Understanding the Energy Quagmire

Every time there is a severe weather event like Hurricane Ida, it is blamed on global warming labeled climate change.  One would think we never had bad weather in the past.

Actually, Hurricane Camille in 1969 had the highest wind speed at landfall at an estimated 190 mph when it hit the Mississippi coast.

Don’t get me wrong.  The data is very clear that the earth is warming.  And an increase in carbon dioxide has been one of the major factors with our use of fossil fuels to provide us energy. 

Not surprising, there are organizations like Bad Carbon that want to keep all the “fossils” in the ground.  On a more balanced side, the Paris Accord is all about limiting the rise in temperature through limiting greenhouse emissions (GHG).

Climate Change

In 2018, the Intergovernmental Panel on Climate Change advocated global GHG needed to fall to zero within the next three decades.  A number of nations and major companies have set targets to reach net-zero by 2050; in other words, balancing any emissions by absorbing an equivalent amount from the atmosphere.

Ecology landscape – climate change concept, desert invasion

These are much more aggressive positions than when I was chairing the Greater Houston Partnership’s (GHP)Energy Collaborative Committee around 15 years ago.  At that time, the Energy Collaborative Committee was promoting a more balanced energy equation. 

There is no doubt renewable energy has some distinct advantages with their lack of carbon dioxide generation. But to be brutally honest, back then we had a hard time seeing renewables as a total substitute for fossil fuels.

We were actually quite proud of the wind electricity generation in West Texas.  The Lone Star State has for some time been the biggest wind producer of electricity in the United States.  Iowa is a distant second.

We were even successful at the GHP in getting Vestas, a wind turbine manufacturer, to set up an office in Houston.

Wind is not a cure all.

The biggest issue with wind is its intermittency as you may know.  The wind is not always blowing, and it blows stronger at night than in the day when the power is most needed.

green meadow with Wind turbines generating electricity

That raises the need for the ability to store power or to offset when the wind is not blowing with another energy source.

Natural gas combined cycle power plants have been a good solution with quick start-up capabilities and with an abundant new supply source from shale gas. And thankfully there are significant advances in energy storage, but more technological advances are needed.

The other big issue is location.  West Texas, as an example, is not a high population center.  That means you need to build transmission lines to major population centers like Houston, Dallas-Fort Worth, Austin, and San Antonio.  Texas has done that spending some $7 billion which has supported West Texas wind renewable developments.

It’s not that straight forward across the country.  The stronger wind capability goes up the middle of the United States.  That is why Iowa, Oklahoma, Kansas, Illinois, Minnesota, Colorado, and North Dakota are in the top ten list of wind power generation.  Unfortunately, many of the big population centers are on the east and west coast.

Besides building the required transmission lines as Texas has done, there is also a loss of power from the transmission.  With the networks in place from the 2015 to 2019, the EIA estimated a 5% loss in transmission for wind.

Like any source of energy, there are various specific issues. Big wind turbines are not what everyone wants to see, visual pollution. These giant blades spinning up to 180 mph are estimated to kill a half-million birds a year according to the US Fish and Wildlife Service

The case for Solar

Solar sounds very promising with the energy radiating from the sun.  Capturing that energy has always been one of the key technology challenges. The most efficient solar cells approach 30%, but solar panels are generally in the 20 % efficiency range.

Thus, a solar farm of 1 megawatt powers around 200 homes and can take 4 to 5 acres in geographical space requirements.  For solar to power the electricity needs of the United States, Vivint.solar estimates that requires roughly 14,000,000 acres or 22,000 square miles about the size of the Mojave desert.  That is a lot of land.

One of the largest utility sized solar farms in the world is in India covering 14,000 acres generating 2,245 megawatts.  In comparison, Egypt built a natural gas combined cycle power plant in 2018 with a total of 14.4 gigawatts of power generation with 12 power blocks each having 1,200 megawatts of capacity. It supplies up to 40 million people with reliable energy.

Solar panel

Like wind, intermittency is a big issue for solar. There is no generation at night which varies by the seasons depending on location.  Time of day also makes a difference. Cloud cover during the day is a real impediment as well. Thus, energy storage is again key with this intermittency.

The sunbelt makes the most sense for solar. Thus, like wind, the high potential solar locations do not always match up to population centers in the United States. Here in Texas, the best solar capability is also in West Texas away from the population centers.  Cloudy days here in Houston are not helpful for solar.

One attractive feature of solar comes from its flexibility to be installed on rooftops. Solar panels on roofs have been around for about 40 years now reaching over 2 million installations in the United States. The pace of installations has increased significantly these last several years. I’ve seen estimates that by 2024, 2.5 percent of residential homes in the United States will have solar panels.  Why not more?  There are many factors that come into play beyond location, costs, and financing, such as roof size, shading, tilt, construction, grid hook-up, local/federal incentives, rentals, and so forth.

Customer demands

The big question remains how much electricity generation can wind and solar provide that will satisfy consumer needs? 

Today, together these two renewables provide only about 5% of the energy consumed in the United States. The technical practicality seems more challenging as developers have already pursued some of the best locations for solar and wind farms.

To really address carbon dioxide emissions, then electric-powered vehicles are important of course.  That has another set of issues that need to be overcome beyond generating electricity such as charging stations across the country.

Those developing plans to achieve net-zero emissions by 2050 foresee trillions of dollars of investment.  Money that could be spent elsewhere more productively if the concerns were not so great.

Thus, the really big question is the consequences of climate change.  How catastrophic will it be for mankind?

Since the 1960s, there have been many doomsday predictions from climate change; however, none to date have materialized.  From another angle, if you look at the National Weather Service data on weather-related deaths here in the United States, there is nothing to be alarmed on trends towards doomsday. All this raises questions on how much do we really know about the consequences?

To step back for a moment, how did I decide to write this blog?

I was contacted by the IPAA’s (Independent Petroleum Association of America) leader for the Energy Workforce Energy Education Center. She wanted me to do a video presentation on Energy Economics and Geopolitics for the students in the high school petroleum academies having done similar presentations over a decade ago.

I wanted to get myself more current on the state of affairs with climate change.

Using the faithful internet, my searches found many websites that seemed rather biased and lacking detail but making large generalizations.

After searching for more detail, to my surprise some people who explored the data were debating the catastrophic consequences based on the data as opposed to any biased opinions.

I particularly found interesting Steven Koonin’s book published this year entitled Unsettled.  What climate science tells us, what it doesn’t, and why it matters.

One expert’s ideas

What got my attention was his background serving as the Undersecretary for Science in the US Department of Energy under President Obama along with numerous other impressive roles.

Initially, a strong advocate, over time Koonin has examined the data from assessment reports and studies, and now raises some serious questions.

He states in his book, “It’s clear that media, politicians, and often the assessment reports themselves blatantly misrepresent what the science says about climate and catastrophes.”

Koonin is not a denier.  He outlines our global warming and the impact of carbon dioxide.

For him, the key question centers not on whether warming is occurring but on the catastrophic impact projected. Thus, he specifically addresses my question on the consequences of climate change.

A big learning for me, Koonin points out the climate and weather are quite different. Weather bounces around from day to day.  Climate has a long horizon of 10 to 30 years and more.

He explains you should not use any one weather event to diagnose climate change and complains this is done so often in the press misguiding the public.

Koonin goes into reasonable depth on key assessment reports and in each case raises good issues about their implications.

What about the long term?

In analyzing different long term climate horizons in the data, he concludes that most types of extreme weather events don’t show significant change. Wow.

You also hear a lot about rising sea levels which is often represented as potentially catastrophic.  After his careful look at the data, he concludes that we are contributing to sea level rise, but scant evidence it is significant much less disastrous.

Nevertheless, the big concern is not just today but directed towards the future if we keep emitting high levels of CO2 emissions.

To project the future, computer climate simulation models are used with a scientific aura of validity.

Koonin is well versed in modeling and able to explain how these simulation models work.

They attempt to mimic reality based on physical laws and weather observations.

As you can imagine, they are incredibly complex using a grid structure to simulate our global climate environment.

A simulation run on the most powerful computers can take a couple of months.

The world is enormous in size with 123 billion acres, of which 37 billion acres are land. To get a finer sub grid structure which could be very helpful simply overwhelms todays computing capability and would take years to process.

As a result, these models are tuned by the researcher’s judgment because the models can be a poor description of the real world.

Obviously, Koonin forewarns over-tuning can cook the books.

His key point is that these models tend to disagree with one another, and the compromise has been to average their results. That seems a bit weak.

Moreover, newer more sophisticated models actually generate more uncertainty.

A big red flag for Koonin is the models can’t reproduce all the past.

Others raise similar points.  Now you see why I called this blog Energy Quagmire; technical practicality of mostly all renewables and questions on the consequences of global warming have got us in a bog.

The more we focus on objectivity, the quicker we can get out of this bog.

Foremost, let’s clearly address the issues that people like Koonin raise on assessing the climate data and projected consequences.

We also need more thoughtful balance of the risks and rewards of pursuing different courses. Let’s get more serious dialogue on other energy sources such as nuclear and green hydrogen.

Let’s discuss the advances in usage of fossil fuels to reduce carbon dioxide emissions. Let’s fully understand the opportunities of CO2 sequestration and similar removal technologies. Let’s consider the more complex issues and tradeoffs of economic security and national security along with environmental security. And let’s be careful in the overhyping wind and solar as our only energy sources for the future with a little pragmatism.

The Keys to Becoming a Great Leader

Now everybody knows something about leadership. 

But when I taught strategic leadership courses to MBA students at the University of Houston, in the beginning my first question to the students was “who wanted to be a leader and a great one at that?”

There was always this look of bewilderment on their faces not knowing how to answer. 

Leadership can be puzzling and seems like a lofty aspiration as many times leaders are put on a pedestal.

 Leadership does make a significant difference in the performance of an organization.

Jim Collins demonstrated that in his well-researched book Good to Great as have a boatload of others. 

Normally, when people begin to talk about leadership, they start rattling off all these characteristics.

Well, I am not going to tell you that these are the top ten characteristics of being a great leader as many articles do. 

But in my opinion that is coming from the wrong starting place.

If you begin with characteristics and try to figure out who is great, you enter into a mindset of rating one leader against another based on the characteristics they possess.

The focus is all on the leader trying to find that special one. It’s grading on the curve.  You are better than that guy, but this other bloke is better than you.

 When the conversation begins with the leader and their characteristics, it leaves out the other half of the equation.

What is really fundamental about leadership is that there are followers. There is no leadership without followers. 

You can be a great solo performer, but that is not leadership which requires more than one person. 

Think of the Other Person First

But why do people follow? 

They follow you because their needs are being fulfilled in some meaningful way.

In effect, the leader must provide a value proposition that fulfills follower’s needs as discussed in my other leadership blogs. 

This is the first key to becoming a great leader, you must start with the needs of the follower by developing a value proposition that motivates them to follow you.

That is what a company does with customers.  It provides a value proposition that cause people to buy. 

You must have a value proposition that potential followers can buy into.

What about the natural born leader? Don’t people just want to follow them naturally regardless.

Sorry, it doesn’t work that way. You shouldn’t rely on whether you got that special leadership gene. 

In fact, most serious leadership authors advocate that leadership can be learned and dismiss this great man theory from days of yore.

Develop the We Mindset

Unfortunately, we grow up being graded solely on ourselves.  It begins in grade school right on through to high school, and then on to college.  It is all about me.

When I worked for Shell, there was a lot of emphasis on the qualities the leader possessed.

I always felt under the microscope to be this superhuman leader with all these wonderful characteristics. 

I knew an awful lot about leadership theories, but it wasn’t until my later years in senior management that the second key came to light. 

A lot of my conversation had too much I.

To be a great leader you must shift your mindset from me to “we”, which is the second key to becoming a great leader.

That requires going out talking to people finding out what really drives them.

Thinking in a “we” mindset opens them up to describing their needs.  People truly love to talk about themselves.

Leadership and Planning Go Together

Leadership is not a random hit or miss process.

How do you figure out a value proposition that motivates people to follow you? This requires planning. 

What big thing have you ever accomplished without a plan?  Planning sets direction. 

Thus, the third key to leadership is planning and setting a motivating direction.

Execution is the Fourth Key

Planning by itself is not enough, even though it does set the stage. 

The plan must be executed achieving the desired results.

People follow successful performance. 

Thus, the way to measure a great leader is to look at the absolute results. 

Thus, the fourth key to becoming a great leader is to focus on results.

That is the mindset shift that makes all the difference. 

Look at the results, but what results are we talking about?

A leader has various stakeholders with different needs as set out in the first key.

Targeting these needs means forming value propositions for each key stakeholder, and since every leader has multiple stakeholders, that means multiple value propositions. 

Great results come from satisfying these different value propositions that cause your stakeholders to follow you. 

Moreover, if you judge leadership on the basis of absolute results, it’s absolutely possible for everyone to become a great leader.  

Leadership Maturity develops a Situational Style

People have different needs; situations require different leadership, and things change over time. 

There is no cookie cutter approach to being a great leader.

Thus, the fifth key is to recognize that leadership is situational depending on the world you and your followers face.

Look to Other’s Strengths

Next, you win by utilizing yours and other’s strengths.

That is what companies do with their value propositions.  They capitalize on their strengths. 

 Great leadership is all about building a winning team, where people step up with their greatest strengths.  That is the sixth key.

You build a gameplan that leverages and synergizes on these strengths.

Develop Specific Actions

Many plans fail for lack of execution as set out in the Fourth Key.

The plans must have executable components with specific actions and be constantly reviewed and revised as results dictate. 

Leadership is not about how many initiatives you can create.  It’s about how well did you deliver on your value propositions by taking well defined actions. 

Thus, the seventh key to leadership is delivering on your value propositions with specific targeted actions.  

That creates authenticity.  Doing what you say you are going to do.

Those are my seven keys to becoming a great leader.

Develop your Leadership Plan

This is a prelude to My book Develop a Leadership Plan Become a Great Leader that recognizes that your personal planning is the key catalyst for greatness.

Typically planning is done from the business perspective, at the corporate or business unit levels on what the company is going to do.

The leader needs to figure out how to integrate into these business plans with his or her leadership actions. 

Some of the leader’s value propositions to key stakeholders will be integral in the business plans. 

Other elements require the leader to formulate more specifically a leadership plan to fulfill those people’s value propositions.

In developing these leadership plans, the focus can then turn to what strengths the leader needs to develop and what fatal flaws to correct. 

That requires the leader to fully assess his/her inner profile. 

What is your leadership style?  What are your proficiencies, things you are really good at?  What are your values, beliefs, and character?  And fundamentally, what is your purpose in life? What legacy do you want to leave?

Weaving together the “outer” world of a leader’s work environment with their “inner” world of character, style, strength, and purpose s brings a practical focus to leadership development efforts.

The leader can then reflect on those aspects of the inner self that more directly impact the outer world and pursue improvement in the areas that will make a significant performance difference, and much sooner.

In doing this, the chances of becoming a great leader go up significantly because there is a targeted focus on your actions and behaviors that will make a real difference in achieving great results.

That is the whole concept that led to my book Develop a Leadership Plan Become a Great Leader. 

The quest for great results doesn’t end with one great achievement.   

It’s not one and done; it’s a marathon. 

People will follow the leader who consistently produces great results that benefit them.  And when these great results occur, that is a great leader in my book.

Character: A Learned Behavior

Ignore your character at your own leadership peril.

Over multiple decades, research studies on character and its derivate corollaries such as authentic leadership, emotional IQ, ethics and so forth find character to be core to leadership success. Many find it to be the most important leadership ingredient.  

Some authors have coined the term Character Based Leadership. In this blog I want to stick with the richness and power of the word character originating all the way back to the Greeks.

Aristotle advocated that character develops over time as one acquires habits and behaviors from parents and community, first through reward and punishment. In other words, he thought it was a learned behavior.

In my blog on the People Side of Leadership, I advocated that Character Matters, but we did not go in depth.

What then is character all about?

Trust is Key

Do not look to me to give you a precise definition of character as like many concepts there is no such consensus in the leadership literature, and I would be just adding another derivation.

One of the reasons for this difficulty is character arises from the perception of others viewing you.  That can be summed up as whether they trust you.

Where variations arise is in the behavior that you exhibit that builds the trust. There are many perspectives and qualities advocated by various authors which tells you there are challenges in building trust with others.

Chimpanzees Deception

What got me to write this blog was a shocking study on chimpanzees that I came across in none other than Lawrence Freedman’s book on Strategy A History.

He starts the evolution of strategy with a view that deception is one of the hallmarks of strategy “across time and space.” (p. 3)

He references studies on chimpanzees finding that “Deception also turned out to be a vital strategic quality.” (p. 5)

The takeaway for me is that in intelligent species, deception is used naturally to gain power over others, not surprising in a world of survival.

However, deception does not build trust.

Honesty a Learned Behavior

Deception is essentially lying. One can consider honesty largely the opposite of deception.

Honesty and its corollary integrity are almost always a part of describing character.

Whether there are aspects of honesty that are innate is secondary for building your character.

Most argue that honesty can be enhanced by repetition and imitation.

I watch my grandchildren respond to the who did it question. There is always a lot of finger pointing.  It takes repeated effort of reinforcing always tell the truth and rewarding that behavior to see progress.

Coalitions require Trust

Friedman in Strategy a History describes coalitions as another fundamental strategy across time and space.

Coalitions provide strength to combat one’s enemies which holds true even today.

Societies also flourish when there are coalitions to enable what individuals cannot do on their own. 

Forming coalitions is almost impossible without some trust.

So, there are natural incentives towards honest behavior which has been valued since ancient societies.

Obviously, there are fragilities in coalitions as circumstances change.

Societies Growing Complexity

Embedded in our culture are societal values which also form a basis for trusting the other person.

For much of man’s history, survival has been the main driving force.

In this modern world, we have stepped up a hierarchy of needs as Maslow would say.

Social and ego needs predominate bringing on more complexity in our interactions with one another.

There is not always a common agenda or perception of what is correct behavior given the diversity of backgrounds, beliefs, and needs.

On some issues such as killing another individual, society almost always condemns that behavior. However, when it comes to punishing the killer, there are a diversity of views.

And so it goes across the spectrum of social mores.

Within our society, coalitions form with strong advocacy on what is “right” or acceptable behavior proclaiming the moral high ground. It goes well beyond political ideologies.

Thus, your character is judged via different coalitions of societal values which makes it difficult for a leader on how to behave in this complexity.

For some people, your behaviors may be deemed virtuous and of strong character while others consider you entirely untrustworthy and not to be followed.

How then do you build your leadership character in today’s complex world?

Guiding Principles

I always recommend that you be open with others about what drives your behavior.  Let people know your guiding principles.  Then they know what to expect which helps build trust.

One that I advocate is “Do unto other as you would have them do unto you”, the Golden Rule.  It only makes sense that this elevates your behavior to a common ground.

I think there is also common sense in avoiding deception.  Be honest. People can count on you doing what you say you will do.

I was part of a small start-up company in which two of the partners were conniving and deceitful to myself and the other partner.  Even though I was the CEO, I got out of there as quickly as possible when the dishonesty became evident as did my other partner.  They made millions but I have no regrets as I sleep well at night being true to myself.

You need to be clear on your relations with others to help build your character. 

One of my guiding principles is I will trust you until you prove me wrong, then we part ways or find a way for you to rebuild the trust.

To establish these guiding principles, you need to know yourself, particularly your values.

When teaching Strategic Leadership to MBA students at the University of Houston, I was surprised at how many students were not able to articulate their values.  If you are flipping from one value to another, that can appear as deception to those trying to follow you.

My blog on Your Leadership Personal Profile should help you articulate what drives you along with your values and beliefs. 

Authentic Leadership

You need to be true to yourself as advocated in Authentic Leadership. For me, this line of thinking provides another perspective on building character.

The most popular book is Bill George’s Authentic Leadership: Rediscovering the Secrets of Creating Lasting Value written in 2004. You may also want to read his follow-on book with Peter Sims entitled True North Discover Your Authentic Leadership.

A shortcut is Bill George, Andrew McLean, and Nick Craig’s book on Finding Your True North A Personal Guide. This guide provides another learning vehicle for you to build a strong character.

In the guide, they provide a concise description of Authentic Leadership as follows:

“To be an authentic leader requires you to be genuine and to have a passion for your purpose, you must practice your values, lead with your heart, develop connected relationships, and have the self-discipline to get results.  You must stay on course of your True North in the face of the most severe challenges, pressures, and seductions.” (p. xxi)

Emotional IQ

It is hard for people to trust you if they can’t relate to you.

Daniel Goleman provides great insight on interpersonal relationships in his book Emotional Intelligence Why It Can Matter More Than IQ.

He says, “There is an old-fashioned word for the body of skills that emotional intelligence represents; character.” (p. 285)

I think the Oxford Dictionary sums up Emotional IQ best with “The capacity to be aware of, control, and express one’s emotions, and to handle interpersonal relationships judiciously and empathetically. Emotional intelligence is the key to both personal and professional success.”

Besides the tenets of self-awareness, self-regulation, and self-motivation, I think empathy is the key in building trusting relationships. Empathy creates a bond of respect. The relationship becomes more than just about you and your feelings.

The good news is emotional intelligence can be learned. 

There are Emotional IQ tests. If your score is low, then it will be well worth your while to put in the effort to improve it.

One way is Emotional Intelligence workshops.  Another is to work with a mentor.

Trust by Followers

The concept of character expands when coming from a leadership perspective. This is one of the reasons the definition of character in the leadership literature varies.

From my previous blogs, you know that leaders quite simply have followers.

For people to follow you, they must trust you.

Everything we have just discussed about character comes into play in forming that trust.

But they also must feel the direction is warranted and that you will be able to successfully lead them down that journey.

You saw that in Authentic Leadership that you must have the self-discipline to get results.

Follower’s trust also gets into many other dimensions of leadership including visioning, collaboration, competencies, and on and on.

For example, in Peter Rea and Alan Kolp’s book Leading with Integrity: Character Based Leadership written in 2005, they talk about the virtues of character, competence, courage, faith, justice, leadership and corporate responsibility, prudence, temperance, love, hope, and worthiness.

Bottom line, when you take an action or exhibit a behavior, ask yourself the question will my people trust me more or less?

Without the trust, your leadership is in peril.

Core vs. Edge

You might ask yourself by following my “True North” sounds like I am building rigidities in this fast-paced chaotic world?  Without my willingness to change and adapt, how can I or my company expect to be successful?

This is the key challenge every leader faces in this rapidly changing chaotic world. In my blog on leadership agility, I introduced you to the concept of core and edge developed by Lee, Hecht and Harrison. My Silver Fox Advisor colleague Doug Thorpe further developed their concepts.

Thorpe in his article Leaders: There is a new way to Understand Change eloquently describes core as “not limited to values and beliefs but has much to do with that.  Understanding your own core can help define purpose.  Core helps to understand the power of harnessing your mind’s attention and your hearts affection.”

He goes on to describe Edge. “As you face new challenges or get pushed into unfamiliar circumstances, you are walking on the Edge. The edge is where everything we don’t know lives. New ideas, new technology, new programs, business growth initiatives, all are edge things.”

So how does one manage the space between Core and Edge?

As Thorpe aptly says, “Agility is the special ability to move from core to edge and back again without losing all sense of balance or security.”

Be conscious of your space between core and edge as circumstances change; take time to develop your leadership agility.

Organizational Alignment

It is exceedingly difficult to get everyone on board on your leadership direction, especially when change is involved.

Openness, collaboration, dialogue, listening all play a role in organizational alignment.

On the Edge, there is organizational strength through diverse ideas and opinions.

However, at the company’s core, you need alignment on the company’s values and acceptable code of conduct.

Otherwise, the common trust cannot be developed to build a strong successful coalition.

Enron had the four corporate values of respect, integrity, communication, and excellence.

All decent values, but they failed to live by them.

Enron ended up as one of the biggest corporate bankruptcies in American history right here in Houston, Texas.

But more than that, they showcased what the moral failure of senior leadership can do to devastatingly impact many lives.

Your leadership character must ensure your company lives by its core values particularly in difficult times which inevitably occur.

In conclusion, a quote from Helen Keller seems apropos, although blind she had great foresight.
“Character cannot be developed in ease and quiet. Only through experience of trial and suffering can the soul be strengthened, vision cleared, ambition inspired, and success achieved.”

It will be worth your while to work to build your character and gain more trust in yourself.

Contributed by Lane Sloan, former Shell CFO and Silver Fox Advisor.

Learning Organization: Your Company’s Survival Depends on It

A colleague of mine at Royal/Dutch Shell, Arie de Geus wrote a book called The Living Company Habits for survival in a turbulent business environment.

He contended through his work that a central attribute of companies with long lives was a sensitivity to the environment with the ability to learn and adapt.  De Gues highlighted several other attributes that contribute to a long company life, which will be discussed later.

In my recent of blog on February 23, 2021 describing the world of accelerating and chaotic change, leadership agility was advocated as a competency every leader should learn.

The main purpose of this blog is to say that will not be enough for your company.  If you want your company to survive without a premature death, then you need to build a learning organization.

What are some of the attributes of a learning organization? 

My tutelage on learning organizations came from a consultant Shell used, Peter Senge, who wrote The Fifth Discipline The Art & Practice of The Learning Organization.

Senge delves into the notion of a learning disability.  A key point I want to make is that you will naturally develop this learning disability.

The Proverbial S Curve

In my opinion, living systems tend to follow the proverbial S shape curve because of their learning ability.

 A newborn entity has little knowledge and focuses outward through a structuring process of how things work or should work.  Once a foundation is set, the structuring process accelerates, and rapid learning growth occurs.

As time progresses, this learning growth slows as the focus shifts inward towards maintaining all this structure of perceptions, beliefs, values, processes, procedures, mental models and so forth.  As Senge aptly points out in his book, “Today’s problems come from yesterday’s ‘solutions’” (page 57)

Eventually, the growth and learning plateaus, that is, unless there are interventions.

As a “living” entity, what can a company do to become a learning organization to combat the natural inertia from the past?

Learning Structures

Your company must specifically build in learning structures. De Guess identified two more habits worth noting.

One is tolerance both within and outside the entity itself.  Another way of thinking about this habit is valuing diversity of thoughts.

It’s more than inclusion. The organization needs to seek out understanding of these diverse views. In this respect, the diverse views involve differences from the current modus operandi of the company.

Understanding does not imply immediate change. Many diverse views will not make sense for the company to pursue.  But an arbitrary discounting of such ideas becomes deadly in this rapidly changing world.

Secondly, de Guess describes the habit of building cohesion and identity. 

This may sound contradictory to diversity.  Quite the contrary, the persona must be built around this burning desire to learn from one another.

As Senge describes, your people need to be lifelong learners.

Thus, the concept of a learning organization needs to be built into the stated company values.

The organization needs to celebrate renewal efforts and achievements.

Learning must become fundamental to the culture.

Systems Thinking

Peter Senge advocates that systems thinking is a key discipline of learning organizations.  I clearly agree.

When I received my master’s degree in management science, systems thinking was a cornerstone, but you don’t hear as much about it today.

It is all about seeing the big picture in a wholistic way looking at the various relationships and factors that bring about your outcomes.

As entities build structures on how things work, there become a lot of parts and sub processes which bogs down learning as the focus is on the trees and not the forest.

This is not to say that continuous improvement programs should be scrapped.  They are one of the “structures” that should be imbedded in a learning organization.

The major shifts and transformations occur at the wholistic system level of a company.

Learning organizations need to imbed vehicles to periodically look at the big picture or when alarms are sounded from external sensing systems.

System audits should ask from the internal side, “What ground-breaking change could we do differently that would have a magnitude improvement on our outcomes?”

From an external perspective, system audits should look at competitors but also pace setting companies who have made major transformations.

Obviously, scanning for new technologies and how they could redesign the way your company operates is another part of a systems audit.

Then there are also major environmental events like COVID 19 that should trigger a systems audit.

Layering on a new S Shaped Curve

Another Shell consultant back in the 1990s was Ichak Adizes who taught us about corporate lifecycles.  He authored a book called CORPORATE LIFEcYcLES How and Why Corporations Die and What to Do About It.

Adizes described to us the growing and aging process a company goes through and outlined some characteristics of growing companies versus aging companies.

A couple of these characteristics really struck me.

In a growing company, “Personal success stems from taking risks” whereas in an aging company “Personal success stems from avoiding risk.” (page 87)

In a growing company, “Everything is permitted, unless expressly forbidden” whereas in an aging company “Everything is forbidden, unless expressly permitted.” (page 87)

Relating to this last point, he talked about the importance of culture with the two dimensions of flexibility and control.

At a company’s prime, flexibility and controllability are balanced.  As controllability becomes more dominant, the aging process eventually leads to death.

My big takeaway was a learning culture can expand the shape and timing of a company’s S curve through maintaining flexibility.  Today, that is called agility. It needs to be part of the organization’s fabric.

Beyond that, there are times in the life cycle when systems thinking can bring about a major transformation in the business model.

In essence, the company layers on a new S curve.  The key is to jump onto the next S wave before it is too late.

When this structural competency is developed in an organization, the life cycle can be extensively extended by having multiple layers of S curves.

Adding Learners to your Company

The last “learning structure” that I want to recommend is consciously adding learners to your company.

Bringing diversity of thought, perspective, and backgrounds as previously discussed is important for your hiring process and something you have likely already included.

My suggestion is that you carefully examine potential hires’ willingness to be tolerant of other points of view along with a strong learning desire.

You can’t build a learning culture with a preponderance of people who aren’t learners.

Many new hires will come from the Millennials (those born between the early 1980s and mid-1990s) plus some of Gen Z (those born between the mid-1990s and 2010).

Millennials Like to Learn

Fortunately, the Millennials are generally curious with an eagerness to develop new skills and learn.

They are also multi-taskers.

I remember one day when I heard a lot of noise from my Millennial daughter’s bedroom.  She had told me she had a lot of homework, so I wanted to check up on the commotion.  It was an incredible sight.

She was sitting with a laptop in her lap but typing on her desktop while watching TV with music blaring away.

When I asked her what she was doing, she answered my homework.

Beyond that, Millennials tend to excel with out of the box thinking and creative problem solving. This will be an important competency skill set in developing the next S shape curve for your company.

Many have high expectations of your company and not afraid to express their views which is what you want in a learning organization.

Gen Z Diversity

Generation Z also has some positive characteristics.

They are entrepreneurial and not surprising all about technology.

This generation has grown up in a rapidly changing world, so they are receptive to change.

You will need that attitude in your learning organization.

Fortunately, diversity of all forms is natural to them and generally not a divisive issue.

Don’t Forget Baby Boomers

Lastly, you may want to consider a baby boomer (those born between 1946 and 1964) as a mentor to help you build your learning organization.

They have many positive characteristics too including resourcefulness and being mentally focused.

As this generation deals with their Millennial sons and daughter and their grandchildren of the next Generation Alpha, their views of change continue to morph.

Now that they are in a mentor position in their careers, baby boomers can bring a lot of unbiased wisdom having seen it all evolve.

Summing it Up

The most basic need of a living system is to survive.  If you have not built-in structures that will foster a learning organization in your company, take some advice from a baby boomer—do so now before it’s too late.

Your company’s survival depends on it.

Contributed by Lane Sloan, former Shell CFO and Silver Fox Advisor.

Situation Based Leadership

Leadership does not have a simple formula for every situation.

A lot of the leadership theory comes from academicians studying a formulation of their leadership model from observing the real world.  They test the model with empirical research to determine results on performance. Then, it’s the publish or perish phenomenon.

If we look at the chapter headings from a well-known college text by Northouse entitled Leadership: Theory and Practice, we find a long list of these type models as well as some more generalized topics: Trait Approach, Skills Approach, Behavioral Approach, Situational Approach, Path-Goal Theory, Leader-Member Exchange Theory, Transformational Leadership, Authentic Leadership, Servant Leadership, Adaptive Leadership, Followership, Leadership Ethics, Team Leadership, Gender and Leadership, Culture and Leadership.

Wow, how do you sort out all these concepts?  And this is just a college textbook articulating all these different perspectives.  There are lots of other relevant authors both academicians and practitioners not included in the chapters listed above such as Strength Based Leadership.

The point is there are many dimensions and factors that come into play when leading.  One facet is all about the leader.  Another dimension is the organization which includes followers, culture, and so forth.  Others are about the relationship of the leader and the follower.  Still other facets are about the broader environment. And so forth.  It is hard to mold all this into a grandiose model.

If that were not challenging enough, the overall environment is changing at a rapid pace as we discussed in my blog on leadership agility.

Ultimately, it all centers on the particular situation and how all the multiple dimensions line up. Fortunately, many situations are comparable, and the response can be repeatable.  Many others will be unique in some fashion that will require you to adjust.  Like playing a game of golf, the better you are the more natural the adjustment.

Situational Leadership

One model by Paul Hersey and Ken Blanchard has been coined “Situational Leadership.”  The model has evolved over time, but the basics are the style of the leader changes depending on the situation and readiness level of the followers.

In a situation of low readiness such as a new employee, then the style is much more directive. You have to tell them what to do. As progress is made, the mode of the leader shifts to coaching with high on direction and supportive behavior.  Further progress by the employees suggests lower direction but still highly supportive behavior from the manager.  Finally, in the fourth stage with a matured employee on performing their role, the leadership style shifts to delegating with low on direction and relatively low on support.

Of course, this model is limited in that the focus is on only the dimension of the manager and employee’s relationship.  Nevertheless, it provided a significant breakthrough that no one leadership style fits every situation.  Moreover, it makes sense and can be applied rather easily.

Adaptive Leadership first described by Heifetz in Leadership Without Easy Answers back in 1994 also gets into the relationship of the leader and the follower based on the follower’s situation.  As the name implies, this model gets into adapting to change which has become more pronounced today.

What to Do?

First, do not think you have all the answers by learning one highly touted approach to leadership.  Rather think of the dimension it is adding to your leadership portfolio of knowledge. The critical point I have been trying to make is there is no one holistic model that prescribes what you should do in every situation.

Second, if you’re in the early stages of your leadership growth, do get several books to read. Take a leadership course or seminar. But also get advice from a leadership coach/mentor. Think of learning golf, a coach goes a long way.  If you are a CEO at a small company  that is growing, you should also consider joining a CEO Roundtable.

Third, once you have some leadership experience, do an assessment of yourself.  I would suggest you look at my Leadership Personal Profile blog of February 23, 2021. It will help you identify areas for improvement.

Fourth, I advise mentees do not get yourself in a “tizzy” on what to do. In leading, be engaged.  Get whatever input you feel is important, then, behave/decide what you think is best given all the circumstances and what you know at the time. In the case where action is needed, that can range from you making the decision, to a team participation, to a delegation and so forth.  In other words, all you can do is the best you can given where you are at in your leadership journey.

Fifth, whatever the leadership situation and the action has been taken, always be open to feedback from followers particularly with significant events or direction. Simultaneously, look at the impact on the performance of the business. Think of the feedback and results not as a critique but a new learning in your portfolio whether it’s good or bad.

Sixth, as your leadership matures, be flexible to the situation and not locked into you know the answer of what to do. Situations always evolve over time, and now they are evolving rapidly. In the maturing process of living systems, we naturally structure approaches to solve problems, issues, and opportunities. Many CEOs go through a pattern of first being incredibly open and inquisitive in their early days to eventually becoming rigid in their thinking to the detriment of the organization.

Seventh, insure you maintain your character and are true to your core values.  This builds trust with your followers.  They know they can count on you to do what is best given changing circumstances.  We will talk about that more in an upcoming blog entitled Character: A Learned Behavior.

Eighth, utilize a wise coach who can act as your alter ego to help you avoid these rigidities setting into your leadership while helping you maintain your authenticity.

Ninth, be sure you are coaching your leadership team and employees to become better leaders. This will be a huge help to them but also keep you fresh.

Lastly, if you want to be a great leader, then seek first to be a wise leader. Wisdom is knowing you need to know more.  Your rigidities will set in when you quit learning. A little humbleness on what you know goes a long way in your lifelong leadership journey.

Contributed by Lane Sloan, former Shell CFO and Silver Fox Advisor.

Achieving the Take-Off Stage in Small Business

Would you like your small business to Take-off?

In 2018, 9% of small businesses made more than one million (SBA.gov).

If you are one of these 1 out of 10 small businesses and have revenues less than ten million, then you have reached a unique position that I term the Growth stage.

If you have been in business five or more years, then you ought to feel a sense of accomplishment as half the small companies do not make it that far.

In the early phase of the Growth stage, you most likely have fewer than twenty employees.  It gets down to math on how many people that you can afford.  With the average annual salary in the US of about $50,000, then twenty people would be a cost of $1 million not considering burden.  You are not likely to be paying the average salary, but you already understand the significant cost of employees.

You quickly find though that you need more people to do more things to accelerate your growth.

The larger the size of your organization the more challenges you face.  Everything needs to rise to the next level of sophistication as the complexity increases, and in particular your leadership if you really want to grow.

It is very possible that you are comfortable letting your small business naturally evolve particularly if this is a lifestyle business for you.

With growth comes change and you may prefer to have things stay pretty much the same.

I have seen many small companies in the lower end of the Growth stage with this perspective.  Sometimes they even say they want to grow significantly but that is not really a driver for them.

There are others that you can easily spot that have a real passion to build their small business into something much more significant.

This blog is geared for small business owners/CEOs that fall into this latter mindset.

Growth Stage Elements

If you want to accelerate your growth, you need to follow good planning processes to first assess where you are at today. 

My 4 Stage Growth Model outlines various elements that should give you a good picture of your current position.

You will probably find that you are ahead on some, behind on others, and several others will describe your condition. 

Take a look at the elements below and go through this simple assessment of marking them red if you are behind, yellow if it is a good description, and green if you are more progressive.

If you are mostly red, then go back to my blog of February 3rd on Breaking out of the Development Stage for Small Businesses.  

If you are a mix of colors or primarily yellow, then this blog should give you some insight into moving into the next phase termed the Take-Off stage. 

If you are all green, then a future blog on the Take-Off stage advice will be coming.

Growth Stage

  • Revenues – Owner(s) are getting excited about the organization’s success. Traction with new customers or expanding activities with current customers is generating a growing revenue base. Typical revenues run above one million and below ten million.
  • Sustainability – Organization is approaching a going concern where owner is less critical to survival and growth. Revenues are providing cash to invest in business and improve operability and compete more effectively for new business.  Loss of key customers can prove devastating.
  • Business Focus/Planning – There is a fair amount of activity on generating new ideas for products/services/customers and more sophisticated approaches to attracting customers through marketing. Still planning is heavily oriented towards current year.  Planning still may be rather ad hoc lacking strategic focus synchronized with tactical game plans.  Planning framework including mission, vision, objectives, value propositions, target markets, strategic themes, competitor analysis, goal cascading, accountability, and so forth are often lacking.  Effort does not seem to match current rewards for many with the focus still on the here and now.
  • Organization – Other key players have evolved and perform critical roles.  Often, these players interact more, and teamwork is emerging.  Organization structure is still somewhat loose with not overly formal role definition. The size of the organization varies based on the nature of the product or service provided.  Often staff exceeds ten and but generally does not exceed fifty and almost always less than one hundred.  Contractors are used to avoid adding staff in many cases.  People can perform multiples functions.
  • Processes – Processes have emerged and there is a level of documentation and sometimes training.  Processes are often changing and adapting as more effective functioning progresses and customer feedback requires modifications to be made.
  • Target Market – Local market continues to dominate customer base in most cases.  Customer loyalty has emerged and identified as key customers with a retention focus.  Expenditures for sales and marketing have expanded significantly. Often there are some dedicated people to sales beyond owner and budgets for improved websites, marketing collateral, and marketing campaigns.
  • Value Proposition – Value proposition is adapting to customer needs and customer feedback.
  • Leadership – Owner and key players are beginning to think about how to motivate and retain employees. Decision making processes are receiving some scrutiny.  Delegation has emerged where owner feels comfortable with key players carrying out more defined roles.  Level of participation in decision making varies but generally still well controlled by owner.

What is your Vision?

I find that many small businesses have difficulty in describing a picture of what they want to look like in their next stage of progression. 

That is the beauty of the 4 Stage Growth Model in that it provides an overview picture. 

There are many things you have to do to get from your Growth stage to the Take-off stage. Knowing what you want to look like invigorates finding the pathways to achieve this next level of progression.

Take-off Stage

Below is the description of the Take-off stage using the same criteria above in the Growth stage.

  1. Revenues: Customers pulling business into extended and new offerings
  2. Sustainability: Going concern sellable if owner disengaged
  3. Business Focus/Planning: Extensive multi-year planning
  4. Organization: Matured with more structured roles and responsibilities exhibiting extensive teamwork
  5. Processes: Tuned as a competitive advantage
  6. Target Market: Tied to broader strategy, potentially new geographies/offerings.
  7. Value Proposition: Rigorously adapts to beat competition or take advantage of new opportunities.
  8. Leadership: Seen as key, owner seeks leadership development for self and management team.

Advise in reaching the Take-off Stage

So how do you move into the Take-off Stage?  Let me give you some of my mentoring advice on each of the key elements.

  • Revenues – If you are really taking off, you ought to see a doubling or more of your revenues in a two-to-three-year time frame.  That means you will have to make substantial progress on your marketing plan and sales effort.  Ensure your target market is clear as are your target customers. Then focus on brand advertising with communication channels that fit your customers’ appetite. It will take more than a website. Depending on your product or service, you should consider strategic selling with profiles of your customers and tactical game plans to grow revenues. For a broader customer base, sales funneling, and a fully functioning CRM system will be key.
  • Sustainability – Cash flow has become sufficient to operate in your current mode without sufficient concern.    However, you will likely need to take some more risk on investing to really grow the business. This is a good time to strengthen your bank credit lines/relationships and depending on your situation consider investors for major investments. It may be worthwhile to investigate acquiring companies that enhance your offering or customer breadth. While acquisitions/mergers can be challenging, they can provide leverage through economies of scale.
  • Business Focus/Planning – This is where you will really have to ramp up your efforts. Redefine your vision, mission, and long-term objectives with a broader mindset.  If you do not have clear company values, do so now as they will have a real impact on the company culture as you grow.  I also strongly encourage you to develop mid-term plans of critical success factors that move you on the path of reaching your vision and longer-term objectives. Look for help.  If you are here in Houston, I would really recommend you join a Silver Fox Advisor CEO Roundtable.  This is a great vehicle for seeing how other companies are trying to grow their businesses.  Many of the members of these CEO Roundtables are in the Growth Stage.  As your company breaks through five million in revenue and heads towards ten million, you may also want to consider an Advisory Board.  The Silver Fox Advisors can help you on that, particularly if you do a deep dive on your business challenges through their Fox Den business review. Like the CEO Roundtables, the Fox Den is pro bono.
  • Organization – Your company probably lacks definition on who does what, who is accountable, and how people work together to achieve your company’s objectives. You should really take a read of TRACTION: Get a Grip on Your Business by Gino Wickman. He does a good job in describing an Entrepreneurial Operating System (EOS) that brings the essentials of running your small company to a higher level of sophistication.  It uses the concepts I taught in my Corporate Strategy course for big businesses and translates them into a practical approach for small businesses.  It is highly beneficial for companies in the Growth Stage in particular.  My clients and CEO Roundtable members find it extremely beneficial.
  • Processes – If you are in the Growth Stage, then you have conquered to some degree putting processes in place that enable the business to operate efficient and effectively.  Do not underestimate the competitive power of having even more highly effective processes that describe the flow of how work gets done to produce your product or service better than your competition.  Processes need to be tied to your customer value proposition.  It is often an advantage to start with a clean whiteboard and rethink how a process can fulfill your value proposition better than your competitor. If you are trying to be the low-cost producer, then think out of the box on how to achieve that.  You can also look at your current processes and determine ways to simplify or eliminate steps.
  • Target Market – You can’t be everything to everyone.  In the early stages of your business, if a customer has a need, then you generally try to fulfill it as revenue is king.  Somewhat ironically, as you grow, the specificity of your customer becomes more targeted.  With small companies, this is also true of the geographic market.  In moving to Take-off, you need to rethink your target market and geography.  In many cases, expanding your target market translates into widening your geographic reach.  There are many repercussions in making this kind of move, particularly the need for investment dollars and organizational building/restructuring.
  • Value Proposition – In the Growth Stage, you have articulated your value proposition most likely on your website and marketing collateral.  The value proposition is framed to attract your target customer.  To move to the Take-off Stage, you need to think more strategically in terms of differentiating your company from the competition. You will need to do much more competitive analysis on their strengths and weaknesses in providing their described value proposition. Then, think strategically. Treacy and Wiersema in their book The Discipline of Market Leaders outlined three broad strategic approaches to capturing customers. While written in 1997, the thrust of these strategic approaches is still very applicable to most small businesses.  The Operational Excellence strategy is built on delivering the best total cost that is driven by operational competence.  The Product Leadership strategy is excelling in product differentiation to deliver the best product.  Finally, the Customer Intimacy strategy provides the best total solution to the customer driven by customer responsiveness and focus. My advice to clients is lead with one of these three strategies but be strong enough in the other two to ensure you win your targeted customer. 
  • Leadership – You have recognized the importance of leadership as your company has grown in the number of employees and organizational structure. The companies I know in the Take-off stage, their CEOs have a voracious appetite to improve their leadership capability and that of their management team.  I have written a whole series of blogs on the Silver Fox Advisors website to help you improve your leadership capability.  One in particular entitled Your Leadership Personal Profile has been very insightful for clients.  The methodology can also be used by the CEO to coach other members of their leadership team.  It provides significant insight for both the CEO and the coached.

Let me conclude by adding to the suggestion for you to reach out for help. 

Think of a personal advisor to mentor and coach you in transitioning your business.

The Silver Fox Advisors have essentially two types of Advisors. 

Those who have had significant careers in larger organizations and understand the complexities and need for best practices for a company to be successful. They have the insight to bring this perspective to small businesses.

The second type are those who have run small businesses and come with a deep understanding of their inner workings. They come with significant knowledge and insight to share.

Take a look at the Silver Fox Advisor website under Engage an Advisor and see if one of our Advisors fits your needs to help you grow into the Take-off Stage.

Also, take a look at the CEO Education Series videos on the SilverFox.org website that gives advice on many of these elements.

Contributed by Lane Sloan, former Shell CFO and Silver Fox Advisor.

Rapid Chaotic Change Requires Leadership Agility

Understanding Change

It is undeniable that change is accelerating and becoming more chaotic.  Leaders need to understand this change.  What is driving the change?  What are the implications on your leadership?

Technology is driving the change. I have put together a model to help you understand this change and high-level implications on your leadership. After exploring the model, we will highlight key thoughts on leadership agility to deal with this rapid and chaotic change in today’s business world.

Industrial Revolution

We are all familiar with the industrial revolution starting back in the mid-1700s.  New technology in the form of machines changed the manufacturing process of goods.  Machines substituted for human labor.

It brought about new forms of business enterprise because this change was mass production.  Organizations had to evolve to deal with the larger volume of transactions.

It was a new world.

Management by Exception

Back in the 1960s when I was taking organizational behavior courses the buzz word was “management by exception.”  You probably heard of “If it ain’t broke, don’t fix it.”

The assembly line was key to production.  You had to keep it going.

Change was not rampant.

Therefore, the focus was on control.

To lead these massive organizations with their hierarchies, the management style was traditionally autocratic.

Information Revolution

The technology of automation from the Industrial Revolution paved the wave for a transformation change in information processes with the advent of computers.  Software programs did the work of repetitive clerical type roles and more.

I joined Shell Oil in 1970 as one of those programmers to create this new software.

The new buzz word was “Change is the Constant.”

The rigidity of large bureaucratic organizations was being significantly impacted by the delayering and restructuring brought on by this information processing revolution.

More decisions had to be made to cope with the constant change.

Knowledge became more important with these constantly changing dynamics.

It made sense to have others participate in the decision-making process. 

Thus, the management style shifted more toward Participative.

Companies needed to keep up and not get lost in the change from their competitors.

The focus turned to adaption.

Second Wave of the Information Revolution

By 1965, an M.I.T. scientist developed a way of sending information from one computer to another that he called “packet switching.”

This has continued to evolve into today’s multi-faceted internet world.

It is not just social media.

You can type anything into your browser and get a voluminous amount of information in seconds.

This has been a big driver of the acceleration of change which creates instability.

Molecular Revolution

The hybrid DNA-RNA was created around 1960 as part of the early beginnings of the Biotechnology Revolution.

At the turn of the century, the world had advanced to the sequencing of the human genome.

On a similar front, the theory of manipulating atoms was around 1960.

Some twenty years later, the scanning tunneling microscope was developed that could see individual atoms.

Nanotechnology is real.

Together this has all led to the manipulation of cells and atoms.

Chaotic Change

Today, this Molecular Revolution has come to the forefront.

It is transforming the very fundamentals of living systems and materials.

In short, the molecular revolution is another key driver underpinning the chaos.

Fundamental Reprogramming

The ability to fundamentally reprogram things is opening people’s minds not constrained by traditional boundaries.

Management styles are shifting to visionaries.

Instead of being whipsawed by accelerating and chaotic change, visionaries are creating the future.

Ramifications on your Leadership Style

There are practical ramifications of today’s changing dynamics for every leader.

Those in fast cycle industries have been in this chaos for some time.

Slow cycle industries have sped up.

Life spans for companies have shortened.

Technology and imaginative minds are driving more technology and transformations that lead to even faster change and more chaos.

Leaders must be more agile and flexible to cope and prosper, but how do you do that?

What competencies and skills are needed to be an agile leader?

There has been some very thoughtful research on this question.  In this blog, I can only give you highlights and direct you to some of the better resources (in my opinion).

Leadership Agility

In 2007, Bill Joiner & Stephen Josephs wrote the book LEADERSHIP AGILITY Five Levels of Mastery For Anticipating and Initiating Change.

It is a rather sophisticated approach based on their notion of a Leadership Agility Compass outlining four competencies: Context Setting Agility, Stakeholder Agility, Creative Agility, and Self Leadership Agility. 

Using the compass, they then take you through their five levels of agility development: Expert, Achiever, Catalyst, Co-creator, and Synergist.

It has a lot of content. If you are really trying to enhance your leadership agility, it is worth a read.

Learning Agility

Korn Ferry has also done a lot of research on leadership agility outlined in their paper on The Organizational X Factor: Learning Agility.

They describe learning agility as made up of five factors: Self Awareness, Mental Agility, People Agility, Change Agility, and Results Agility. 

You can see some similar ideas to Joiner and Josephs’ Leadership Compass.

I like their addition of Results Agility described as delivering results in first time situations.

The authors, Mary Knight and Natalie Wong, contend that Learning Agility is a top predictor of high potential people. Companies with highly agile executives have 25% higher profit margins than their peers.

Core, Edge and Agility

Agility competencies are important.

It is also important to have a perspective in thinking about the context of this change in your day-to-day world. 

What is central to how the world should work for you to what are the dramatic implications of changing technologies?

In this respect, Lee, Hecht, and Harrison, a global leader in talent development, wrote an interesting paper on Core, Edge, and Agility.

My Silver Fox Advisor colleague, Doug Thorpe, has condensed their ideas and his own in an article on his website in 2018 entitled Leaders: There’s a New Way to Understand Change | Business Advisor, Mentor and Executive Coach | Doug Thorpe

It is certainly worth your read with the idea that agility helps manage the forces of what’s core and what is on the edge.

Set Direction Not Destination

Agility has certainly become a popular topic for organizational consultants in this 21st century.

 One concept I like from McKinsey’s March 2018 article of Leading with inner agility is “set direction not destination.”

This brings us back to my model introduced at the beginning of this blog on understanding change.

You not only have to have agility competencies, and a framework of thinking about agility as we have just discussed.

You also need to be the visionary highlighted in the model.

Ultimately, the management style of significance in this world of accelerating and chaotic change is a visionary leader.

Set directions with the agility to adjust destinations.

To paraphrase Jack Welch, control your own destiny or someone else will.

Contributed by Lane Sloan, former Shell CFO and Silver Fox Advisor.

personal profile

Your Leadership Personal Profile

Your Leadership Personal Profile

4 Inner Ps of Leadership

There are plenty of articles and books on leadership.  The reason being leadership is clearly critical for an organization’s success.  Many emphasize a particular angle or perspective in how you should lead. Instead, this blog provides a comprehensive straight forward approach to know your leadership self.  As Socrates said,  “know thyself.” And with this full picture, it is much easier to identify areas for improvement that will make a difference.

 In coaching mentees on how to improve their leadership. I use my 4 Inner Ps of Leadership framework: Purpose, Persuasions, Personality, and Proficiencies. The framework was introduced in my blog of October 29, 2020 on the Silver Fox Advisors website (See here).   This blog takes that 4 Inner Ps framework and provides a step-by-step approach to develop your Leadership Personal Profile.

Personal Purpose Section

We discussed Personal Purpose in my blog of October 13, 2020 where I briefly outlined a self-development approach.  In the profile exhibit below, that is the methodology taken.

Step 1

The first step is to rank the five characteristics of your Career Development from 1 to 5.  Likewise, in the Personal Development rank the three characteristics from 1 to 3. Finally, rank the three characteristics from Social Development from 1 to 3. 

For example, you might have Financial, Type of Role, Work Environment, Type of Career, and Type of Industry ranked in that order.  You do that for the other three categories.

You should now have a good sense of your priorities in the three main development areas.  Next, we need to determine your priorities across the developmental areas.

Step 2

Then compare the top ranked item from each development area against one another and choose the highest priority in your life. For example, if your top items from the three developmental areas are Financial, Mental, and Family. Then decide on which of these three is most important.  It may be Family.

From the development area chosen, move up the next highest ranked and compare that again against the other highest-ranking development areas.  In our example, you would compare your next social developmental area which might be Friends against Mental and Family to choose the highest of those three.

 You do that five times and place the results in the allotted space in rank order.

Now, you have a fairly good idea of what are the most important priorities in your life.

Step 3

 Then, think about your passions, what excites you, what you are living for, what makes you happy, what you are always talking about.  Couple that with the five priorities above and envision your personal future. 

Write that down as your Personal Vision Statement.  This is what you would like to see your life become in the future. A personal coach can help you think through this personal vision.

Persuasions Section

As you might recall from my earlier blog on the 4 Inner Ps of Leadership, Persuasions are deep rooted beliefs, feelings, needs, perceptions, values, and morals that influence how you behave and act in the “outer” world. They persuade you in acting a certain way and create a filter or bias in dealing with the “outer” world bringing judgment in how to behave. 

The profile exhibit below captures those key elements to illuminate underlying influences on your leadership behavior.

Step 1

Start by listing your top 3 core values such as honesty, tradition, integrity, diversity, positiveness, etc.

This is not intended to be a rigorous psychological assessment.  Instead, what really gets you really angry when someone behaves in a certain manner? What are you always thinking about in making personal decisions? What do you think of most when judging people’s character?

Step 2

Next, think through your key beliefs in people.  An example from Douglas Mc Gregor would be “people are self-motivated to work” or “people only work for the paycheck.”  Another might be “most people tell the truth.”  “People are only out for themselves,” and so forth.  You can get some insight from some personality and leadership assessment tests. Write your top two or three key beliefs about people in the box on beliefs.

Step 3

Similarly, think through your current driving needs.  Maslow’s hierarchy of needs may give you some ideas.  On ego, “I need to be recognized for my talent.”  At the social level, “I need a group of close friends.”  Another need might involve “I need more money to buy a house for my expanding family.” What is driving you? Only list your top 3.

Step 4

The broad perspective on life can be more challenging.  What is your overall outlook that biases you in looking at the world in a particular way? This can be spiritual. Or it might be something like the world is full of opportunities.  We are all just passing through life in a moment in time.  The world is a treacherous place.  I am along for the ride and want to have the most fun.  Again, whatever it is that shapes your broad perspective in approaching life.  It is helpful in talking this through with others.

I have a very forward-looking perspective with an open mind on what opportunities or challenges will come forward in the future.  It is important for me to recognize that others are focused on the past and the issues they faced.

This does not need to be complicated.  Write a simple statement of your perspective in the box provided.

Step 5

In the 4 Inner Ps of Leadership blog, we discussed the concept of a Johari window.  There was a window described as Façade where there are things known only to yourself.

It can be helpful in sharing some of these with others to increase your authenticity.

You might say I act very self-confident but underneath I am quite insecure. Or I put on the aura of being in control of a situation when I am unsure of what to do. I tell people that I am happy when I am terribly sad.  I shake people’s hand warmly, even when I do not like them.

Identify a couple to start opening more of yourself to others. List those in the Façade box.

Step 6

My coaching suggestion is to develop Guiding Principles that give people a deeper understanding of how they can expect you to behave.  These principles often emanate from your values, beliefs, and perspectives.

They should be shared with your people.

Here are two of mine to give you an idea.  “Treat people as you would like to be treated.”  Another is “I will believe you until proven wrong.”

Once you feel comfortable with your Guiding Principles, write the top two in the box provided.

Step 7

This all leads to a Character Statement.  The key is what is your moral compass?  How will you respond in challenging circumstances when your behavior matters most?

An example might be, “I am a trustworthy person that people can count on me doing what I say.”  You can get much more elaborate. 

If you put it down in writing, the Character Statement becomes something for you to live up to. This is vital in improving your leadership qualities.

Personality Section

We are getting on firm ground with personality.  Most people have a reasonable idea.  It can be expanded by personality tests, and other people’s feedback. The point is to get a high-level view that accurately describes you.

Step 1

It is best in the characteristics box to simply list words as opposed to phrases that represent you.  Various personality tests are available on-line from the internet.

 If you have taken the Myers Briggs test, then the choices would be from their four categories: extraversion or introversion, sensing or intuition, thinking or feeling, judging or perceiving.

 In the Big 5 Personality test it is degrees of extraversion, agreeableness, emotional stability, and openness to experience from low to high.

 In DISC, the four quadrants are Dominance, Influence, Steadiness, and Conscientiousness.  And so forth. 

You can see some of the overlap among these tests.

 Also include specific feedback from family, friends, and work colleagues that can be quite revealing.

Write these personality words in the Characteristics box.

Step 2

The Leadership Style component is an area of significant interest in coaching you.

 Leadership style can have an incredibly significant impact on the performance of your followers.  This was discussed in my blog of December 3, 2020 on The People Side of Leadership.

Hogan Assessment

 The Hogan Assessment, although somewhat costly for a small business owner/CEO, is a very comprehensive and powerful tool addressing many areas that influence your workplace behaviors and leadership style.  In my opinion, it is the most comprehensive and best assessment on an overall leadership profile covering in a different format Persuasions, Personality, and Proficiencies.

Their personality test focuses on seven areas: Adjustment; Ambition; Sociability; Interpersonal Sensitivity; Prudence; Inquisitive and Learning Approach.  If you take their assessment, this would-be key input into the Characteristics box.

The Hogan Assessment also has a test on Motives, Values, Preference Inventory that focuses on the Persuasions section. Taking their test would provide significant input into that section.

Hogan also has a cognitive ability section which looks at judgment and reasoning.  The judgment can identify the “dark” side of your personality that in my 4 inner Ps Leadership blog can represent fatal flaws. 

This test also provides significant input on leadership strengths and weakness that is key input into the Proficiencies section coming up.

Hogan does provide detailed analysis of your leadership style.

Broader Frameworks

 As a coach, I also like some of the broader frameworks.  Our aim is to get a personal profile not a detailed personality analysis as provided in Hogan or Birkman tests.  However, their key findings are useful input.

In the Managerial Grid, you assess your concern for People and your concern for Performance from low to high.

Likert’s model outlined in my previous blog on the 4 Inner Ps of Leadership is extremely useful. His four styles are Exploitive Authoritarian, Benevolent Authoritarian, Consultative, and Participative Group.

Other leadership approaches such as Servant Leadership, Authentic Leader and so forth are good for you to understand your inner leadership self.

I also highly recommend taking an Emotional IQ test.  Include your assessment in this Leadership Style segment.

It is also critical to get others views of your style by asking people: how you get things done? how you work with people?  Feedback from work colleagues, family, friends, and your coach provide a different and important perspective.

A personal coach can be extremely helpful in providing an assessment of your leadership style.

Take all this input and summarize in several key words and statements.

Step 3

Besides knowing more about yourself, you will have opportunities for improvement. 

For example, you may want to take on the bigger strategy of restructuring your leadership style.  You will need real passion to do so.  This can be a challenging undertaking.

Also, recognize your leadership style matures over time.

In my opinion, Situational Leadership is the strongest style once you have reached a high level of leadership competency.  Here you adjust to reflect the environmental conditions you face based on the deeper understanding of various leadership approaches.

 Tactically, you may find something like you tend to be less sensitive to people’s feelings.  In this case, you would want to listen more carefully.  How are they expressing themselves?  What is driving their behavior?  

There may be fatal flaws you have to correct to be an effective leader. A fatal flaw can be as simple as you constantly snickering when people are talking.  And so forth.

There is no perfect leadership style.  Build primarily on improving yourself, not becoming someone else.

Write down what you want to do now in the last segment.  Update this segment In your profile as you progress.

Proficiencies Section

In my coaching sessions, we spend a good deal of time on Proficiencies.

 As you can see in the exhibit that follows, these proficiencies are broken down into the following:

1) Traits (using Northouse model from his eighth edition book on Leadership Northouse Theory and Practice)

2)  Knowledge of Business (in general),

3)  Industry Knowledge

4) Technical Knowledge

5)   Leadership Strengths with a focus on Strengths Based Leadership.

6.)  Leadership Brand on how you want to be known.

Step 1

In the Leadership Traits box, this is a self-assessment not a test taking exercise.


 You have a fairly good idea on your cognitive ability.  Simply assess from low to high.

 On the other hand, you may have remembered your IQ score.

If you are around 100, then medium would be the choice.

My view is above 115 could be considered high for this purpose.

Other traits

Similarly, how do you view your self-confidence, determination, integrity, and sociability?  This is your view and how others perceive you.

 Low is not typical for intelligence and integrity. The rest varies by individual. Be honest in your assessment. You will only be deceiving yourself as Traits are generally stable.

Step 2

Business knowledge not surprisingly relates to what is taught in business schools.  These are the underpinning functions in running a business. 

This self-assessment should reflect your knowledge of the current state of the art.  What is being taught today. And what are current discussion topics in business circles. 

For example, I have a business major in marketing and a master’s degree with a lot of IT.  In my career, I started as a computer programmer and was once the head of Shell Oil’s IT organization.  But today, both marketing and IT world would rank only medium in my mind.

Rank yourself from low to high on the business categories in the business knowledge box.

Step 3

Industry knowledge relates to experience as well as expertise.

What are the key drivers to success in this industry? This would include your knowledge of the competition’s offerings and value propositions.  The industry dynamics such as ease of entrance, competitiveness, progressiveness, cycle time, and so forth.

Industry knowledge is not the centerpiece of leadership; yet without sufficient knowledge it can become difficult to gain followers.

Write a couple of key statements in the Industry Knowledge box.

Step 4

Technical knowledge starts with understanding in sufficient detail your product or service. That is, how it works and what might be unique.

More broadly, technical knowledge includes science-based backgrounds such as engineering, physics, etc.  If the product or service depends on a science-based background that should be highlighted.

Similarly, specialized knowledge such as being a CPA, a lawyer, a technician, computer programmer, etc. 

To what degree do you keep up with technology trends? 

This is not a dissertation, but headliners.

Capture a few headliners in the Technical Knowledge segment.

Step 5

The next box on Leadership Strengths is key.

 As mentioned in my blog describing the 4 Inner Ps of Leadership, my approach is to start with Rath and Conchie’s Strength Finders 2.0 Strength Based Leadership test.

 It is not an expensive book and has an internet test that provides your top 5 strengths in the categories of Executing, Influencing, Relationship Building, and Strategic Thinking.

Any additional insights from your personality tests, Hogan assessment, other’s feedback should be included. 

Again, make these headliners to keep it simple.

Put them in the Leadership Strengths box.

Step 6

I have found it is extremely helpful for the leader to develop a desired brand statement.

Just like companies have a brand that influences their reputation, leaders do to whether they recognize it or not. 

Managing your leadership brand starts with developing your brand statement.  Your leadership strengths will be a key determinant.

For example, my leadership brand is “a strategic visionary who gets things done.”

 That rests on 3 of my strengths from StrengthFinders falling under Strategic Thinking. The other two fall under Execution.  Plus, all my feedback including LinkedIn point towards my strategic skills.

Think about this carefully. You may want others to review as well as your coach.

 Then formulate your Brand Statement and put in the designated box.

Step 7

Improving your leadership really comes to the forefront under Proficiencies. 

You will find some key areas that you want to improve. 

If there are clear deficiencies, identify what steps need to be taken.

Most often, it is building synergies around your strengths.

These lead into your brand.


The beauty of putting your Leadership Personal Profile together is you will know yourself better.

Knowing yourself better provides clarity on what you can work on to improve your leadership.

While there many components in the overall profile, my goal has been to make this practical and straight forward. It is not a rigorous academic model nor a complicated personality test.

 I have designed it so that you can sketch out your profile on your own.  Treat it as an evergreen document as you progress.

If you are a small business owner or CEO, this tool can be incredibly useful as your company moves through the 4 growth stages described in my blog of October 8, 2020.  In that model, leadership becomes more and more important as you move up the growth stages. 

A Silver Fox Advisor can help you on this journey.


Contributed by Lane Sloan, former Shell CFO and Silver Fox Advisor.

Breaking Out of the Development Stage for Small Business

According to the most recent NAICS Association data, there are roughly 14 ½ million small business with annual sales of less than one million dollars in the United States. They almost all have less than ten employees.

The Chamber of Commerce indicates there are about 400,000 new businesses started each year. Of these, about 20% go under in this first year. The reason most often given was lack of funding followed by poor planning and then bad management.

In my 4 Stage Growth Model outlined in the October 8, 2020 blog, the Development Stage’s criterion was those small companies with revenues of less than one million. The stage is not built around sole proprietors but for those companies desiring to substantially grow their revenues which involves adding employees.

Using this 4 Stage Growth Model framework, this blog will share some thoughts on how to break out of this Development Stage. 

These are typical characteristics of small businesses who have recently launched to those who are struggling to break out of this early stage.

Development Stage Characteristics

  1. Revenues
    Cash inflow from revenues are not robust and less than one million.
  2. Sustainability
    Managing cash to survive is critical for sustainability. Chasing new customers and constraining expenses are dominant management features.
  3. Business Focus/Planning
    Day to day operations dominate the owner and any workers activities. Planning is generally no greater than a year and very ad hoc.
  4. Organization
    Owner controls decision making most of the time. Staff is limited often less than ten as revenues will not sustain greater numbers.
  5. Processes
    Operational sophistication is not strong with processes not well defined.
  6. Target Market
    Unless a strong business idea backed by venture capital or significant angel funding, the customer base is generally local.
  7. Value Proposition
    Owner’s business idea drives offering to customer.
  8. Leadership
    Leadership is not typically a discussion point as distracted by daily business. There are few employees.

Where do you want to take the business?

This is the first question to ask yourself in this Development Stage.

If your answer to this question is you are a sole proprietor and quite comfortable continuing down this path, then no need to read further. You are happy and fulfilling your personal career aspirations.

For the rest, one way to think about this question of where you want to take the business is to ponder your exit plan.  That helps establish the long-term vision.

Maybe this is a family business, and you want to pass it along to future generations stronger and better positioned than it is today.  That is a viable exit plan because you recognize that if you aren’t growing your dying.

 Others want to develop the business through their career to be able to sell it for their retirement funds. My only caution with this vision is you need to build a sellable business.

Some want to take the business as far as it will go with the aspirations it becomes a meaningfully sized business with significant revenue and profitability.  The exit plan may be to sell when a certain valuation is achieved, or to continue to be engaged whatever it morphs into becoming.

Then, there are those with great ambitions of building an empire which they want to control to the grave.

Obviously, there are many scenarios.  What do you want?

As soon as that exit plan is clearer in your mind, the next question becomes how do I get there?

The answer from most every business advisor is you will need to plan a path.

Take time to plan

If you have recently launched your business, then hopefully you have put together a business plan.

 Many people just jump into starting a business without thinking through the essential elements necessary for ongoing success which is why so many go under in their first year as the Chamber of Commerce points out.

Even those who have made it through the first year, often continue to float sideways without any meaningful growth. Many will die before their fifth year.

My experience is these small businesses spend all their time fighting the daily fires trying to survive with little time for planning.

If you are in this position unless you set some meaningful time to plan, then the business will just keep floating sideways.

What are elements of the plan for breaking out?

My reason for developing the 4 Stage Growth Model for small businesses is to give a roadmap of elements to aspire to in the shorter term.

Thus, the objective becomes moving into the Growth Stage.

Here is a generalized description following the same elements outlined in the Development Stage with new characteristics.

Growth Stage

  1. Revenues
    Owner(s) are getting excited about the organization’s success. Traction with new customers or expanding activities with current customers is generating a growing revenue base. Typical revenues run above one million and below ten million.
  2. Sustainability
    Organization is approaching a going concern where owner is less critical to survival and growth. Revenues are providing cash to invest in business and improve operability and compete more effectively for new business. Loss of key customers can prove devastating.
  3. Business Focus/Planning
    There is a fair amount of activity on generating new ideas for products/services/customers and more sophisticated approaches to attracting customers through marketing. Still planning is heavily oriented towards current year. Planning still may be rather ad hoc lacking strategic focus synchronized with tactical game plans. Planning framework including mission, vision, objectives, value propositions, target markets, strategic themes, competitor analysis, goal cascading, accountability, and so forth are often lacking. Effort does not seem to match current rewards for many with the focus still on the here and now.
  4. Organization
    Other key players have evolved and perform critical roles. Often, these players interact more, and teamwork is emerging. Organization structure is still somewhat loose with not overly formal role definition. The size of the organization varies based on the nature of the product or service provided. Often staff exceeds ten and but generally does not exceed fifty and almost always less than one hundred. Contractors are used to avoid adding staff in many cases. People can perform multiples functions.
  5. Processes
    Processes have emerged and there is a level of documentation and sometimes training. Processes are often changing and adapting as more effective functioning progresses and customer feedback requires modifications to be made.
  6. Target Market
    Local market continues to dominate customer base in most cases. Customer loyalty has emerged and identified as key customers with a retention focus. Expenditures for sales and marketing have expanded significantly. Often there are some dedicated people to sales beyond owner and budgets for improved web sites, marketing collateral, and marketing campaigns.
  7. Value Proposition
    Value proposition is adapting to customer needs and customer feedback.
  8. Leadership
    Owner and key players are beginning to think about how to motivate and retain employees. Decision making processes are receiving some scrutiny. Delegation has emerged where owner feels comfortable with key players carrying out more defined roles. Level of participation in decision making varies but generally still well controlled by owner.

Not sure this Growth Stage can be achieved?

If you face the dilemma of breaking out, you may be bewildered on how to move into this Growth Stage.

Here are two recommendations for you to consider if you are willing to listen to others.

First, look for a business advisor.

The association I belong to, The Silver Fox Advisors, specifically targets small businesses.

This is our mission.

“Our association of proven business leaders serves the needs of small business owners, CEOs and entrepreneurs in the Greater Houston area.  We help leaders establish, grow, and prosper their business by sharing our collective wisdom through robust service offerings.

The second recommendation is for you to consider their service offerings.

I particularly recommend their CEO Roundtables that are free of charge.

This will provide you an advisory type board of other small business owners and CEOs trying to grow their businesses too.

A Silver Fox Advisor participates in these monthly meetings.

You should also consider our CEO Education series as well as our Lunch & Learn programs.

If this interest you, go to our website Silver Fox Advisors for more details. As we like to say, Growing your business can be challenging.  You don’t have to go it alone.

Contributed by Lane Sloan, former Shell CFO and Silver Fox Advisor.

Power: The Interwoven Fabric of Leadership

Power: A Dirty Word?

Rosabeth Moss Kanter once wrote that “Power is America’s last dirty word. It is easier to talk about money, and much easier to talk about sex, than it is to talk about power.”[i]

Power and politics are often equated but they are not the same thing although deeply related.

Politics often relates to the influencing strategies and tactics within governments, which are usually quite contentious particularly at the federal level today.

In the American democratic construct, there are two opposing sides trying to gain the upper hand to impose their point of view through vehicles not always healthy for the nation. In many respects, power by its association with politics remains a very dirty word in this 21st century.

Of course, there are still lots of power plays in many organizational settings that are detrimental perpetuating this sinister view of people who use power.

Power: Interwoven Fabric of Leadership

All through my executive career, I always felt that power was this negative dark force never really grasping that it was the interwoven fabric of leadership.

This latter view did not come clear to me until my role change into an executive professor teaching strategic leadership where I had to study more in depth the role of power in leadership.

My intent in this blog is to bring forward some of those insights such that power is seen in a more objective light out in the open. Understanding power as this interwoven fabric of leadership enables you to elevate your leadership capability to a higher level of sophistication.

Now in my role as a leadership mentor, I can really see how the lack of understanding of power often reduces the overall effectiveness of a leader.

There was a fair amount written on power when organizations were more hierarchical and leaders more autocratic. But power does not go away just because today’s organizational structures are flatter. It is worth a deeper understanding.

The Flow of Organizational Energy

My view is that power controls the flow of energy in an entity whether a work group, large organization, company, government or even a society.

With this perspective, it becomes clear that power is the interwoven fabric of leadership since the essence of leadership involves influencing people to follow a direction or path that will create a flow of organizational energy.

On this positive side, the levers of power can unleash motivation, enhance productivity, and increase value generation.

Zaleznik understood that “Leadership inevitably requires using power to influence thoughts and actions of people.”[ii]

What is important for a leader is to recognize that power can expand this flow of energy or reduce the flow. It can gather momentum in a direction, or different flows of energy can run smack dab into each other diffusing and even stopping the overall flow.

Thus, power is really a neutral concept. As Gardner points out, “The significant questions are: What do they use to gain it? How do they exercise it? To what ends do they exercise it?”[iii]

The key for a leader is understanding the various controls of organizational energy. They really break down into two categories: formal and informal.

Formal Power

In a business setting, the formal controls are the legitimate authorities the organization bestows upon a position such as supervisor, manager, or executive. For a small business, the power resides primarily with the owner or CEO.

In the end of the day, these authorities provide the ability to reward or punish.

While the formal control mechanisms are much more direct, the nature of the influence tends to be extrinsic. This translates into focusing on lower-level needs such as security in the sense of keeping one’s job.

Positive rewards can reach higher level needs including social positioning and ego.

Unfortunately, often the flow of energy in formal controls stems from obedience rather than a natural flow driven by belief in the directional pathway.

The solution for positive energy is to get people are engaged and believe in the vision.

Informal Power

Informal control mechanisms derive from the compelling attributes of an advocated direction.

The literature gets into concepts like referent power where the leader is trusted and respected, or associate power based upon who you know and who knows you.

Expert power can be very compelling as it is based on highly valued knowledge and skills. A derivative of expert is the power of one’s vision and ideas.

An important point that I often argue is that a leader does not have to be a manager (i.e. the CEO for a small business).

A manager has the formal control mechanisms, but anyone can wield informal control mechanisms regardless of position in the organization.

Understanding Power

As Rosabeth Moss Kanter has pointed out there are various strategies to enhance one’s informal influence.

The leader needs to be there and have a presence which leads to the power of speaking out, putting one’s ideas into the organizational conversation.

Power comes through persistence.

Power also comes through partnering.

This last point is quite potent. Power is not isolated to an individual.

Teams, coalitions, cliques, large subgroups, etc. can exert substantial control over the flow of energy in an organization.

Leaders who do not think in terms of the organization’s energy flow tend to rely on themselves often to the organization’s detriment.

Informal power often comes from thoughtfully influencing and organizing teams, coalitions, and so forth. As mentioned previously, referent power is a source of forming these coalitions.

Dealing with Conflict

The sophisticated leader needs to understand that any organization can have conflicts relative to the flow of energy.

The leader needs to think through the different styles of addressing these conflicts. Too often the unsophisticated leader ends up avoiding the conflict seeing it as that dark force.

In such cases, those with significant formal authorities often win through domination.

Sometimes that is needed to right the ship, but often domination builds pent up negative organizational energy that has lasting impact.

Compromise has its place particularly to minimize loses. Sometimes the fight is not beneficial and that can lead to accommodation. In this case, the more powerful style is pursuing collaboration seeking a solution of mutual benefit.

Situation is Key

Many times, the opportunity is to build up the energy flow of the organization.

A leader should intelligently consider the different power control options given the situation.

All the basics of leadership come into play such as understanding people’s needs and the value proposition the leader is offering them. What are the potential outcomes and which choices will enhance the overall flow of organizational energy?

Thus, as Pfeffer points out “An important source of power is the match between style, skill, and capacities, and what is required by the situation.”[iv]

This leads us to reinforce strength-based leadership that we have discussed in prior blogs. Leadership can and should flow to where the strengths reside to enhance this energy flow.

Maxwell advocates that “People naturally follow leaders stronger than themselves.”[v]

The important point here is that those possessing leadership strengths change based on the situation. For those with formal authorities, delegation becomes an effective control tool to tap into these strengths within his/her team.

Having this deeper understanding of power can truly enhance the effectiveness of a leader.

Power Can Be Destructive

At the same time, a lack of understanding of the appropriate use of power can impede organizational effectiveness. When power is used in a narcissistic fashion it destroys organizational energy.

The leader with formal controls must address devious tactics seen under his/her purview.

Infighting can lead to very sinister behavior like taking no prisoners.

Those who try to divide and conquer also destroy organizational energy. It can be as subtle as excluding the opposition in the organizational discussions.

Certainly, any leader that is destroying organization effectiveness for their own personal gain must be dealt with quickly.

Continuous Learning

Learning is always critical for a leader. Ultimately, one can develop individual attributes that will become sources of power.

Certainly, focus is a key attribute that leads to developing potent directional pathways. Not everyone will agree with your direction, so having a sensitivity to others provides a foundation to tolerate conflict and effectively deal with it.

This will require some flexibility that in many cases may require submerging one’s ego and getting along. As previously noted, persistence can be quite effective, which requires energy and physical stamina.[vi]

Leaders are distinguished by their desire to create and build something of value with a heartfelt interest in helping others. It is a continuous process of learning and acting.

In summary, power is the interwoven fabric that enables the leader to influence and build the necessary organizational energy to create and build value for the various constituencies.

You should embrace power being fully cognizant that used unwisely it can be abusive to your organization.

[i] Kanter, “Power Failure in Management Circuits,” Harvard Business Review, (July-August 1979), p. 65.

[ii] Zaleznik, “Managers and Leaders: Are they really different?”  Harvard Business Review (March-April 1992) pp. 126

[iii] Gardner, On Leadership, New York Free Press, 1990, pp 55-57

[iv] Pfeffer, Managing with Power: Politics and Influence in Organizations, Harvard Business School Press, 1992, p. 77.

[v] Maxwell, The 21 Irrefutable Laws of Leadership:  Follow them and People will follow You, Nelson Press, 1998.

[vi] Pfeffer, Managing with Power: Politics and Influence in Organizations, Harvard Business School Press, 1992, pp. 165-185.

Contributed by Lane Sloan, former Shell CFO and Silver Fox Advisor.