Lateral Leadership: A New Approach to Leadership in Today’s Evolving Corporate Environment

Introduction:

In an era of globalization and heightened competition, forward-thinking organizations and their employees operate in an environment of constant change. They search relentlessly for efficiency gains and competitive advantage. Although this new order has produced important innovations – e.g. employee inputs are often reinforced by contractors, competitors are sometimes partners, and teams can extend beyond corporate boundaries – it has left many employees struggling to understand how to operate effectively in these new contexts and how to navigate their roles. Traditional approaches to leadership fail to arm employees with the tools they need to optimize outcomes in this environment.

We developed the concept of Lateral Leadership from our work in the field of high-stakes negotiation. It equips employees with the frameworks and skills they need to operate successfully in this less structured environment, where traditional notions of hierarchical leadership are no longer as effective, and where the use of influence, not control, allows leaders to optimize outcomes with colleagues across departments, teams, divisions, and organizations.

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Why Traditional Ideas on Leadership Are No Longer Sufficient

 Today’s Evolving Corporate Environments… In many of today’s more progressive corporate environments, the walls have come down. Organizational structures are ‘flatter’. Reporting lines are, if no longer matrixed, certainly not purely vertical. Nor are they single-tracked. Furthermore, the traditional boundaries separating employees, contractors, consultants, partners, suppliers and customers are more blurred than ever. If it sounds chaotic, it’s because forward-thinking companies are constantly challenging the effectiveness of their organizations. They are pushing to find ways to enhance communication, motivation, workplace satisfaction and productivity. The norms of old – static organizational structures, vertical reporting lines, arms-length relationships with other organizations, upward flow of information and downward flow of decisions and directives – have been abandoned in favor of leaner, more direct flows of information and decision-making. The priority for senior management is the relentless optimization of the value-creation process, from every contributor and in every interaction. The new corporate culture is therefore constantly evolving in support of that optimization. And though a consensus has not emerged on the ‘best’ corporate culture, it is clear that the traditional way of doing business is changing.

…Have a Profound Impact On Employees…  Like the game of Whack-A Mole, one solution begets another challenge. As companies abandon traditional structures in favor of flexibility, speed, and nimbleness, employees must figure out the new norms, often without assistance or guidance. How does one navigate a constantly changing landscape? What is the ‘right’ way to communicate with others in an organizational culture that doesn’t have decades of protocol on which to rely? Senior managers and human resource professionals are realizing that their employees – especially those in leadership roles – need to be able to work seamlessly across departments, teams, divisions and organizations. They need to be able to function independently, without detailed direction and oversight, while at the same time supporting the overall needs and objectives of the organization. The new, ‘independent’ leader needs more tools in her bag. She needs to be able to lead, influence, and work effectively with other people in order to get things done, across departments, teams, divisions and organizations.

…and Render Traditional Notions of Leadership Obsolete. Traditional concepts of leadership have focused on the leader being in a position of authority. This authority – whether organizational, financial, physical, or intellectual in nature – implies that leaders have control over the other party or parties and that it is the leader’s responsibility to develop the ‘ideas’ and to drive them down through the organization so as to achieve successful implementation. This theory of ‘hierarchical leadership’ is antithetical to the way corporations are managed today. To the extent there has been innovation in hierarchical leadership theory and techniques, it has centered on how to convey ideas such that other parties are motivated to ‘own’ them, either through empowerment, the use of more palatable language, the use of more explicit directives, or other similar enhancements. These modest enhancements notwithstanding, the traditional, hierarchical notion of leadership no longer serves the needs of the organization.

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If Old Ideas on Leadership Are No Longer Effective, What Is? 

Why Hierarchical Leadership Is Less Effective… Hierarchical leadership relies on the leader for ideas and decisions. The leader then attempts to exert control over subordinates, guiding and coordinating their implementation of her decisions. Our work, informed by our 30-year history as a leader in the field of negotiation theory and practice, has revealed that in day-to-day decisions and high-stakes negotiations alike, the notion of ‘control’ is a fallacy: one person cannot control another, at least not in the long-term.

Further, as Galinski and Schweitzer discuss in Friend & Foe, hierarchies can inhibit group or team performance in environments where the task is more “human”; i.e. where learning, unpredictability, and cognitive complexity are more central to the task, such as in dynamic and changing environments. This is because these types of tasks require the input of a broad cross-section of contributors at multiple levels in order to produce the best thinking and optimal results. If this sounds familiar, it is because this is precisely the nature of today’s corporate environments; whereas hierarchical leadership relies on the leader for ideas and decisions, contemporary companies want ideas to come from and decisions to be made by contributors at every level, both inside and outside the corporate walls.

…Whereas Lateral Leadership Is More Effective. To thrive in this new corporate environment, leaders must possess the skills to elicit critical thinking and decision-making from subordinates, colleagues and business partners. They must operate effectively in all directions, not just downward. In particular, subordinates and business collaborators outside the corporation’s walls must be made partners in problem-solving and decision-making, not just conduits for decision implementation. Therefore, the focus of developing leadership talent should be on enhancing people’s ability to influence, persuade, and elicit constructive contributions from others at all levels. To accomplish this, leaders need a framework and the tools that allow them to plan interactions more carefully, bring others into the problem-solving process, and be more nimble in real-time situations: Lateral Leadership.

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Lateral Leadership

Our concept of Lateral Leadership is informed by the work of our colleague, Roger Fisher, and colleagues at The Harvard Negotiation Project, as well as our work in the fields of negotiation, communication and influence.

There are several important challenges that Lateral Leadership addresses:

Challenge #1: Identifying new problems

• How do leaders identify new challenges not as new instances of old problems but rather as the new problems they may be?
• How do leaders see that a problem may require a different solution rather than the same old solutions that may no longer apply or be effective?

Lateral Leadership is about:

• Developing a strategic mindset around problem-identification and -resolution. In a traditional, top-down organization, the leader is expected to have the answers: information flows upward; decisions flow back down. Today’s leaders realize that problems are most effectively understood with the input of a healthy cross-section of stakeholders, all of whom are vested in obtaining an optimal outcome. Developing a common sense of mission around problem-resolution can yield a more comprehensive understanding of the problem and its impacts across an extended organization.
• Exploring multiple avenues of resolution. The best solutions (or kernels of solutions) to problems can come from stakeholders at any level; this may include subordinates, members of other departments and/or representatives from other organizations. In many cases, the implication is that the flow of information and the collaborative relationships are lateral or diagonal, not necessarily vertical. The leader who motivates and elicits the best ideas from this diverse constituency will drive optimal results.

CMPartners Case Study #1: A leading worldwide aerospace company was experiencing a supply chain crisis just prior to the launch of a major new product, resulting in losses of $5 million per day. Instead of coercing the supplier with its financial muscle, threatening a lawsuit, firing the supply chain manager or switching to another supplier, the aerospace company convened a multi-supplier dialogue – up and down the supply chain. This dialogue exposed not only the root cause of that problem but also numerous other issues that could have derailed the project. All of the issues were promptly addressed. Only by hearing all the voices around the table in a cooperative, non-coercive environment were they able to surface the problems and agree to solutions that all parties supported. As a result, the crisis was resolved far more quickly (and less expensively) than it would have been otherwise, and additional crises were averted.

Challenge #2: Addressing increasingly complex problems

• How do leaders address increasingly complex problems?
• What are best practices for problem-solving?

Lateral Leadership is about:

• Not accepting the game as a given. The most effective leaders are entrepreneurial in their approach to challenges. They look for innovative insights and ideas that can solve complex and new problems. Lateral Leaders are skilled at reframing problems into value-generative discussions. They are able to shift mindsets from obstacles to possibilities and encourage those around them to work off of each other’s ideas in order to develop a more comprehensive understanding of the problem and a more expansive consideration of solutions.
• A willingness and a competency to develop and explore problem-solving options. Leaders should brainstorm all feasible options before committing to a solution path. Yet they can only develop problem-solving options by first gaining a deep, nuanced understanding of each party’s interests. What drives their actions and positions? What are their underlying goals and concerns? The ability to elicit information from others, especially when they are skeptical of your motives, is a critical skill set.
• Going slow to go fast. The temptation, particularly in a corporate environment where demands are abundant and time is limited, is often to find ‘the solution’ quickly and move on to put out the next fire. Lateral Leaders understand that slowing down initially – to be certain multiple voices are heard, interests are clearly understood, and all options are considered – can produce more optimal results, establish a culture of inclusion, and allow for faster decision-making in the future.

CMPartners Case Study #2: Two major national ice cream brands decided to engage in a discussion to see if they could minimize excess capacity on their distribution trucks in Manhattan, an inefficiency estimated to cost them $3 million per year. Through a principled problem-solving process, which included a candid discussion of each parties’ interests, a thorough exploration of all options available, and a rigorous vetting against widely-accepted benchmarks, the parties developed solution that was far broader in scope and more valuable than what had been anticipated initially; the outcome was a nationwide distribution agreement that saved them $97 million annually.

Challenge #3: Creating a learning organization

• How can leaders encourage a culture of learning?
• Is it possible to lead and learn at the same time?

Lateral leadership is about:

• Developing a ‘learning stance’. The ability to tease-out interests or to generate options, especially from a recalcitrant party, can be difficult, time-consuming work. It requires commitment and skill, as well as a backdrop of trust and genuine, open communication.
• Remaining in that learning stance. A leader must maintain the learning stance in order to become a model for others. It is, in a sense, leading by example. It is a way of conducting oneself at all times and in every interaction, not a discrete step in the process.
• Adopting a curiosity mindset. The relentless drive for efficiency and results can tempt leaders to exert power in situations where disagreements or alternate viewpoints are slowing progress. Yet by forcing solutions onto others, a leader can drive sub-optimal results and fail to achieve unanimity of purpose within the team or organization. By choosing instead to approach difference and obstacles with a curiosity mindset, the leader can better understand and address the root causes of the impediments. She can also learn about innovative pathways not previously considered but that result in more lasting solutions.
• Engaging in genuine inquiry and active listening. Genuine inquiry allows others the opportunity to be heard, and it empowers the leader by allowing her to learn. By demonstrating to others the importance of asking for their ideas and by listening carefully and probing for underlying interests, the leader sends a powerful message about the benefits of understanding others’ viewpoints. It sets the stage for deeper two-way communication and understanding. Ultimately, it results in a better-functioning team or organization.

CMPartners Case Study #3: A leading financial services firm believed its core services were becoming commoditized. The firm perceived the need to move from a transactional sales approach to an advisory approach in order to differentiate itself from its competitors. CMPartners identified current mindsets and capabilities within the organization and those required to meet objectives. Based on this diagnosis, CMPartners designed a learning architecture incorporating multiple “best in class” providers. The training was delivered both in the classroom and on-the-job. We also provided advice on the redesign of organizational systems and structures to support this culture change initiative. The company reported incremental new business sales of $12M in the first twelve months.

Challenge #4: Building trust

• How does one develop a relationship of trust when efficiency is paramount and time-constraints are a countervailing force?
• How does one open communication across departments or organizations when the other party is skeptical of how the information they share will be used?
• How does one overcome institutional biases or suspicions?

Lateral Leadership is about:

• Earning the trust of others through purposeful actions (Ury, W. Getting Past Noand Fisher, R. and Shapiro, D. Beyond Reason) such as:

o   Active listening

o   Acknowledging the feelings and perspectives of others

o   Validation of other viewpoints

o   Establishing a transparent process

o   Separating the people from the problems

However, because it can be time-consuming, challenging and frustrating, many leaders do not follow through effectively. It can take some patience, skill and determination for a leader to build trust in the face of these obstacles.

• Creating an environment that allows all stakeholders to contribute productively. Amy Edmundson of Harvard Business School describes an environment of team ‘psychological safety’. This is an environment where all members of a group or team, including those with less authority, visibility, or confidence, can feel safe from threat or embarrassment while engaging in interpersonal risk-taking (Edmundson, A Psychological Safety and Learning Behavior in Work Teams). Interpersonal risk-taking facilitates learning behavior and therefore creates a fertile environment for trust-building.

Purposeful actions such as those in bullet-points above are productive in establishing an environment of psychological safety and should be a priority for an effective leader.

CMPartners Case Study #4: In the aftermath of the 2008 Financial Crisis, wealth advisors at a global Wall Street investment bank struggled to engage in productive conversations with clients concerned about their portfolios’ poor performance. The bank trained its wealth advisors in empathetic listening and enhanced communication skills, holding each of them responsible for developing the ability to hear the clients’ concerns, convey an understanding of them, and respond with information that built clients’ confidence that the wealth managers were taking actionable steps to address those concerns. Following the training, managers at the bank reported a dramatic decline in client complaints and in closed accounts.

Challenge #5: Instilling these traits in others

• How do successful leaders instill positive attributes in team members they do not control?
• How can they exert influence in such scenarios?
• How can they manage teammates who do not share this approach but instead enter the process with a ‘the-pie-is-fixed’ mindset?

Lateral Leadership is about

• Team-building. In traditional organizations, team-building is related to one’s department or unit (i.e. one’s direct reports). But as traditional organizational constructs have evolved, the concepts of teams and teamwork have expanded to include a broader suite of potential teammates. Lateral Leaders recognize that the characteristics of successful teams – trust, delegation of responsibilities, accountability, free flow of information, to name a few – must be nurtured more broadly and more deliberately.
• Drawing-in others with challenging roles. Lateral Leaders can elicit significant contributions from others by helping to create meaningful roles for them in the process. Fisher and Sharp suggest that, through skilled questions and subtle suggestions, others can be stimulated into defining and taking on team roles that are personally rewarding and beneficial to the goals of the group.

CMPartners Case Study #5: A major cable television company was acquiring a large number of local television stations in advance of an IPO. After several months of negotiation, it reached an impasse with the manager and minority owner of a highly desirable station. Their initial disagreement was over price, but the station manager quickly lost all trust in the cable TV company due to its perceived strong-arm tactics and lack of good-faith negotiating. After a brief interlude, the parties re-commenced negotiations, but this time the cable TV company used a structured process that emphasized trust-building, active listening, careful information-sharing, and thorough interests and options analyses. Despite the earlier setback, a deal was reached within three weeks that garnered the station manager sale proceeds far in excess of his initial asking price and an ongoing role with the cable TV company. The cable TV company satisfied all of its most important interests with the transaction and went on to a highly successful IPO.

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Conclusion:

As corporations strive to optimize performance and improve efficiency, walls between departments and barriers between organizations have been removed in favor of leaner organizational charts and faster decision-making. Necessary as these changes are, they have left employees largely on their own to figure out how to survive – and thrive – in this new environment; traditional notions of leadership are antithetical to this new reality. In our practice, CMPartners offers clients a model of Lateral Leadership – a framework and approach that recognizes these shifts and allows individuals to lead effectively in such environments using a skill set that:

• Identifies new challenges;
• Analyzes and solves complex problems
• Encourages a culture of learning
• Builds trust
• Elicits cooperation from and exercises influence – not illusory control – over others.

By learning, practicing and using these constructs and skills, Lateral Leaders exhibit the behaviors that are necessary in this new, less-structured corporate environment. They are able to influence the thinking and behavior of those around them, resulting in more robust problem-identification and -resolution processes, more focused work teams, and a more inclusive corporate culture.

Written by Rob Rosen