Leadership

A critique of leadership using the example of Lars Kolind, the CEO of Oticon for 10 years (1988-1998)

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Abstract

Exploring leadership styles, the difference between a manager and leader, the role of vision, charisma, transformational leadership and the system perspective of leadership. All these aspects are presented with practical examples from Lars Kolind’s career as the CEO of Oticon.

Kolind’s Background

The world has witnessed countless leaders through the course of history. Regardless of their context, religious, political, social or organisational leaders are in the centre of attention and they often become heroes that people admire and expect to save them from disasters. Lars Kolind, the CEO of Oticon between 1988 and 1998, was no exception. He arrived at the Danish hearing-aids manufacturer while the company was struggling to survive. Suffering from stale management methods and executive groupthink, Oticon’s economic results were disappointing. Oticon had all the potential to reclaim its past market leadership, but it needed a radical change in the way it operated. Kolind accepted the challenge to save the company from the ultimate doom, an action that was perceived itself as a heroic quest by a true leader.

His charisma and leadership style allowed him to implement one of the most impressive experiments in organisational history introducing the ‘spaghetti-organisation’. His achievement is of certain significance for project management since he created the first pure project-based organisation. Demolishing the previous formal hierarchy, Kolind established an almost flat organisation structure where anyone could start a project regardless his/her former position. This structure encouraged innovative ideas, creativity and experimentation enforced by flexible project teams which had no supervision and no job description. But how did Kolind succeeded to implement such a massive change in people’s behavior? How did he persuade everyone to follow his radical plans leaving behind their preconceived views of work? This paper will answer these questions analyzing Kolind’s leadership and comparing it with the literature.


Kolind: Capable Manager or Great Leader?

Before analyzing the concept of leadership, there is a need to make a clear distinction between management and leadership. Kotter’s (1996, p 26) work in this area is considered the standard for drawing the main differences. He attributes to management characteristics such as planning and budgeting, organising and staffing, and monitoring. On the other hand, establishing direction, aligning people and inspiring are typical leadership elements. According to Nurmi and Darling (1997, p 55), “the difference may be summarised as activities of vision and judgment, which facilitates effectiveness as a leader, versus activities of mastering routines, which facilitates efficiency as a manager”. Linking these findings with Kolind, there is a profound difference between his leadership abilities and his predecessors’ management style in the key feature of control. While Oticon was operating for years under the classic management style of having stiff job descriptions and controlling every aspect of employees’ efficiency, Kolind treated employees as adults who are responsible enough to find a project every day and deliver what is expected from them. Doing so, he built a psychological contract that was much more effective in raising productivity since it gave respect to the followers and in turn it generated respect and commitment towards the leader. In addition, “followers who act out of commitment do not have to be watched all the time to ensure that they give the activity their best effort” (Lewis, 2003, p 3). In other words, “leadership is not about command and control, hierarchy or status. It is about trust and giving authority back where it belongs” (Fiorina in Thompson & Ware, 2003, p 135), something that management hardly ever achieves.

Yet, some scholars identify some similarities between management and leadership. For example, Northouse (2004, p 8) notes that both of them “involve influence and deal with effective goal accomplishment”.


Origins and Types of Leadership and how Kolind relates to them

The literature is rich with different explanations about the origins of leadership. The traditional view of leadership traits was initially the main instrument of identifying leadership. Various scholars have created different lists of skills that leaders require to be successful. The interesting fact in these traits is they are constantly updated as years pass, showing that people’s view on leadership is dynamic. For centuries, nobody dared to challenge the belief that leaders are born, not made. Of course, this theory ignores the fact “that we are more a product of our environment than of our genetics” (Waite, 2004, p 72) and as such is considered archaic. Observing these traits from the literature, Denhardt et al. concluded that the most frequent mentioned leadership competencies are “intelligence and self-understanding, self-confidence and self-esteem, high energy and determination to succeed, sociability and integrity” (Denhardt et al., 2002, p 196). Considering more set of leadership skills or leadership definitions is not part of this paper’s intentions. Therefore, having in mind that Kolind came to bring radical change in Oticon, Stein’s definition of leadership as “the ability to step outside the culture and start evolutionary change processes that are more adaptive” is regarded as more appropriate for this case.

Kouzes and Posner link leadership with a specific set of practices regarding “risk taking, inspiring a vision, enabling others to act, setting the example and encouraging the heart” (Sternberg et al., 2004, p 178), all practices that can be attributed to Kolind. Focusing on the subject of vision, one can find contrasting views whether it is enough to empower followers or not. Heifetz and Laurie suggest that vision is not the answer. Instead they propose adaptive leadership. The adaptive nature of leadership has a central role in ‘situational leadership’. Hersey and Blanchard’s model (Figure 1) on situational leadership is used to analyse the change in the leadership behaviour depending on the follower’s readiness to be guided.

Figure 1: Hersey & Blanchard’s Situational Theory of Leadership (Daft, 1999, p 100)

According to the situational model, there is no ‘one size fits all’ approach to leadership. In contrast, the successful leader can adjust his/her style based on the willingness of the followers to trust him/her. Kolind was aware of this requirement so he was constantly changing his leadership style, from participative (seminars to hear employees’ views) to extremely directive (relocation of offices when the company was slipping back to the old norms). “In a paradoxical way, he combined almost dictatorial concentration of power with a great openness and with great communicative skills” (Foss, 2000). In addition, situational leadership “shares much in common with models like path-goal theory, which also attempt to prescribe appropriate leader behaviour using some of the same parameters” (Chemers, 1997 , p 56).

Supporters of vision on the other hand, oppose that followers need something to believe in. Humans, as social beings, need to be part of something bigger and purer than them, therefore “every employee wants to be part of an organisation that has purpose, direction and values” (Thornton, 2003, p 11) (Figure 2).

Figure 2: Leadership’s Foundation Triangle (Thornton, 2003, p 11)

Effective communication of vision depends heavily on charisma, “a term often used to describe a subset of leaders who by the force of their personal abilities are capable of having profound and extraordinary effects on followers” (Conger & Kanungo, 1987). Consequently, charismatic leadership refers to the “emotional attachment to the leader on the part of followers, the motivational arousal of followers, trust and confidence to the leader” (Shamir, House & Arthur, 1993). Yet, it is difficult to attach all those attributes to Kolind since there is no clear evidence that there was emotional bond between leader and followers or just trust that he would save the company. Rather, the emergence of charismatic leadership stems from a variety of different contextual and organisational sources. Indeed, Shamir and Howell (1999) proposed that charismatic leadership is more likely to emerge when new leaders that succeed non-charismatic leaders under crisis, “in dynamic environments that require new strategies, when the tasks are complex and individuals are required to present responsibility, creativity and intense effort”. Oticon’s massive change process demanded a strong leadership character because as Kotter (1999, p 53) suggests, “more change always demands more leadership”. All the above, together with the Danish social environment that encourages changes and new ideas, provided the perfect contextual background for Kolind to unpack his charismatic leadership. Nevertheless, it is not certain if Kolind would be so successful if he was bound to operate under different circumstances. More research is needed in this field to determine in what degree the external environment ‘produces’ the leader and allows him to stand out of the crowd in order to lead it towards a better fate.

Brown sees leadership from a different perspective and explores the roles that leaders adopt, such as heroes, actors, power brokers, immortalists, willing victims and ambassadors (National College of School Leadership, 2003). Kolind’s quest to save Oticon from bankruptcy, using strong symbols to support his transformational change, gave him the role of the symbolic hero. For example, in order to place himself amongst his employees he refused to have an office of his own. However, this heroic image did not emerge from the first day of his appointment as he spent two years in Oticon trying to rationalise the company’s financial status implementing old and traditional measures like downsizing and controlled expenditures. The ‘refusal to call’ as Campbell describes it is the second step in the cycle pattern of each hero, where he/she is still reluctant thinking about the consequences of the risk involved (monomyth.org, Unknown date).


Kolind: The Transformational Leader

Kolind’s vision for Oticon was based on a heads-to-heads learning organisation where employees’ opinion was valuable and information exchange was in the centre of attention. Even when the change process was still in progress, Kolind was constantly asking employees about their views on implementation details. This leadership style, also known as transformational leadership, is totally different from the traditional leaders who possess some kind of supernatural knowledge and their only mission is to transfer it to their followers. This traditional view called transactional leadership “is more concerned with the management of individuals and centres around the leader’s ability to influence their followers to behave in the way the leader wants in return for something that the follower wants” (Lowe, 1995, p 9). “Success in government (achieving quality), however, is not a matter of telling followers what to do and getting them to do it, but rather enabling individuals and teams to act in the best interest of the organisation” (Koehler & Pankowski, 1997, p 16). And that is exactly what transformation leadership is all about, empowering people to act independently and trusting them that they will do their best for the collective good. Oticon’s flat organisation structure with no supervisory positions was reflecting its true transformational leader. Finally, it is worth adding that despite the difference between transformational and transactional leadership, there is evidence that “transformational augments transactional leadership in predicting effects on follower satisfaction and performance” (Bass, 1998, p 10). Some authors link transformational with charismatic leadership but Roth (2003, p 25) notes that “charismatic leaders may fail to have a transforming influence on followers”. It is more about being participative in leading and trusting the followers on their abilities to perform better than the minimum acceptable standards. Trust, in turn, reduces control levels, a path that Oticon went through. Kolind not only got rid of supervisors but also all unnecessary middle management positions, aligning with Koehler and Pankowski’s (1997, p 18) call to “reduce the need for service instead of increasing the power by developing large organisations. Such leaders view themselves from a systems perspective”.


Conclusions

This paper approached leadership from many different angles, linking it to a great CEO, Lars Kolind. First, the difference between leadership and management was clarified and then different origins of leadership were discussed. The role of vision divides scholars as there is no prevailing argument either for or against its importance in the effectiveness of leadership. Situational leadership seems more logical though since it demonstrates the leader’s ability to adapt in different situations. Roles and charisma in leadership also helps the researcher to build a more comprehensive leadership profile. Transformational leaders that rely on the participative style of leadership usually earn the trust of their followers which, in turn, decreases the need for control. Finally, the system perspective of leadership may be the next big influence in leadership research in the future.


References

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