiments
showed an increase in worker productivity was produced by the psychological stimulus of being
singled out, involved or made to feel important. Additionally, the act of measurement itself
impacts the results of the measurement.
Mayo’s findings challenged many assumptions of scientific management. The Hawthorne studies
found that the workplace was a social system. Workers’ attitudes and effectiveness are
conditioned by social demands from both inside and outside the work plant. Informal groups
within the work plant exercise strong social controls over the work habits and attitudes of the
individual worker. Additionally, the need for recognition, security and sense of belonging is
more important in determining workers' morale and productivity than the physical conditions
under which they work. These new ideas would lay the foundation for a whole new way of
thinking about management.

24. x&y
Theory X and Theory Y are theories of human motivation created and developed by Douglas
McGregor at the MIT Sloan School of Management in the 1960s. The theories describe two very
different attitudes toward workforce motivation. McGregor felt that companies followed either
one or the other approach.
In Theory X, management assumes employees are inherently lazy, dislike work and will avoid it
if they can. Management believes that workers need to be closely supervised and comprehensive
systems of controls developed. A hierarchical structure is needed with narrow span of control at
each and every level. According to this theory, employees will show little ambition without
enticing incentive programs and will avoid responsibility whenever they can. These ideas have
been proven counter-effective in most modern practice.
In Theory Y, management assumes employees may be ambitious and self-motivated and exercise
self-control. It is believed that employees enjoy their mental and physical work duties. They
possess the ability for creative problem solving, but their talents are underused in most
organizations. Given the proper conditions, theory Y managers believe that employees will learn
to seek out and accept responsibility and to exercise self-control and self-direction in
accomplishing objectives to which they are committed.
For McGregor, Theory X and Y are not different sides of the same coin. Rather they are two
different coins all together. If managers felt the need to apply Theory X principles, that does not
preclude them from being a part of Theory Y. McGregor incorporated Maslow’s hierarchy of
needs into his theories. He grouped Maslow's hierarchy into "lower order" (Theory X) needs and
"higher order" (Theory Y) needs. As the influence of McGregor and Maslow’s writings spread,
management theorists soon realized the possibility of connecting higher level needs to worker
motivation.

25. the grid
The concepts behind Theory Y laid the foundation for much of modern management thinking.
One such idea that built upon Theory Y was the Blake Mouton Managerial Grid. This model
originally identified five different leadership styles based on the concern for people and the
concern for production. The optimal management style in this model is based on Theory Y.
The model is represented as a grid with concern for production as the X-axis and concern for
people as the Y-axis; each axis ranges from 1 (Low) to 9 (High). The resulting management
styles are as follows:
The impoverished style (1,1). In this style, managers have low concern for both people and production.
Managers use this style to preserve job security and job seniority, protecting themselves by avoiding
getting into trouble.
The country club style (1,9). This style has a high concern for people and a low concern for production.
Managers using this style pay attention to the security and comfort of the employees, hoping that this will
increase their performance.
The produce or perish style (9,1). With a high concern for production and a low concern for people,
managers using this style find employee needs unimportant; they provide their employees with money
and expect performance in return. Managers using this style also pressure their employees through rules
and punishments to achieve the company goals.
The middle-of-the-road style (5,5). Managers using this style try to find balance between company goals
and workers' needs.
The team style (9,9). In this style, high concern is paid both to people and production. As suggested by
Theory Y, managers choosing to use this style encourage teamwork and commitment among employees.
Blake and Mouton’s grid took a unique approach to managerial thinking. Rather than prescribe a
“one best way” to manage, it is suggested that managers continuously adopt their style as the
situation and people change.

26. objectives
Management by Objectives is the flagship concept of management legend Peter Drucker. The
method is a process where supervisors and employees discuss their role, the organizations needs
and agree upon objectives that the employee will achieve. This idea leverages the motivational
force of goal setting to manage and improve performance.
Management by objectives provides employees with clarity about the roles and responsibilities,
both of which are often murky in the world of knowledge work. Employees know what is
expected of them and how it will contribute to the success of the organization. The process of
setting these objectives is only the first step. These objectives are regularly reviewed and
assessed to discern whether they were demanding enough or too difficult to achieve. Often
bonuses, rewards or other external motivators are tied to the achievement of objectives.
The method is not without criticism. Some argue that it over-emphasizes the accomplishment of
objectives without giving concern to the methods used to achieve them, which can lead to
counterproductive or unethical behavior in order to achieve individual objectives. Likewise,
management by objectives focuses on production targets, often without considering the systemic
hindrances to realizing those targets. Nonetheless, management by objectives remains a presence
in management literature and in practice through performance evaluations and performance
management systems.

27. constraints
Theory of Constraints (TOC) is an overall management philosophy introduced by Dr. Eliyahu M.
Goldratt that is geared towarding help organizations continually achieve their goals. The theory
contends that any manageable system is limited in achieving more of its goal by a very small
number of constraints and that there is always at least one constraint. A constraint is anything
that prevents the system from achieving more of its goal. The underlying assumption of TOC is
that organizations can be controlled by variations on three measures: throughput, operating
expense, and inventory. Throughput is money generated through sales. Inventory is money the
system invests in order to sell its goods and services. Operating expense is all the money the
system spends in order to turn inventory into throughput. The TOC process seeks to identify the
constraint and restructure the rest of the organization around it, through the use of the Five
Focusing Steps:
1. Identify the constraint.
2. Decide how to exploit the constraint.
3. Subordinate all other processes to above decision.
4. Elevate the constraint
5. If the constraint has moved, return to Step 1.
The five focusing steps aim to ensure ongoing improvement efforts are centered around the
organization's constraints. Though Goldratt is still the main driving force behind the
development and practice of TOC (sometimes labeled “constraint management”), there is a
network of individuals and small companies loosely coupled as practitioners around the world.
TOC has a large body of knowledge with a strong guiding philosophy of growth.

28. systems thinking
Systems thinking is the understanding of how various things influence one another within a
whole. In nature, systems examples include ecosystems in which various elements and creatures
work together to survive or perish. In organizations, systems consist of people, structures and
processes that work together to make an organization healthy or unhealthy.
Systems thinking is one way to approach problem solving. Rather than reacting to a specific
problem or event, systems thinkers view the problem as part of a larger, overall whole. Systems
thinking is not one thing, but a set of habits or practices within a framework based on the belief
that the component parts of a system are best understood by their relationships with each other
and with other systems, rather than in isolation. Systems thinking shuns linear cause and effect
relationships, viewing these systems as cyclical. Systems thinking concerns an understanding of
a system by examining the linkages and interactions between the elements that compose the
entirety of the system.
Acknowledging that an improvement in one area of a system can adversely affect another area of
the system, it promotes organizational communication at all levels in order to avoid the silo
effect. Systems thinking techniques may be used to study any kind of system — natural,
scientific, engineered, human, or conceptual. The major proponent of systems thinking in
organizations is Peter Senge, who views systems thinking as a vital component of a learning
organization.

29. deming’s fourteen
W Edwards Deming was an American statistician, considered the father of the modern quality
movement. In 1982, Edwards Deming published “Out of the Crisis” identifying 14 points for
management which if applied would enable Japanese manufacturing efficiencies to be realized.
Deming’s 14 Points:
1. Create constancy of purpose and continual improvement where long-term planning replaces
short-term reaction.
2. Adopt this new philosophy by management and workers alike.
3. Do not depend on quality inspection; rather build quality into the product and process.
4. Choose quality suppliers over low cost suppliers in order to minimize variation in raw
materials and supply.
5. Improve constantly in order to reduce variation in all aspects.
6. Train on the job (both workers and management) in order to reduce variation in how job is
done.
7. Lead, don’t supervise in order to get people to do a better job, not just meet targets.
8. liminate fear and encourage two-way communication.
9. Break down internal barriers by departments to view each other as “internal customers.”
10. Assert that processes make mistakes not people. Management harassment of workers will
create bad relations if no is effort made to improve processes.
11. Eliminate numerical targets. Management by objectives encourages low quality in order to
meet quantity.
12. Remove barriers to worker satisfaction.
13. Encourage self-improvement and education for all.
14. Assert that everyone is responsible for continual improvement in quality and productivity.
W. Edwards Deming’s ideas strongly influenced the Japanese auto industry after World War II.
Additionally, his quality management systems influence other models such as Statistical Process
Control (SPC) and Total Quality Management (TQM).

30. MOTIVATION

31. elusive
Motivation is elusive. We struggle with the challenge of motivating ourselves to get out of bed
and find a job. If and when we’ve found one, we try to remain motivated by something other
than the weekend. Sure, there are a lucky few who are motivated just by the very nature of their
work. But we more often write those people off as workaholics…
or just plain nuts.
Those of us who are normal (or so we believe) figure that it’s the role of “management” to
motivate us to work. That shifts the job of improving performance from the contributor to the
supervisor, but it doesn’t make motivation any less complex.
Management hires silver-tongued speakers, hangs pretty posters and designs complicated
“incentive compensation” bonus plans. Yet still something is missing. Few people rise, shower
and drive to work because their utmost desire is to look at a picture of an eagle and read its pithy
caption.
What is motivation? How do we motivate others?
These are the questions researchers have sought to answer for some time. They’ve made some
great strides. They’ve created useful theories and models to explain motivation and improve
performance.
Management just needs to find the motivation to learn them.

32. the hierarchy
Maslow’s Hierarchy of Needs is perhaps the most frequently cited psychological model of all
time. Most often, one encounters Maslow’s pyramid in freshman year of college while taking
Psychology 101 and never quite escapes it. Maslow first proposed his idea in 1943, but further
developed and fully expressed it with the 1954 publication of Motivation and Personality.
Maslow developed his ideas by studying the lives of exemplary people such as Albert Einstein,
Eleanor Roosevelt and Fredrick Douglass (perhaps a precursor to the new field of positive
psychology).
Maslow presents a five-level hierarchy of human needs and the assertion that human are
motivated to fulfill those needs. The first four levels of needs he refers to as “deficiency needs.”
These levels are: physiological, safety, love/belonging and esteem. The top level of the
hierarchy, self-actualization, is a need pursued only after the others have been met.
Physiological needs represent obvious survival needs: air, food, water, shelter and reproduction.
The second level, safety needs, takes precedence once the physiological needs are met. These are
needs like personal security, financial security, health and protection from harm. The next level,
love and belonging needs, covers humans’ desire to be in emotionally based relationships. These
are needs like friendship, family and intimacy. Esteem, the second highest level, presents that
humans have a need to be accepted and valued by others. Humans engage themselves in
behaviors which they can gain recognition and feel a sense of contribution from.
Self-actualization, the pinnacle of the hierarchy, pertains to humans’ desire to reach their full
potential. Maslow describes this as a desire to become more of who one is and everything one is
capable of being. Whether or not self-actualization is possible is still being debated. Indeed,
whether this hierarchy is accurate is also up for debate. What is agreed on, however, is that
Maslow laid a powerful foundation for studying human motivation.

33. expect
Expectancy theory attempts to explain the mental processes of choice or choosing. In doing so, it
seeks to present a framework for how to use incentives to motivate people. The theory itself was
first proposed by Victor Vroom, who served as a professor at Yale School of Management.
Expectancy theory’s basic premise is that employees in an organization will be motivated to
perform when they hold three beliefs:
1. More effort will yield better results.
2. Better results will lead to rewards.
3. These rewards are of value.
Vroom’s theory also assumes that humans are rationale and make conscious choices among
alternatives in order to maximize pleasure and minimize pain. In order to leverage this conscious
choice, Vroom presented three elements within expectancy theory that explain the thought
process employees use in choosing to perform (motivation). These elements are valence,
instrumentality and expectancy.
Valence represents the strength of a person’s preference for an outcome (“do I value the
reward?”). Instrumentality represents the belief of a person that effort will yield the outcome
(“can I achieve better results?”). Expectancy represents a person’s belief that the outcome will be
rewarded (“will the company reward me for better results?”). When these elements are
considered as variables in an equation, the product is motivation. In order to motivate employees,
organizations ought to tie reward systems closely to performance. They must also be ready to
provide training if necessary in order to increase instrumentality.
Expectancy theory presents a formula for motivation. However, Vroom himself suggested that
perhaps human beings aren’t simple enough to be explained in a simple formula. Nonetheless,
expectancy gives us a framework to understand and evaluate motivational efforts such as
incentive compensation structures.

34. two factors
The two-factor theory (also known as Herzberg's motivation-hygiene theory) was developed by
Frederick Herzberg. The theory states that there are certain factors in the workplace that cause
job satisfaction, while a separate set of factors cause dissatisfaction.
Two-factor theory distinguishes between motivators (e.g., challenging work, recognition,
responsibility) which give workers satisfaction, arising from intrinsic conditions of the job itself,
such as recognition, achievement, or personal growth and hygiene factors (e.g. status, job
security, salary and fringe benefits) which do not give workers satisfaction, but their absence can
create dissatisfaction. These are extrinsic to the work itself, and include aspects such as company
policies, supervisory practices or wages/salary. The theory prescribes that, if management wants
to increase satisfaction on the job, it should focus on the opportunities work presents for gaining
status, assuming responsibility, and for achieving self-realization. If, on the other hand,
management wants to reduce dissatisfaction, then it must focus on the job environment, working
conditions and policies.
Unlike Maslow, who offered little data to support his ideas, Herzberg and others have presented
considerable empirical evidence to confirm the motivation-hygiene theory. Their work has been
criticized on methodological grounds. Nevertheless, Herzberg and his associates have rendered a
valuable service to science and to management through their efforts to apply scientific methods
to understanding complex motivational problems at work and have stimulated others to continue
the search.

35. equity
Equity theory is less of a full theory of motivation and more of a warning to organizations. The
theory itself attempts to explain employee satisfaction through exploring employees’ perceptions
of fair distribution of rewards. The theory was first developed and presented by John Stacy
Adams in 1963. Adams asserted that employees desire to maintain equity between their inputs
and the organization’s outputs.
Inputs are the contributions that employees make. They can include time, effort, loyalty hard
work and many others. Outputs are positive or negative consequences that individuals perceive
have been given in response to inputs. These can include job security, esteem, salary, benefits
and more. Based on the mental equation in their head, employees evaluate whether their
input/output equation is fair by comparing it to others. Individuals believe they’re being treated
fairly when their ration of inputs to outputs matches those around them. If individuals believe
they’re over- or under-paid, they will experience distress and a decrease in performance will
result.
Equity theory presents organizations with a warning about over-compensation or lowering
expectations of certain individuals. Over-compensated employees may respond by working
harder, or they may alter their perceptions about the worth of their contribution and reduce their
contribution. Likewise, employees may perceive others as over-compensated and respond by
reducing their effort. While many argue that equity theory offers an overly simple means of
explaining employee behavior, most still heed the warnings it offers.

36. goal setting
One of the most popular theories in organizational psychology, Goal-setting theory states that
humans are motivated by setting goals.
(“Thank you very much. I’ll be here all week. Try the veal.”)
It is a little more complicated than that. Researchers such as Edwin Locke have been examining
the process and results of goal setting for thirty years. They’ve discovered that setting goals
alters behavior in four ways: choice, effort, persistence and cognition. Choice refers to how goals
narrow individuals’ attention and focus it on goal-relevant activities. Effort refers to goals ability
to draw more effort from individuals. Persistence refers to individuals’ tendency to work through
setbacks to pursue a goal. Cognition refers to individuals’ development of cognitive strategies to
change their behavior if needed to achieve a goal.
Goal-setting theory also offers various moderators to the relationship between goals and
performance. Goal commitment is an especially influential moderator; if people are not
committed to a goal, then it has no effect on performance. Attainability can affect effort toward
achieving a goal; if it is too hard, then it is not worth trying. Likewise, self-efficacy affects
whether or not people will try to achieve a goal based on whether they believe they can do it.
The theory also highlights the importance of feedback. If individuals cannot check their status
toward achieving a goal, they may cease working toward it. Goal setting theory also offers a
warning to organizations. Individuals need to be involved in the goal-setting process, but their
goals must also be aligned with the goals of the organization.

37. self-determination
People have an inherent tendency toward growth. That is the main concern of self-determination
theory, which examines the motivation behind the choices people make without external
interference and influence. The theory developed as Edward Deci and Richard Ryan began to
study why individuals engage in activities for their own sake without seeking to obtain a goal or
reward. In doing so, Deci and Ryan distinguished between intrinsic and extrinsic motivation.
Intrinsic motivation is the inherent drive to seek out challenges and new possibilities associated
with personal growth. Extrinsic motivation is motivation that comes from an external source,
such as a goal or reward. Deci and Ryan argued that intrinsic motivation is driven primarily by
innate needs: competence, relatedness and autonomy.
Self-determination theory contains three essential elements. The first that humans are proactive
by nature and seek to develop their potential. The second that humans desire to grow and
develop themselves and their capabilities. The last that this development doesn’t happen
automatically, it must be worked toward. In order to work toward this development, individuals
need nurturing from the social environment. The role of organizations, then, is not to develop
complex incentive compensation schemes to manipulate performance. Rather, organizations
should design the optimal environment for individuals to pursue their growth and development
through working toward organizational objectives.
Self-determination theory is a radical departure from the formulas and models first developed by
motivational theorists. Yet, in some ways, the theory brings the field full circle by expanding on
the ideas of self-actualization first proposed by Maslow.

38. CHANGE

39. meet the clown
Most people view organizational change the same way they view a clown walking toward them
on the street. It may be a positive experience, but we’d rather it be someone else’s positive
experience.
Despite our best efforts, the world continues to change and grow. In order to remain competitive,
organizations need change alongside their environment. Changing certain parts of an
organization are easy, but changing people is hard.
Most people try to avoid the clown.
For over fifty years, organizations have looked for help in leading people through change. They
relied on thought leaders and researchers for help making sense of the mental processes people
use to understand and cope with their changing roles. These models can help people become
more willing and able to embrace change. At any level in the organization, leaders will be
involved in leading change.
So leaders must meet the clown.

40. three-stage
Change is a complex process, but many organizational changes follow a common process. The
idea to develop a model around this process was first pursued by sociologist Kurt Lewin. Lewin
uses the image of an ice cube to explain how to change an organization: unfreeze-change-
refreeze.
Unfreeze. Before any change can occur, people must be change ready. Lewin calls unfreezing
the process where people begin to realize the need for change and prepare accordingly.
Impulsive leaders wrongly believe they must begin by casting a new vision of the changed
community. However, these visions will not be received until the frozen followers have thawed
to the idea of change.
Change. After people are change-ready, the real work of change begins. This stage of the model
does not happen immediately; it can take a long time. People are staring down an uncertain road,
and need to be reminded how following this road will ultimately benefit them and the
organization. Leaders must communicate frequently and give people time to let that
communication internalize.
Freeze. Often after a change effort, it’s tempting to stop there and declare victory. However,
Lewin argued that in order to make any change permanent, it must be made part of the
organization’s culture. The refreezing stage allows people to plant roots and grow accustomed to
the way things will be. Leaders can promote refreezing by helping followers see the connection
between new behaviors and new success and by celebrating the people who helped bring about
that success.
Lewin’s model is a simple approach to a complex issue, and as such is bound to be lacking
certain details. However, Lewin laid a foundation for future change management theories and
this foundation is apparent in the writings of more modern theorists.

41. intervention
Many times change requires more than the conscious decision of organizational members.
Companies, like people, typically need help changing. They need an intervention. Behavioral
scholar Chris Argyris studied this need for intervention, eventually publishing his findings in the
late 1960s as Intervention Theory.
Argyris first defined intervention. To intervene is to enter into ongoing system or come between
people, groups or objects to provide assistance. An intervener helps the system become better at
problem solving, decision-making and implementation so that the system can continue to be
effective. With a defiition in place, Argyris moved on to outline three basic requirements, or
primary tasks, for intervention. First, intervention must generate useful and accurate information
to describe the factors that lead to the organization’s ineffectiveness. Second, the intervener must
allow the system or organization to make an informed, free choice to become more effective.
Third, the organization must gain internal commitment to implement the changes required to
become more effective.
Argyris’ theory is not a model, but a series of vital recommendations for leading change. Argyris
built on classic organizational behavior theories such as Theory X and Theory Y to create a
series of recommendation and requirements that create a sort of oath of office for organizational
consultants.

42. adkar
Change is a gemstone that must be viewed from multiple angles. The ADKAR model provides
another perspective of the change process. Rather than describe what is happening, or prescribe
what actions must be taken, the ADKAR model predicts that organization change only happens
individuals change. Developed by Jeff Hiatt, the ADKAR model focus on the five outcomes
individuals must experience before organizations can change:
 Awareness of the need for change.
 Desire to support and participate in the change.
 Knowledge of how to change.
 Ability to implement the change.
 Reinforcement to sustain change.
Besides leveraging the power of acronyms, this model has made an impact in change
management because of its softer, individual focus. There is nothing new in the ADKAR model,
except how its unique perspective allows for unique application. Not unlike the five stages of
grief, its easy for individuals and leaders in a changing organization to understand and diagnosis
their own stage and develop a plan of action accordingly.

43. lead change
There is perhaps no modern change model more cited than John Kotter’s eight-stage change
process. Kotter’s work has been repacked and resold by countless “change consultants.”
Considering what is said about imitation, the Harvard Business School professor must be the
most flattered guru in management. Kotter first presented this model in his 1995 book Leading
Change. Kotter outlined an eight-stage process that leaders should take their organizations
through when implementing change:
1. Create a sense of urgency. Identify potential threats and start honest discussions about the
need for change.
2. Form a powerful coalition. Identify true leaders and ask for emotional commitment.
3. Create a vision for change. Develop a short vision with the coalition and practice
communicating it.
4. Communicate the vision. Talk openly about the change vision and apply it to all aspects of
operation.
5. Remove obstacles. Take action to identify change leaders and remove their barriers.
6. Create short-term wins. Look for sure-fire projects and highlight their success.
7. Build on the change. Set goals to continue building on the momentum created.
8. Anchor the changes in culture. Talk about the progress at every opportunity and ensure that
people tie future success to the change effort.
Kotter’s work is heavily relied on because of its prescriptive nature. Some have even theorized
that Kotter’s eight-stages build upon the three-stages developed by Lewin by providing
instructions for leaders to follow while unfreezing, changing and refreezing.
Lewin would be flattered.

44. STRATEGY

45. going to school
The very mention of the word strategy brings with it connotations of planning and images of
executives sitting around large tables at off-site meeting facilities. These executives pour over
data regarding what products are profitable and unprofitable. They decide on where to position
their products. They examine estimates about what opportunities the future of the market holds
for their current and imagined products. Finally, they emerge from their off-site cave with a step-
by-step plan to implement.
This view of strategy is commonly held, but represents a very narrow perspective on what it
means to be strategic. In reality, there are numerous schools of thought surrounding strategy,
each one with an infinite number of perspectives on how to implement the ideas of that school.
There are ten main schools of thought surrounding strategy. What follows is a summary of each
school and the key thought leaders to seek out for a deeper perspective.
By the end, we’ll have strategically tackled strategy.

46. design school
Strategy is an informal process of conception.
In the 1960s, the design school presented a framework for prescriptive strategy. Other schools
would build their claims on this similar focus on strategy formation as a process of conception or
informal design. This school’s most famous tool is the SWOT analysis, which examines the
organizations strengths and weaknesses in consideration of its environmental opportunities and
threats. Like the SWOT analysis itself, the primary goal of design school strategy is to find a
match: a match between the external environment and its possibilities and the internal abilities of
the organization. In essence, it seeks to find what future opportunities the present organization
could leverage.
Once this match is found, typically by the senior management of an organization, it is
communicated down the organization so that everyone can proceed to turn the organization into
the designed ideal. This view of strategy was prominent well into the 1970s, and in many ways,
elements of this view on strategy are still being taught and practiced today.

47. planning school
Strategy is a formal process.
The planning school developed parallel to the design school. It rose to awareness in a flurry of
publications in the 1960s and was regularly in practice in organizations in the 1970s. The
planning school opposed most of the tenets of the design school, with the exception of its
formality. The planning school saw strategy as a systematic and detached process, a formal
planning process. The planning school relies heavily on data from tools such as SWOT, but takes
SWOT and breaks it down into formal, delineated steps. These steps get further broken down
into checklists and techniques, each assigned to an individual or department and given a deadline
and budget.
In many ways, the strategic planning process is taken away from senior managers, as the real
work of this process is done by staff planners. Many organizations even create strategic planning
department, in charge of a regular strategic planning process. The result is typically a neatly
delineated plan, with little trace of uncertainty, that may or may not be fully implemented once in
the hands of those charged with taking action.

48. positioning school
Strategy is an analytical process.
The positioning school is most closely associated with its undisputed champion, Harvard
professor Michael Porter. In the 1980s, the positioning school somewhat displaced the planning
school. The positioning school favored a focus on the actual content of the strategy, rather then
the formal process of developing it. The school draws its name from its emphasis that only a few
key strategic positions within the marketplace were worth pursuing. While this school did argue
that a formal planning process was needed, it was only viewed as worthwhile after the preferred
strategy was selected by senior managers.
This school of strategy is promoted heavily by consultants and academics, who have been able to
build lucrative careers creating literature on and promoting the practice of market analysis. In
this way, strategy is not creative; it is simply a matter of analysis. Perhaps because of this, the
positioning school remains a clear presence in teaching and in practice.

49. entrepreneurial school
Strategy is a visionary process.
At this point, we depart from the schools that are aligned with a larger prescriptive “university”
of strategy. Rather, these schools seek to describe what is happening when strategy is made. The
entrepreneurial school was the first of this mindset to develop. It sees strategy as an
entrepreneurial process, centered on the chief executive of the organization. The entrepreneurial
schools focus on leaders’ intuition, and the hidden process leaders use to decide where to steer
the organization.
This idea changes how strategy is made. Gone are the formal processes and precise designs. In
its place is a vision, communicated by leaders and put into action by followers. In the place of
quantitative data are qualitative statements about what the future will look like once the
organization makes its impact on it. While not often taught or promoted, this idea is in practice in
many organizations, especially start-ups and organizations in need of a “turn-around.”

50. cognitive school
Strategy is a mental process.
If the entrepreneurial school introduced the idea that strategy is a mental process that leaders
engage in, the cognitive school began the study of that mental process. The cognitive school
investigates the process of strategy formulation through the lens of cognitive psychology. This
school is fairly small, yet large enough to house two differing camps. The first treats strategy’s
processing and structuring of knowledge as an effort to create an objective view of the world.
The second sees any mental process as subjective; therefore strategy is inherently biased.
The cognitive school doesn’t house many consultants or other promoters. It is not concerned
with preaching to leaders what information is needed to develop a strategy. Rather, it seeks to get
inside those leaders minds and discover what information strategists are using and how they are
using it.

51. learning school
Strategy is an emergent process.
For proponents of the learning school, any attempt to reduce the complex world into clear
positions and plans is futile. The world is far too vast and multifaceted to allow such reduction.
Therefore strategy cannot be a formal planning process. Rather, strategies emerge as individuals
and the organization learn about themselves and the situation around them, as well as their
capability to respond to those situations. Thus, strategy is not a large plan full of delineated steps
developed and assigned by senior management but a series of little actions and decisions made
by everyone at every level of an organization.
Like the prescriptive schools, the learning school emphasizes the need for information, both
internal and external. But this information isn’t to be collected by the chief strategists, rather its
circulated to all in the interest of pursuing the best ideas
.

52. power school
Strategy is a process of negotiation.
The power school draws a lot from the learning school, especially the belief in multiple levels of
engagement with the strategic process. However, it spins it a little differently. The power school
focused on the processes of negotiation, bargaining, persuasion and confrontation that go on
while strategy is being made. In essence, the strategy that gets implemented is a matter of power:
micropower and macropower. Micropower refers to the small political processes that individuals
engage in. Macropower refers to the larger power the organization holds over employees,
partners, alliance and joint ventures.
The strategies that develop and are implemented represent a “collective” strategy involved all
interested parties, with the specifics about what tactics are highlighted determined once the dust
has settled on the battlefield of negotiation.

53. cultural school
Strategy is a collective process.
Contrasting the power school, which emphasizes negotiation and bargaining, the cultural school
views strategy as an inevitable product of the culture of the organization. The process of
developing strategy is collective and cooperative, but also heavily dependant upon the traditions
and norms of the organization. If culture is about what differentiates an organization from other
organizations, than culture’s influence will also be what makes the organization’s strategy
unique. Strategy, in essence, represents the collective intentions of organizational members.
Included in the development of strategy is not just information about strengths, weakness,
opportunities and threats, but also cultural beliefs, values and traditions. In practice, strategy
formation is a social process and as such is subject to the same cultural awareness as other social
interactions.

54. environmental school
Strategy is a reactive process.
The environmental school takes the burden of strategy formation off senior management and
even the organization as a whole. Instead, strategy is merely a reaction to the environment,
subject to the constraints and opportunities the environment provides. The initiative for strategy
is the environment, not the organization. Environmental strategists seek first to understand the
pressures imposed on the organization by its competitors, marketplace and industry.
Many schools of strategy recognize the importance of the environment as a factor of strategy
development, but the environmental school views it as THE factor. In practice, the strategy
engaged in is merely a logical reaction to the dictates of the environment.

55. configuration school
Strategy is a fluid process.
The configuration school is the jeet kune do of strategy: the way of no way. Proponents of this
school don’t promote any new ideas about how to formulate or implement strategy, instead they
investigate the other nine schools of strategy and determine what elements should be included
and when. In this way it seeks to integrate the various schools into a fluid process of strategy.
At certain stages of development, this school argues, different schools should be utilized. In the
start-up and growth stages of an organization, entrepreneurial and learning schools hold insight
into how to develop strategies. In stable organizations and environment, design and planning
schools become more relevant to the strategy needs of the organization. The configuration
school doesn’t see the other nine schools as conflicting, but complementary. In practice, most
organizations borrow elements from all nine schools.
Thus, we are all configuration scholars.

56. CODA

57. Organizational theory is ever-changing and ever-developing. It is tempting to assume that if each
new theory builds and strengthens the theory before it, then the most recent research and theories
are the most valid. Which theory is most applicable? Which is most correct?
They all are.
Remember the lesson of useful lies. All theories are useful in explaining some perspective on
leadership but are lies because they don’t explain everything.
Remember the lesson of the configuration school. All schools of strategy are useful at some point
in the life of the organization.
Review and learn all of the theories presented here. As you travel further on in leadership, your
situation will change and the theory you need to draw from will, as well. There is no one best
theory of leadership or organizations, but there is one best leader:
The leader who knows all the theories.

58. further reading
This book is a primer. A mini-textbook. A crash course on leading organizations. The desire is
that it enlightens readers, entertains them and instills in them a desire to learn more.
If that is not the case, then these works won’t be enjoyable at all.
leadership
Galton, F. (1869). Hereditary Genius.
Fiedler, F.E. (1967). A Theory of Leadership Effectiveness.
Vroom, V. H. (1964). Work and motivation. New York: Wiley.
Hersey, P. & Blanchard, K. H. (1977). Management of Organizational Behavior: Utilizing
Human Resources.
Burns, J. M. (1978). Leadership.
Greenleaf, R.K. (1977). Servant Leadership.
Buckingham, M. & Clifton, D. O. (2001). Now, Discover Your Strengths.
Rath, T. & Conchie, B. (2009). Strengths-Based Leadership
management
Taylor, F. W. (1914). Principles of Scientific Management.

59. Mayo, E. (1949). Hawthorne and the Western Electric Company, The Social Problems of an
Industrial Civilization.
Weber, M. (1922). Economy and Society.
McGregor, D. (1960). The Human Side of Enterprise.
Herzberg, F. (1959), The Motivation to Work.
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61. ACKNOWLEDGEMENTS
The process of writing a book requires more than just the authors who get acknowledged on the
front cover. Therefore the author would like to carve out some white space to recognize the
following people:
My wife Janna for her continuous toleration of my crazy ideas.
Professors and mentors Wendy Shirk, Brigitte Steinheider, Gary Oster and Steve
Greene.
Those who pushed me to continue writing, editing and publishing, Christine Franzeim,
Linda Gray and Kay Meyers.
My editor Alison Foley who came back to life just to edit this manuscript.
The fans and followers of and contributors to LDRLB, for making this possible.

62. ABOUT THE AUTHOR
David Burkus is a professor of management at Oral Roberts University and editor of LDRLB. He
has written for numerous scholarly journals and practitioner magazines on leadership, strategy,
management, creativity and innovation.

63. ABOUT LDRLB
LDRLB is an online think tank that shares insights from research on leadership, innovation, and
strategy.