Terms such as “empowerment”, “employee participation” and “change management” so dominate the vocabulary of organization behaviour today. Not surprisingly, the person who coined those terms and championed their importance, Rosabeth Moss Kanter of the Harvard Business School, has herself become one of the highest-profile academics and respected consultants in the world. In this interview, the author discusses the changes in leadership styles during the 30 years she has researched and taught leadership, and advised many of the world’s top CEOs and leading organizations. She also discusses the qualities that make a leader great in a time of uncertainty and those qualities that a leader will need to develop to inspire employees going forward.

Throughout much of her work, Harvard Business School professor Rosabeth Moss Kanter writes about “pacesetters,” a term that she not only helped define, but in her own pacesetting accomplishments, one that she came to personify. Professor Kanter was the first female academic to achieve the status
of management guru and become widely referred to and quoted. And as both a thinker and a consultant, she was one of the first individuals to champion, and educate business leaders about, the meaning and importance of “empowerment”, “employee participation” and “change management.”

Today, as the Ernest L. Arbuckle Professor of Business Administration at Harvard, Professor Kanter specializes in strategy, innovation and leadership for change. She also advises major corporations and governments around the world, and is the author or co-author of 15 books, including her latest, Evolve! Succeeding in the Digital Culture of Tomorrow (Harvard Business School Publishing, 2001). In 2001 she received the Academy of Management’s Distinguished Career Award for her contribution to management. In 1997-98, she conceived and led the Business Leader in the Social Sector project, which involved over 100 national leaders, including CEOs, senators, governors and the First Lady. Professor Kanter has received 20 honorary doctoral degrees and has also served as Editor of the Harvard Business Review. Ivey Business Journal spoke with Professor Kanter in her office at the Harvard Business School.

Question: You’ve been an academic and a consultant for more than 30 years now, and during that time, you’ve observed and given advice to a wide range of business leaders. What have been the major changes in the nature of leadership over that time?

Prof. Moss-Kanter: I was extremely young when I began consulting, so it was not only unusual because I was a female, but also because I was so young. That meant that I could look at the corporate world with fresh eyes. Some of my initial work was very similar to anthropology in that this was all so new to me. I didn’t take any of it for granted. I felt like I was looking at a traditional tribe. [Ed: Kanter’s Ph.D is in sociology.]

My first consulting experience, which became my first research experience, was in a very, very large bureaucracy in a major chemical company. I was fascinated by the rituals, by how rigid it was. But it was also a time when new kinds of people and new kinds of pressures were beginning to affect that company and many others in the United States. Women were entering the workforce and there were new competitive pressures. So I could observe the rigidity of the previous system and the need for change.

What year was that?

This was in the late 1970s. The U.S. had already had one energy crisis, and a second crisis occurred in 1979. Japanese cars were flooding the market, and that pressured some major companies to start looking at practices differently. That was also the era in which digital technology, in essence, information technology, was beginning to be a force and a factor in business. We date the development of the microprocessor to about 1973.

So in the late 70s you could begin to sense the clash of two worlds. There was the traditional hierarchical bureaucracy that was very homogenous, very orderly, and that had clear career paths. People who were unusual or different didn’t play much of a role. Entrepreneurs were considered wild-eyed mavericks or small business owners, but they weren’t particularly valued.

Up against that traditional model we began to see two alternatives. One was coming from foreign competition, largely Japanese automakers. We can’t underestimate the impact that the auto industry in general had in defining management. That was, after all, where Peter Drucker started, with the concept of the corporation. It was all about General Motors and Alfred Sloan. His ideas had dominated modern management. This was an industry that employed, directly or indirectly, a very high proportion of the workforce and shaped managers’ image of how you run a company. So there was a model that was more team based, that involved a higher degree of worker empowerment, the empowerment of people for higher productivity and to nurture the entrepreneurial spirit that created innovation and change and a higher degree of company loyalty to employees. That was one alternative—and competitive—model.

That alternative model already existed in Scandinavia. At that time, I was very interested in participative management and alternative models because of my background. Those were foreign ideas to large, established, hierarchical, industrial companies. And so they weren’t paying much attention to the Scandinavian alternative. Volvo had those kinds of work practices too. But when the Japanese started beating American companies, it called into question how some of that hierarchical bureaucracy functioned.

The other alternative model was being developed by new high-technology companies, start-ups that grew very quickly and which had a very different culture. Digital Equipment Corporation had been founded in the 1960s but it really didn’t take off until the middle 70s. I started working with it in the late 70s and I started to see that alternative culture. The founding of Apple Computer and the Silicon Valley style of startup were other examples of the second alternative model.

So there were two alternative organizational models. One came from other countries, which, by the way, also marked the beginning of our realization that globalization mattered. The other was being shaped by the emerging high technology companies. This development was also our first hint that information technology and computing were going to challenge our traditional models. And so gradually during the 80s—because American companies in particular had to become more competitive—I could begin to present an alternative to the hierarchical model, one that involved more participation and emphasis on innovation, more flexibility, greater readiness to change, and empowering people for higher productivity but also for the entrepreneurial spirit that created innovation and change. Those ideas were fairly new when I was one of a handful of people introducing them, in the early-to-mid 1980s.

I began to take those ideas all over the world, to work with lots of companies on how to change their culture and structure so that they were based on these new principles. There’s still a lot of bureaucracy in very big companies, and there’s more lip service than actual practice. But they have gone from being maverick ideas to being mainstream ideas.

In the 80s, was there a leader that embodied some of those principles that that you had begun to champion, such as empowerment?

Yes, many of the founders of the high-tech companies that challenged the bureaucratic models. They had limitations but they created a very different culture.

On the East Coast it was Ken Olsen, the founder and CEO of Digital Equipment Corporation. He created an environment in which ideas were valued, people took responsibility and initiative at every level of the company and felt that they could speak up. And in which the organization chart with a formal structure was less important than the ability to pull together project teams. I remember somebody trying to draw an organization chart at Digital and it looked like a plate of spaghetti, because there were so many interconnections between parts of the company.

On the West Coast there was Steve Jobs at Apple. Even back then he created a Silicon Valley style, a free-wheeling, highly-entrepreneurial environment in which the leader did not have all the answers, but engaged in constant dialogue in which management often felt more like it was a college debating team or part of a classroom with an open exchange of ideas.

Now each one had blind spots too. In the case Ken Olsen, Digital started going downhill, in fact because he had his own views about which technology it should invest in or not. He really inhibited the move of the company into personal computers. But there was no doubt that it was a great company for a long time.

What style of leadership do you like today?

I must say that today I see many of the same characteristics that I was just talking about—a free and open spirit of inquiry, the willingness to challenge orthodoxy and assumptions, and to chart new directions.

My definition of leadership is that which leaves the world a better and different place, that is you lead people in new directions, to solve problems and make new things happen. You stretch people to achieve things they didn’t think were possible. So it starts with that same spirit of dialogue and curiosity and of leaders seeing that there’s still work to be done, that is we haven’t solved every problem, we have not improved the world sufficiently. They then challenge assumptions, chart new directions and inspire others with the power of their vision. They create a support system or structure that makes it possible to get the resources and the credibility. They nurture a team that does the actual work, they persist, and they make heroes out of all the people who have worked with them.

One of the people that I consider one of my greatest heroes, and perhaps the hero in the world of our times, is not a businessperson, but a political leader. That’s Nelson Mandela. He’s very much in my mind because I just got back from South Africa, where he is revered. He did an amazing thing. He came to power after having been in prison for 27 years. Talk about persisting and persevering and having the power of personal passion! But when he got into power he also said, “We will all work together as one country and we will not take advantage of anybody.” It is amazing to be a leader and bring about reconciliation.

But when I looked more deeply at what made it possible for him to do that and what skills he was exercising, I saw that he felt that the world could be a better place. He challenged a lot of assumptions and set forth a bold new vision. He had a support system, a coalition, and in fact they were with him in prison—which certainly makes a difference—and they persisted and achieved. A lot of these lessons about how you reach out and keep widening the circle seems to me very appropriate, because as I write in Evolve!, leaders are like community organizers. They start out by finding their natural supporters but then they have to keep converting more and more people if they’re really going to change behaviour. In all of my writing about change I distinguish between bold strokes and long marches. If you have the authority, there are certain things you can do with the stroke of the pen. You can make a decision to open something, close something, lay off workers or make an acquisition. That’s a bold stroke. A long march is leading people in a new direction that changes their behaviour, in which they voluntarily begin to act in new ways. It’s why something like the Hewlett-Packard merger with Compaq became so problematic. It was very easy for leaders to make the bold stroke of saying what’s vital but a lot of harder for them to convert people in their hearts and minds.

Part of what I learned from Mandela is that on a bigger canvas, on the level of a nation, he managed to convert people’s hearts and minds before he had the authority. And I thought that it was not so different from what I see in business leaders who are effective at leading change. They manage to build a bigger and better support system and use external publicity to convert the critics. Then they try to get everybody headed in the same direction.

What business leader today has done a reasonably good job of that?

A transformation? Some companies continue to evolve, they just keep changing and don’t really have to have a turnaround or a transformation to be effective. In Evolve! I talk about Scott McNeely, the CEO of Sun Microsystems, because Sun has continued to be successful without ever needing a turnaround. However, it did change its business strategy dramatically. It moved from being a workstation company to a networking company by continuing to foster the entrepreneurial spirit and by continuing to change.

On the transformation or turnaround side, I do have to give Lou Gerstner at IBM enormous credit for taking a company that had become very complacent and was falling behind dramatically and turning it around. A lot of his turnaround was strategic and not cultural, because it did involve investment decisions like building up services. But there also were cultural elements in that he encouraged people to be bolder in their vision of change. He also seeded and led an amazing initiative that involved IBM in partnership with the public education system. The initiative created change in public education by using IBM people and technology. He showed that he’s an incredibly shrewd strategist and a big visionary by saying that, “We can take on a problem like that and make a difference in the world.” That external effort has come back inside IBM to help make people in the company see how valuable and important their technology and efforts are, well beyond their impact on the profitability of the business.

So Lou Gerstner created a larger sense of meaning by doing something that people consider important beyond just a way to grow profits. That is a change since I first started out. It’s now in the air that business should be making a contribution to society, and that the workforce no longer goes to work just to put bread on the table and say “It’s just a job and I’ll accept whatever rules my employer lays down.” The new workforce wants to feel that its work is meaningful, that it’s doing something good. So I give Gerstner a lot of credit.

One other leader that I’m impressed with in a very different kind of situation is Jim Kilts, who is currently leading the turnaround of Gillette. Gillette is a great company that became very complacent and began to slope about 5 or 6 years ago. Kilts came in and began setting a new tone, creating a new culture, opening people’s eyes to the wider world. He is an open communicator, he makes the standards clear, and he says, “I have no secrets and I want you to have no secrets.”

There’s been enormous discontinuity, disruption and uncertainty these past few years. How does a leader get more out of people in that kind of environment?

First of all I have heard that “Change is the only constant” ever since I was an adult able to hear those hings, so we’ve been talking about that for years. It seems to have become truer in the last few years…and by the way, a booming economy, driven by new technology, can be just as disruptive and full of surprises and threatening to established companies as a down economy, with threats of terrorism hanging over their business. So, we are living in turbulent times where you can’t expect anything to remain in place for a long time. In that environment, the very meaning of commitment itself changes, from “commitment is created with long-term or forever” to “commitment has to do with the quality of the relationship.” In Evolve! I call it “renewable commitment.” It may last forever, the bond between an employer and an employee, but it may not. But even if it lasts forever, it has to be renewed every few years because circumstances keep changing, and it may no longer be a fit for the employee or the employer. So then one of the questions is: How do you ensure the strongest possible bond, to work very hard, even with the knowledge that it’s not permanent? I think we are already seeing organizations that are based on project models in which people are working very, very hard, but not with an expectation of permanence, but rather because they’re committed to their project and the employer, or the company happens to be the vehicle that makes the project possible. And if there is a series of equally exciting projects, then of course people want to stay and continue to do them.

If you think about the old-fashioned system of longterm employment you will see that, first of all, it didn’t exist for everyone. It existed for union members, for tenured professors, and for some managers in very large corporations. It was never a way of life for everybody, and lots of people were entrepreneurs and changed jobs and so-forth. I sometimes joke about it—I say that the old system was like this: You went to work as an enthusiastic young person and you over-performed and were under-compensated for it. But that was all right because for the next 30 years you rose through the hierarchy until you reached a position where you could under-perform and be over-compensated. It was supposed to even itself out during a lifetime.

That is only partially a joke. Part of what long-term employment meant was servitude. And what got called commitment or loyalty was that people were supposed to subordinate themselves to the corporation. But it’s not necessarily clear that that was good for productivity, particularly in a world of change.

I would like to see people feel secure, but there is no more security in a world of surprises. That’s permanent. I think all we can do is help people over the transitions. So I also defined a concept which has caught on, one of employability security…it may not last but whatever you do here will make you more employable, more desirable to somebody else, more able to start your own business. But even if companies got up and declared “I want you here for life,” who would believe it? But it sometimes happens. When I say “renewable commitment” I mean that a company has to keep justifying itself to employees. It has to keep making its case to employees by continuing to offer them opportunities to grow and to be rewarded.

In your work, you describe seven skills that change leaders need to have today. You refer to one of those skills as “kaleidoscopic thinking.” What do you mean?

A kaleidoscope is a device for seeing patterns. They’re made up of a set of fragments, but it’s a flexible set of fragments, so that if you twist it or look at it from a different angle you can see a different pattern. So, in fact, it’s not reality that it is fixed, it’s often our view of reality. And orthodoxy or conventional wisdom makes the pattern look much too rigid. Leaders have to shake people out of their orthodoxy and get them to see that a new pattern is possible. So it’s all about seeing new possibilities.

You use a phrase called “the sticky moments in the middle of change” to describe bumps in the road, when it looks like a vision or a business plan is just not going to make it. How does a leader prevail in those “sticky moments”?

This is now known as “Kanter’s Law”, that everything can look like a failure in the middle. Leaders today need to be very flexible. You need to define goals much more broadly than “whether we’ll make this quarter’s earnings” or “whether a particular device gets launched on the market.” Leaders need to work around the obstacles, try a different way, if they believe that the goal is really important.

That’s one of my lessons from Mandela—again I can’t expect business people to feel exactly the same—I mean 27 years in prison…but the goal was so important, he did not let go of the goal, he was flexible about the tactics and that’s what’s really important. The goal can’t be defined so specifically and narrowly that you feel that all is lost if you didn’t get it this way. And our life goals are like that too.

But in business you’ve got a lot of very short-term goals, so even short-term goals need to be reviewed and revised as you add experience. So it says to me that persistence means flexibility. It means trying a different path if the first path doesn’t work, but not giving up just because it wasn’t easy.

You’ve written that, “Leaders can enhance the assets that are critical to success but they can’t really control or mandate them.” Could you give me some examples of those assets and tell me how a leader can enhance them?

Some comes from the imagination and brainpower of people in the organization. You can’t force people to be creative, you can’t force people to give you their best ideas. They have to want to do that voluntarily because you can’t see what’s in their minds. So leaders have to create the conditions in which people want to contribute by knowing that their contributions will be valued and rewarded.

Many employees and observers feel that leaders today get preferential treatment, whether it’s in the form of huge stock options or rewards for poor performance. Just how can employees keep the faith when it appears that there’s a sort of executive immunity, while the rank and file just have to fend for themselves?

The point I would make is that companies are not democracies—they’re just a job. And it is considered legitimate in western countries to have differentiated rewards and to concentrate decision rights in a small number of people. They’re not democracies, nobody votes, except a tiny handful of people on the board to pick the CEO.

So the question is what standards can we bring to governance. Some of these are the rules set by society, so people are willing to accept that, up to a point. When there’s an obvious abuse, it undermines the credibility of that form of governance, it undermines the credibility of the people with privilege and power or authority, and it causes the democratic mechanisms outside the corporation to take a second look. You can bet that there are going to be investigations of how companies handle pension funds. There may be a new set of laws in the United States, and there will also be a new set of laws involving accounting and so-forth.

On the other hand, and up to a point, we do accept the system in which people with more authority get bigger compensation. And at least we want to see that this is based on performance and results and not just based on traditional privilege. That’s when we start screaming “corruption.” And if it is based just on traditional privilege and the results and the performance aren’t there, it makes people very angry.

By the way, people in positions of authority and privilege aren’t necessarily leaders. There are people in those positions that are leaders. But I think that leaders are people that don’t abuse their status and that nurture the people who are doing the hard work.

In the context of governance, “transparency” has been discussed for so long now that it seems to have become a cliché, something to which people only pay lip service. Are we ever going to achieve the level of transparency that is desirable?

I think it will come, but I don’t think we’re there yet. I think it will come about in several ways. First of all, I think that digital technology makes it easier, makes it more possible. Cisco Systems closes the books every 24 hours. It can run the numbers so quickly, because it has so much digitized. Secondly, I think there are more external watchdogs that are noticing, that are going to analyze the results. And the more groups that are watching, the more difficult it will be to hide. But somebody who’s hell bent on corruption or terrorism is very hard to stop. All you can do is try and minimize the number of people in that position and surround them with so much exposure that you will be able to catch a problem very quickly.

Many leaders today, from managers to directors, pride themselves on their reliance on data—and the quality of it—for making informed decisions. Yet it seems that bad decisions—whether it’s choosing the wrong CEO or botching an acquisition—are still being made. Bad decisions will always be made, but is there something fundamentally wrong with the way that managers make decisions?

Well, I’ll comment on boards of directors. Boards of directors have two handicaps. One is that they have no independent source of information other than what management provides them. Secondly, they are small groups, there’s a lot of small group dynamics, and it’s very hard to sit around a small table and look at people face-to-face and express dissent. It’s very difficult and that’s a problem.

In terms of managers making effective decisions, it all depends on the checks and balances surrounding them, and who else gets involved, and what gets known and exposed. There are good faith decisions and we have to distinguish that this is a matter not of management theory or philosophy so much as a judgment…and sometimes it’s legal judgment…about when a bad decision is taken in good faith with the best of all available knowledge, in the interest of the widest group of constituencies, and when it is a bad decision that’s self-serving, against the interest of major constituencies, and that often is a matter of legal judgment. These are matters of judgment not matters of principle. And organizations rest on human judgment. You only know later whether it was a good strategy or a good decision—you don’t know in advance. There are legal standards for this. It’s why boards of directors don’t get sued even if the company gets into big trouble and declares bankruptcy, or loses the stockholders money, as long as it looks like they’ve taken good faith decisions.

Is it necessarily right that there are cliques on boards and that boards deal only with information that they have been given by management?

Boards vary in their effectiveness. But because boards are intimate small groups dependent on information from management, it is cometimes hard for directors to exercise independent judgment and steer a CEO away from something that he or she wants to do. That’s a dilemma noted for years. But now, because of the Enron scandal, I hope there will be some reconsideration of the nature and purpose of boards, including how directors can get reliable, timely information.

But the other thing I would say, which takes us back to the bigger context about change, is that one can do all the analysis in the world and make the best possible decisions you think under the circumstances. Then the circumstances change and it turns out not to work. I mean there is no guarantee. We will never be able to guarantee that life will go smoothly, especially in this turbulent world. So the best we can do is to create the conditions that make it possible for more people to succeed and to move on.

With respect to the presence of more women on boards, are you seeing signs of progress?

More and more women are in line positions, running business units, and they’re getting on boards. I think that the notion of the board as “a club” is declining, because companies need the benefit of the best possible thinking and the best possible experience. There was a time when many of the women on boards were college presidents which, while they exercised leadership and understood budgets, didn’t necessarily bring a lot of experience with P&L, corporate strategy and so-forth. Now there are a lot more…I don’t want to say it’s all just a numbers game but we have to get more women in positions so that they’re eligible.

But I do see progress. It’s slow and it takes a long time. But all of a sudden we have a number of women CEO’s of Fortune 500 companies. It happens, and a number of them are concentrated in companies that 25 years ago made a big effort with respect to affirmative action. I’m thinking about Hewlett-Packard, AT&T, of which Lucent is a spinoff, and Xerox. And lo and behold they do have women CEOs now. They didn’t rise through the ranks in every case but they were in an environment where the culture understood that women had talent.

Speaking of talent. There’s a fierce war for talent today. How can an organization win that war?

It doesn’t look quite as fierce in a climate of higher unemployment, but there is a lot of competition for the best and the brightest. This goes back to my “renewable commitment” point. I think that, in addition to compensation that reflects the market, companies need to focus on what I call the “Three Ms”… Mastery, Membership and Meaning. They have to offer people Mastery, that is challenging jobs, where they have a chance to grow their skills; they have to offer Membership, which is a feeling of belonging to a community and of being treated as a whole person with attention to their needs—which probably means child care if they need it, it means attention to the amenities that make it possible for people to balance work and the rest of life; and Meaning…that people want to work for companies where they feel that they’re making a meaningful difference in the world.

Thank you very much.

You’re welcome.